Healthcare
The private finance initiative's ability to divide public opinion is nowhere more evident than in Birmingham where the controversial funding solution is being used to develop a massive new hospital that has languished on the drawing board for more than 20 years. andrew macleod reports read on....
BIGGER THAN THE BULLRING
The private finance initiative's ability to divide public opinion is nowhere more evident than in Birmingham where the controversial funding solution is being used to develop a massive new hospital that has languished on the drawing board for more than 20 years. andrew macleod reports
As battles go, this one has definitely been won by the pro-private finance initiative lobby, which sees the new £3520 million facility on the existing Queen Elizabeth Hospital site, next to the University of Birmingham, as a monument to a new era of collaboration between the health service and the private sector.
The private finance initiative's (PFI) opponents, however, have not yet conceded the war, and view the same edifice as less of a monument than a tombstone to the NHS - a visible and unwelcome sign that the government is retreating from the healthcare sector.
The arguments seem simple, but the ideologies behind them run deep.
On the one hand is the assertion - seemingly indisputable - that without PFI the hospital would have remained where it has been for the past three decades. Namely in the tray marked "pending".
On the other is the equally valid claim that private enterprise isn't getting involved in hospitals from any sense of altruism. It will be taking a healthy chunk of taxpayer's money over the next 35 years or so - money that could have been spent on health provision.
So what are the people of Birmingham getting from the deal?
A new 1,249-bed acute hospital for a start, plus a 137-bed mental health facility on the Queen Elizabeth site, and two more adult mental health units at Sparkhill and Stirchley.
There will be many more jobs to boot, both among healthcare workers and the legion of tradesmen needed during the lengthy construction period.
The city stands to gain some additional housing too. Since Selly Oak Hospital will close, and its functions transfer to the Queen Elizabeth campus, the hospital site adjacent to Bournville will almost certainly be earmarked for new homes.
Add to that better access, improved road layout, better car parking facilities and cycle routes, and it all starts to look like a nice package.
Steve Maleham, project manager for the University Hospital Birmingham NHS Trust, certainly believes so. He says: "Without PFI it's difficult to see where the £3520m needed for the hospital would have come from in the current climate.
"There has never been a publicly-funded scheme of that size in the NHS. The health service hadn't been building hospitals on this scale for 40 years, but since the advent of PFI, projects have been springing up all over the place - Derby, Coventry, London."
He adds: "PFI allows the government to accelerate the modernisation of the NHS to provide it with access to private sector capital. A new hospital in south Birmingham has been talked about for thirty years, and I understand that there have been a number of reviews where it has nearly got off the starting blocks. But it took PFI to actually make it happen."
That £3520m is just the start of the process, of course. That's the amount that Consort Healthcare - a consortium headed by construction giant Balfour Beatty - is stumping up to build the hospital and outlying units.
In return Consort will be paid a management fee for running and maintaining the new hospital buildings.
Maleham is somewhat coy about how much will be paid to the consortium, conceding only that it "might" run into hundreds of millions of pounds over the life of the agreement.
Public sector union Unison, which has been outspoken in its opposition to PFI, is scathing about all PFI agreements. Spokesperson Margie Jaffe points out: "We haven't seen any evidence yet that PFI is value for money."
The argument is that the private sector is entitled to some remuneration for shouldering the risk, but the risks have never actually been monitored, the union claims. Anyway, it alleges, when things go wrong the government always steps in and picks up the tab.
Maleham remains to be convinced that PFI is anything but a good idea. "What Unison don't tell you is that with a traditional Treasury-funded scheme we employ an architect to design it and a construction firm to build it. Once it is finished they disappear into the sunset, never to be seen again. Nothing is set aside for things that might need replacing in ten years time.
"With a PFI project all of these things are planned for in the life cycle replacement programme. If something goes wrong - such as the lifts - they are repaired promptly by the firm that has the maintenance contract."
In line with the latest government thinking about PFIs, the Birmingham scheme is designed for flexibility. No-one knows what the NHS will look like this time next year, let alone next decade.
"Because it's a 35-year concession it's a big task to negotiate a contract with a private sector partner," says Maleham. "What we need is flexibility, because the NHS will not remain as it is for ever. It will change, and our requirements will need to be modified."
He accepts that there is still much to be learned about PFI and how public and private sectors work together, but says each scheme helps write another chapter. "One of the things we have done very well here is to think carefully about the model of clinical care. We aren't just replacing old building with new one and shunting the doctors and nurses into them.
"We have a once-in-a-lifetime opportunity to transform the way in which patients are treated, and we have developed the buildings to facilitate the introduction of new models of care.
"Add to that, if you put in all the potential private-sector investment on the back of the new hospital, such as through housing and retail, then you have almost £31bn of investment coming into South Birmingham over the next six years or so. It's a major opportunity for job creation and regeneration. It's bigger than the Bullring."
Factfile
Balfour Beatty's partners in the Consort Healthcare consortium are the Royal Bank of Scotland, HSBC Bank and Haden Building Maintenance Services.
The new hospital will have 1,249 beds (against 1,130 at present), and 30 operating theatres (25).
It will employ almost 1,000 additional staff by 2009. During the five-year construction period it will provide work for around 2,000 building workers.
Supermarket chain J Sainsbury is considering a major development on the former Battery Park site, to the south of the Queen Elizabeth.
Healthy and wealthy
A changing healthcare market driven by the reform of the NHS and advances in medical technologies is presenting untold opportunities. Andrew Macleod reports
As academics across the region become increasingly canny in exploiting their intellectual property, whole new industries are being seeded from which the region's future prosperity could grow.
In the West Midlands the job of cultivating this particular patch has fallen to regional development agency Advantage West Midlands (AWM), which oversees the crucial technology cluster, one of ten which it is hoped will form the basis of a new economy for the region.
Organisations like AWM and its equivalent in the east of the region, the East Midlands Development Agency (EMDA), are pushing at an open door. Universities and colleges in the area are well aware of the commercial benefits that come from exploiting the ideas flowing from academics and talented students, and already have a head start. And they are led too by a breed of academic entrepreneurs who are prepared to get their hands dirty in the cause of achieving multi-millionaire status.
Although the West Midlands has the technology cluster - on paper at least - it doesn't mean that technology know-how recognises this man-made boundary. Michael Carr of Medilink East Midlands points to Nottingham, for example, where BioCity, one of Europe's biggest life science parks, is already up and running on a huge site close to the city centre.
Medilink - which also has an operation in the West Midlands where a "smart housing" project is underway, permitting frail and disabled people to live independent lives - exists to create sound links between academia, the private sector, and the NHS, assisting the knowledge-transfer process.
Carr points out: "The whole healthcare marketplace is very buoyant at the moment. People are living longer and they are healthier than they have ever been before."
At present the healthcare sector in the East Midlands is small but with very clear growth opportunities, he says.
As well as identifying new technologies and helping to encourage start-up firms, Medilink - a not-for-profit organisation - assists companies in traditional industries such as textiles and engineering to diversify into the medical field.
Few organisations can have done this as brilliantly as Qinetiq, the former MoD research centre at Malvern, which delivers the killer combination of brilliant science coupled with commercial acumen.
As the largest science and technology company in Europe, and the second biggest in the world, it is no stranger to world firsts, and recently has become more involved in medical technology.
Qinetiq's recent triumphs include the world's first automatic breast cancer diagnostic and treatment system, which is based on military image analysis technology.
Its performance rating is similar to that of the human pathologist, but unlike a human it never gets tired and so can be used 24 hours a day and seven days a week.
Alun Williams, managing director of Qinetiq's heathcare operations, says: "Importantly, the system is affordable because no extra expenditure is required for specialist equipment. It can be used with existing computers, microscopes and cameras."
Not all business opportunities revolve around innovation and technology, however. Bryan Higgins, Birmingham-based senior manager with accountant RSM Robson Rhodes's healthcare team, says that after a few years in the doldrums the residential care home sector is making a comeback too.
A decade or so ago they were falling like ninepins, and receivers became some of the largest care home operators in the UK.
"The demographics show that long-term care is once again a growing market," says Higgins. "The government is trying to reduce the number of hospital beds blocked by elderly patients, and is pushing local authorities to provide more places."
The massive over-provision of beds, which contributed to the crisis, has now been resolved, and supply and demand are more in equilibrium, with the average occupancy of care homes running at around 93 per cent.
Pressure has also been placed on beds by the fact that land prices have risen so dramatically. The cost of building a new care home is now almost prohibitive in all but a few cases.
While the NHS grabs the headlines, and advances in medical techniques mean hitherto impossible operations are now almost run of the mill, there remains a massive body of the populace that only requires medical assistance for the most mundane of reasons.
It is widely held that for the transplant patient or heart attack victim, no service can match the NHS. Suffer from a hernia or in-growing toenails, however, and it can be a different story.
Which is where organisations like BHSF have a vital role to play. BHSF, and other similar not-for-profit organisations like HealthSure, provide access to consultants and meet a proportion of the cost of some basis treatments, such as dental and eye treatment, in return for regular monthly insurance payments.
And as the NHS becomes less able to deal quickly with these small but uncomfortable ailments, they are growing in size.
BHSF, for example, now turns over £328m a year, and counts blue-chip names like Cadbury, MG Rover, Asda and BP among its customers.
"We insure a total of 380,000 people," says chief executive Peter Maskell. "We don't offer private insurance, but our health cash plan insurance schemes help a lot of people to get diagnosed and treated much faster than they would otherwise."
As well as dentistry and eye tests, plans cover part of the cost of physiotherapy, chiropody, osteopathy and other conditions for which the NHS queues are very lengthy.
The plans are offered as an employee benefit by some companies that are gifted with altruistic self-interest.
Maskell accepts that organisations such as his are complementary to the NHS, and in no way competitors, but he does see their services as being of great value to business and industry.
"From the employers' standpoint we have helped an awful lot of people to get their minor medical problems sorted out very quickly and back to work," he says.
Raman Sankaran, head of marketing with HealthSure, adds: "The demand for our type of service has increased dramatically in recent years, and as NHS treatment becomes less and less available that demand will increase.
"It is currently the case that fewer than 50 per cent of dentists in the UK are willing to accept NHS patients, and that figure will fall even lower as fresh changes are introduced."
The drop-in docs
Midlands plc is starting to take its health seriously - opening a door of opportunity for three enterprising doctors Drs Richard Newland, Bryan Fehilly, and Carsten Lesshast have launched an enterprise unique in Birmingham - the city's only private general medical practice.
They have located their new venture in Newhall Street, in the commercial heart of the city and within a few minutes of almost every major legal and accountancy firm in Birmingham.
Modelling themselves on similar practices in the City of London, the trio are aiming to win 'walk in' business from the 150,000 or so corporate employees within a one mile radius of the centre.
Around 70 per cent of their work comes through the corporate route, but a respectable 30 per cent of clients are strictly private individuals. This proportion of the work is growing as Birmingham attracts increasing numbers of affluent people enticed by luxury loft-style living.
"People can phone us in the morning and get an appointment for the same afternoon," says Newland. "They can walk here in a few minutes, see a doctor and get treated very quickly.
"The alternative might be an appointment with their family doctor in a few days time that could entail taking the afternoon off."
He says many firms are happy to pick up the tab for the average £350 consultation - lasting 20 minutes or so - rather than risk having key employees absent for extended periods. Forward thinking companies now realise that managing absence is a key part of productivity," he adds.
"The service we offer isn't rushed in any way, and people who come to us know we will have time to deal with them properly. A patient who arrives with a chest infection might have his blood pressure checked before he leaves, as well."
More detailed medicals are available for around £3120, corporate value for money when compared to the average £3400 charged by a private hospital, claims Newland.
"The service is here for anyone who wants to use it. Patients don't have to de-register from their NHS doctor, and we keep our NHS colleagues informed of any treatment we give.
"In fact a lot of NHS doctors find what we are doing is quite convenient. They really don't need any more work than they already have."
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