My mission statement

The times we are working in now need a great deal of accelerated change and there must be no negotiating that down. So my mission statement for this part of my consultancy career is to be clear that there needs to be and will be a lot of change from the work that I do with individuals and organisations and if organisations don’t want that, then it is probably best to go somewhere else.

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Take a few steps back to understand what failing hospitals really mean for the NHS – and why we need to do something serious when they do.

Filed Under (Francis Report, Healthcare delivery, Hospital Trusts, Localities) by Paul on 28-01-2013

Last week I drew the analogy between the role of the administrator in the NHS and the fact that someone with the same name – administrator – winds up High Street retail chains like HMV. The point I was trying to make was that the announcement of an administrator for HMV was recognised as being the end of the line for the current organisation of a failed chain of stores. However when an administrator  was announced for South London Healthcare Trust it was seen as another opportunity to develop the trust with the minimal amount of change.

Some of the responses on the blog make the point that hospitals don’t fail in the same way as High Street chains and that the analogy doesn’t work. For me it means that I need to explore the meaning of a ‘failing hospital’ a bit more.

First, as we shall see when the Francis Report is published, hospitals can fail for financial or clinical reasons (and sometimes for both). We will see what Francis says should happen when there is a catastrophic clinical failure in a hospital. I don’t know what he is going to say but I wouldn’t expect it to be to give everyone involved in the hospital another chance. He will say that a part of Mid-Staffs failed very badly and the Trust as a whole should have done something about it.

It’s true that not all of Mid Staffs was failing clinically, but the failure was very significant and enough to engulf the entire institution.

The same is true of financial failure. There will be some parts of a hospital that may well work very well financially. The orthopaedic department may be carrying out efficient surgery in large numbers meaning that this part of the hospital is not failing financially. But overall – as with clinical failure – the institution is failing to earn enough money to pay all its bills.

What does that mean for a hospital?

Well in fact if NHS leadership did not steal money from other parts of the NHS to give the failing hospital a ‘bung’, what that means is that about this time of the financial year the hospital runs out of money. Over a whole financial year they are paying out more than they are receiving so at some point in the final 3 months they run out of money and can’t pay staff wages. Or they pay the wages and can’t buy any more supplies.

This can happen. In Greece many hospitals are in this position because the Government does not have the money to bail out those that do not have enough money to pay their bills.

Up until now this has not happened in England because NHS leadership has been spreading bungs of money around to top up failing hospitals. In the case of South London Health care Trust this bung was to the tune of £1.3 million a week. That’s about £65 million a year.

Some might say that it’s vital to find that money keep the hospital exactly as it is. But the problem is that the £65 million does not come out of thin air. For South London Healthcare Trust it is taken in one way or another from the rest of NHS London.

It is taken from patients.

Using money to bolster failure has a cost. Patients in other parts of London will wait longer for treatment because some of that £1.3 million was taken from their locality to pay for failure elsewhere.

This has been going on for years. It means that some of the hospitals struggling to break even will have some board members looking at South London Healthcare and say “why should we bother?” If we don’t go through the very hard graft of making ourselves more efficient someone will come along with a bung and bail us out. Why should we do the very hard work of change when they don’t have to?

The fact that there are no real penalties for economic failure means that somewhere someone will try a lot less hard to put things right.

And of course now, in 2013, there is a lot less money around to keep giving bungs for failure.

The job of the administrator is to ensure that as many services as possible can be delivered more efficiently under new providers.

But there will be considerable change.


3 Responses to “Take a few steps back to understand what failing hospitals really mean for the NHS – and why we need to do something serious when they do.”

  1. NHS hospitals operate under an artifical pricing regime. Fees are adjusted by the so-called Market Forces Factor. Then A&E sessions exceeding 2008 numbers are remunerated at only 1/3. Consultants give each other merit awards without reference to the economics of their employers as far as I know. There might be mis-management – but it might also be incorrect pricing or local service design.

  2. But unlike high street stores, hospital departments are split into visibly divided structures which often have little interaction or sense of how the whole organisation is performing. Administrative staff who work well and profitably in their area can find themselves penalised by the failings of others in a Trust. Yet Trusts will seldom seek to work collaboratively to fix problems and bring poor performing departments into line.

  3. This still doesn’t explain why anyone thinks a successful hospital in a different Trust (Lewisham) should be emasculated because of the failure of its neighbours – or why previously a number of hospitals in difficulties were pushed into a new single organisation with little or no prospect of being able to manage financially.
    Does anyone know how much of the problem is due to the PFI contracts involved?
    If the Trust needs to be bailed out to that extent due to the PFI , what are the prospects of any other Trust, encouraged or forced to take it over, being able to finance both services and the PFI?
    Mightened it be more cost-effective in the long run to pay off the PFI?

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