Almost identical reports in the (£) Times and Daily Mail that Sajid Javid “is planning to set up academy style hospitals,  potentially run by the private sector (coyly described as “outside sponsors”), are clearly much more linked to the task of supplying “red meat” to Tory back bench headbangers than any serious attempt to tackle post-pandemic waiting lists.

They also confirm that Tory politicians, especially bankers like Javid and Rishi Sunak, just don’t get the fact that running an NHS general or teaching hospital is unlike any other management task outside the NHS. This failure was also shared by New Labour ministers who first experimented with privatised management.

Javid’s demonstrated his ignorance by his decision last October to bring in General  Sir Gordon Messenger, who led the Royal Marines’ invasion of Iraq, to lead an overhaul of NHS management. 

Javid’s main concern in his speech to last year’s Tory conference, was “to stamp out ‘waste and wokery,‘ while also casually threatening to sack NHS managers who failed to reduce waiting lists.

But while the right wing press always delights in speculation there could be “a cut in the number of highly-paid managers,” achieving these cuts has been difficult, since there is no ready source of people to replace them.

The combination of organisational complexity, political sensitivity, constant pressures on services, the constraints of cash limits and the potentially lethal impact of staff shortages mean managing NHS hospitals has no similarity to running any ordinary business, or running private hospitals in this country. 

That’s why the two previous smallscale experiments with private management (Good Hope Hospital, franchised out by New Labour back in back in 2003 to management consultants, and Hinchingbrooke Hospital, handed over to Circle by the Tories in 2012) both ended in total and costly disasters – and took years for the NHS to sort out afterwards. 

Management of Good Hope Hospital Trust, then a 550-bed general hospital, was contracted out on a 3-year deal to management consultants Secta, who installed a chief executive, Anne Heast, on £225,000 a year – up to £80,000 higher than the going NHS rate. The company jacked up its own fees by 48% in the first year, despite also racking up deficits.

The contract – which offered no provision for the Trust to terminate early, or enforce penalty clauses for failure – was wound up 8 months early when Ms Heast left for another job after a period of utter chaos in which, far from sorting out the Trust’s financial problems, it haemorrhaged money at £1m per month, and was headed for a £47m deficit. The Audit Commission report on the contract revealed a managerial shambles and noted: “The franchise arrangement … was only partially successful and introduced significant extra costs to the Trust.”

The management was handed over to the neighbouring Birmingham Heartlands Trust, which brought in £21m of cuts including loss of beds, wards and buildings in an effort to reduce the deficit.

Hinchingbrooke Hospital is small in NHS terms in 2012, with up to 310 beds, but with a busy A&E, and a mix of emergency and elective admissions, it was more than ten times larger than Circle Health’s extravagant, tiny private hospitals in Bath and Reading – which scraped through financially only on the strength of treating NHS patients in otherwise empty beds. 

But when Circle (which claimed to be a ‘partnership’ offering ‘shares’ to its staff – but all along was owned by hedge funds) promised to generate a staggering £311m of savings, they were given the 10-year franchise deal, potentially worth £1bn, to balance the books and manage the Trust. If the company failed to deliver, it would get paid nothing, and could lose up to £7m before it could escape.

The contract began in February 2012. But things quickly started to go wrong. A November HSJ report based on an unredacted copy of Circle’s business plan revealed a planned 20% cut in workforce – 320 jobs, 130 of them clinical posts. 

In the 2013 NHS staff survey the Trust scored worse than average on 19 of 28 key measures, and in the worst 20% on almost half the questions. Hinchingbrooke staff reported above average rates of bullying. 

Vacancy levels grew, as did the bills for more costly agency staff. In November 2014 Finance Director Jenny Raine left her post, amid growing signs of chaos. Papers for the Trust Board’s October meeting listed “contract penalties and deductions” of up to £1.6m. 

In January, just before the publication of a critical CQC report on the quality of care, the long-expected announcement was made that Circle was pulling out. Deficits had already exceeded £7 million, so the firm walked away without additional payment – leaving the NHS to clear up the mess they had left behind. 

It’s not surprising that today’s reports make no reference back to these previous abject failures.

But the messaging is hugely confused. 

Javid’s latest excursion into NHS “reform” with proposals to give “well-run hospitals more freedom” is in complete contradiction with the legislation Tory MPs have just rubber-stamped in the Commons – which seeks greater central powers for Javid and NHS England. The Health and Care Bill is still going through the Lords.

And changing course yet again to set up yet another tier of NHS trusts not only ignores the previous failure of ‘autonomy’ to solve problems in trusts and then foundation trusts, but also cuts right across the claim that the Health and Care Bill is all about “integration” of health and social care services. “Reform trusts” will not even pretend to be integrated with other services.

Worse still this latest effort to bully managers into success comes at a time when staff and management morale is at a historic low ebb after almost 2 years of Covid stress and pressure. As the HSJ’s James Illman pointed out last November, when the talk of a new round of ‘performance management’ first surfaced:

“Flogging an exhausted leadership cohort with an already battered morale will very unlikely lead to the tremendous results required to turn around the NHS’ waiting list crisis.”

Indeed one impact in each of the previous experiments in private management was to lose vital staff — the biggest problem already facing the NHS. 

Are ministers daft enough to try it again? It seems like they might – as a last-ditch resort to ignorance and neoliberal ideology in the effort to bolster up back bench support to bail out Boris Johnson.

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