BRITAIN'S NHS IS SQUEEZING EVERY COST EXCEPT THE BUREAUCRACY

Tony Blair is to be told today that hospitals must make drastic cuts in spending on drugs and agency staff. Sir Ian Carruthers, the acting head of the NHS, will present his plan for reducing the estimated 750 million pound NHS deficit at a No 10 seminar. Sir Ian, who took over after Sir Nigel Crisp’s resignation, believes that there is considerable scope for cuts in the 10.3 billion pounds spent every year on drugs and the 1 billion on temporary staff. This will raise fears that some patients will not be given expensive treatments from which they could benefit.

Last year the Department of Health negotiated a cut of 7 per cent in the profits that drug companies can make from the NHS, but Sir Ian believes that too many hospitals still have a “misplaced brand loyalty”, which adds to costs. His review for the Prime Minister comes as a report predicts that NHS staff levels will fall by 100,000 as reforms bite. A smaller, more effective and flexible workforce should emerge, according to the market- orientated think-tank Reform. With young doctors emerging in ever greater numbers from medical schools, the report predicts “severe medical unemployment” and calls for a review of training plans. “There is little point in pulling more able young people into training with heavy costs when their employment chances are poor,” it says.

By 2004 the total NHS staff had risen to 1.33 million, an increase of 45,000 a year since 1999. As deficits hit hospitals, jobs are beginning to be shed — about 7,000 in the past few months — but new policies will accelerate the process, says the Reform team, led by Nick Bosanquet, Professor of Health Policy at Imperial College, London.

The costs of the expansion are one reason why the health service is being driven into deficit, the report says. Now the Government’s “highly welcome reform agenda” is likely to have widespread effects across the NHS. The reforms include payment by results, patient choice and the spread of foundation hospitals. The centralised “silo” mentality — pile up manpower regardless of cost or quality — will be replaced by more local initiatives. These could include an end to centralised contract negotiations, a key feature of recent NHS history.

Professor Bosanquet said yesterday that he expected the reforms to benefit staff as well as patients: they will gain from increased choice, higher morale and the satisfaction of working in smaller, more independent organisations; but he is concerned about job prospects for young doctors. Given the expansion in medical school places, the number of funded training posts needs to rise by 1,768 between 2004-05 and 2007-08. “Realistically this scenario is unlikely to be met as the funding situation worsens,” the report says. “New medical graduates are already facing serious obstacles to getting jobs. This pressure is likely to increase dramatically in the next few years as graduate numbers outweigh retirees massively and the financial situation of the NHS causes a dramatic slowing in recruitment and even a reduction in staffing numbers.”

So far most graduates do seem to be finding jobs. A survey for the General Medical Council found that only 2 per cent of those wanting to work as doctors were without jobs. There are still a few areas where the NHS is short of staff, including midwifery and radiography. Some parts of the country find it hard to recruit GPs, and mental health services find attracting staff of the right calibre difficult. The think-tank does not recommend that NHS staff should be paid off, but it says that this will inevitably happen if the Government’s current reforms are pursued.


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NHS: YOUR LUXURY CAR SUPPLIER (IF YOU ARE ON THE GRAVY TRAIN)

Senior health managers and consultants are being provided with luxury cars including Jaguars, Mercedes and even Porsches at a cost of millions to the National Health Service. As hospitals across Britain face job cuts, new figures show that executives are receiving subsidies of up to 6,600 pounds a year to lease cars that they can subsequently buy at a discount. All maintenance costs are included in the agreements, while some authorities and hospital trusts also cover the costs of insurance premiums. The bill for leasing the 35,000 cars for NHS staff is now close to 90 milion pounds, while the cost for new leases rose by more than 3.5% last year, according to government figures.

It coincides with a growing cash crisis in the NHS with total deficits estimated at more than 800 million and trusts cancelling operations and threatening more than 5,000 job cuts. Katherine Murphy, of the Patients Association, a charity campaigning for a better health service, said the issuing of luxury cars was "morally wrong". "Here we are with the health service in severe financial crisis with deficits everywhere, redundancies threatened and wards closing and these executives, who are on hugely inflated salaries anyway, are driving around in lovely top-of-the-range cars obtained with NHS money," she said. "It is morally wrong and gives completely the wrong message."

NHS officials say the "company car" perks enable the service to compete with the private sector. However, many health trusts eschew such schemes as an unnecessary expense. Last year the government tried to rein in the cost by paying outside consultants - at an estimated 2,000 pounds a day - to review the scheme nationally. Despite the exercise, the average annual cost of leasing each company car rose by 175 pounds.

The Department of Health admitted the extra expenditure following the consultants' exercise was because the vehicles now being bought by the NHS were of a "generally higher specification". In the 12 months until March this year, figures show that the NHS has started new lease-hires on 428 Audis, 260 BMWs, 101 Mercedes, 35 Jaguars, 28 Land Rovers, 88 Saabs, 10 Lexus and even a Porsche. Masterlease, one of nine lease-hire companies that have agreements with the NHS to supply vehicles over three-year contracts, is providing two Porsches to executives. A spokesman confirmed the company is leasing a Porsche Cayenne - a 4x4 model with prices ranging from 35,560 to 81,565 pounds - and a Boxster two-seater sports model, which retails at 32,640, to the NHS.

Because of the preferential rates negotiated centrally through the NHS's purchasing and supply agency, a Cayenne can be leased for about 6,000 pounds a year while a Boxster costs about 5,000 annually.

Most NHS staff who are entitled to company vehicles are given an allowance based either on their status and salary or the number of miles they drive. They are then entitled to choose any car they like. If their choice exceeds their allowance, they can top up the NHS subsidy with their own money. Other costs, such as road tax, are often paid by the driver, who is also sometimes expected to contribute towards the insurance. Petrol is paid for by staff and reimbursed through claims for mileage. Some trusts and health authorities are providing such generous allowances, however, that topping up is not necessary.

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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