The Lewisham scandal: market failure and the NHS

Next week Jeremy Hunt will announce the closure of A&E and maternity services, in the face of a concerted campaign which culminated in today’s 20,000+ march. I don’t think he has any realistic choice but to do this, and here’s why...

Max Davie
29 January 2013



Lewisham protest - image: tomylees

When the Labour government turned hospitals into pseudo-companies and simultaneously saddled them with decades of debt via the PFI scheme which started in the 90s, they made it inevitable that some of these organisations would ‘fail’. 

By ‘fail’ I don’t mean that the hospitals would be bad or the care inadequate, just that for some of these hospitals their funding levels would not match their liabilities, especially with PFI added in. 

The failure of these organisations was put off by rising funding levels until recently, but now we’re here as the South London Healthcare (SLH) Trust has ‘gone into administration’. 

What does this mean? The hospitals haven’t closed, but the organisation is now overseen by a ‘special administrator’ to straighten out the finances. In the private sector a buyer would be sought and probably the business shrunk, closed, or merged into another. But this can’t happen to SLH- people would start dying fairly rapidly, and in its current state no-one would touch it with a bargepole financially.

The PFI liabilities can’t be changed, so the only other way to balance the books is to increase income. This, the administrator has suggested, can be achieved by removing acute services from Lewisham, so that more funding can flow to the SLH hospitals. They become viable financially and a private company, Circle say, is brought in to manage them.

Now I hope this is making sense from a money point of view. The problem is that it makes sod-all sense from a service perspective; there is no serious attempt to dress this up as of benefit to the service as a whole, or to the health of South Londoners. 

There has been an attempt to argue that poor management at SLH is the cause of the failure. Balls. SLH failed because it didn’t have a nice lucrative tertiary centre, and its two full general hospitals were both heavily indebted via PFI. Mistakes were made, of course, but mistakes are constantly made in all organisations (yes, even mine…). 

By the market logic that this government professes to swear by, SLH hospitals should be down-graded- after all, no-one asked Amazon to close its CD-selling department when HMV was in trouble. But of course this would make the hospitals permanently ‘unviable’. 

So we get the weird situation of Health Secretary who is avidly pro-privatisation and market forces recommending something utterly alien to capitalism- rewarding ‘failing’ organisations at the expense of ‘succeeding’ ones.

Because Lewisham Hospital is succeeding. It’s PFI debt is manageable (they do have one though), and, far more important, it’s clinical services are generally excellent. 

I hope it’s obvious by now that all this financial winning and losing is just a game that NHS organisations play- I see this all the time, from when in 2003 I was asked to record a patient’s admission as pneumonia rather that asthma because that payed more (I refused), to yesterday, when I learned about a trust who have built a state-of-the-art mental health facility… for other trusts’ patients. They all play this artificial system which determines funding, attracting the lucrative patients and contacts, neglecting those that don’t pay, and some lose that game. Although of course the only people who suffer are the patients, both in the ‘failing’ trusts, and throughout the NHS as this pointless financial roundabout has trebled admin costs.

So Jeremy Hunt has to decide the Lewisham loses its services. The alternative is to admit what a terrible, painful failure the NHS market experiment has been, and reverse the whole sorry process. And that’s never going to happen….. 

I’ve tried not to make this post personal, but I need to close by saying that Lewisham Hospital is where I started in Paediatrics, where I first kissed my wife, and where two of my children were born. It hurts me to see it brought low, but it hurts more to know that this will be the first of many such scandals.



Cross-posted with many thanks to Max Davie at the paedspoliticsbiscuits blog

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