Memorandum by Catalyst Healthcare Management
Ltd (PS 49)
I attended the Committee's oral evidence session
earlier today and was heartened by how the debate over the use
of the PFI and PPP in the Health Service is moving from the ideological
divide towards the practical challenges and opportunities which
face both the Health Service and the private sector in implementing
the NHS Plan.
Unlike Norman Rose, I was trained as a cleaner
in 1972 and am not a lawyer.
I noted that the Committee was particularly
interested in the innovative ideas which can come through partnership
working, and also in details of employment packages and profit
margins. I hope to be able, when giving oral evidence to the Committee
on 15 November, to come equipped with some useful facts and figures
which the Committee may find helpful.
2. CATALYST HEALTHCARE
Catalyst Healthcare Management Limited is a
subsidiary of Bovis Lend Lease Limited. It has three functions:
to lead and coordinate the PFI bids for Bovis Lend Lease and its
consortium partners; to act as agent for the project company investors
to manage the project on their behalf, and to facilitate the development
of best practice and the transfer of knowledge.
The Catalyst consortium consists of Bovis Lend
Lease, RCO (since acquired by ISS) of which I was managing director,
Bank of Scotland and Societe Generale. The project reached financial
close in July 1998, and the main new build was completed and patients
moved in in April and May 2001. Refurbishment and demolition of
old estate will continue until Spring 2002.
This was one of the early pioneering procurements,
beset by affordability issues, an unrealistic Public Sector Comparator,
changing NHS requirements and site constraints. We have since
learnt that these are fairly common in acute hospital modernisation
and reconfiguration projects.
The Trust had a strong team of managers and
clinical representatives who knew what they wanted to achieve
in terms of clinical adjacencies and functionality. There was
for example a challenging model of care required for the treatment
and nursing of mental illness patients in "family clusters"
of no greater than six, all in single en suite rooms, providing
a non-institutional environment whilst allowing the development
of good socialising opportunitieswhich we delivered. There
were health planning and bed capacity assumptions that changed
during the course of negotiations which were accommodated, and
post signing contract, significant variations between the mix
of new build and refurbishment were achieved at marginal cost
and that brought big operational and quality of environment benefits.
Calderdale's objective was to procure an effective
new hospital building with minimum outsourced services at lowest
cost and as fast as possible. We believe the Trust achieved this.
There were also some practical examples of where
there is a clash of Government policy priorities. For example,
green transport policies limit the number of car parking spaces
because the aspiration is that people will use alternative forms
of transportbut they don't. The site constraints at Calderdale
have also meant that many of the car parking spaces will not be
available until final demolition works have been completed.
The same Catalyst consortium as at Calderdale
reached financial close for Worcester in March 1999, and patients
will move in to the hospital in March 2002.
This is an outstanding healthcare solution.
Worcester's approach was to engage with us to look at new healthcare
models that were evolved through a joint design development process
involving clinicians and healthcare planners appointed by the
Trust to work alongside the Catalyst professionals.
From the outset, the private sector was to provide
all medical equipment and a wide range of non-clinical support
services within the PFI.
I have attached the comments of the Trust's
architectural adviser on the approach to the project at Appendix
5. HEXHAM GENERAL
The consortium comprises Bovis Lend Lease Bank
This is a small acute hospital serving a large
rural area. The Trust went to America to look at similar facilities,
and the PFI project allowed them to realise the ideas they found
We were delighted to respond to the enthusiasm
of the clinical team to be completely involved in the design process
and to assist them to achieve what they wanted.
Notable points are the triangular ward design,
which gives very short walking distances and excellent observation;
the efficient and flexible theatre configuration and recovery
area, and the incorporation of a Primary Care Centre linked to
the main hospital.
The Trust had decided to retain soft FM services
in-house. We wait to see if this is the best long-term policy,
but we are supporting its implementation.
6. THE NEW
Catalyst is a short-listed bidder for the Havering
project, known as the new hospital for Romford.
From the outset, the Trust wanted an integrated
healthcare asset and service solution. The private sector provider
will be responsible for all medical equipment and Information
Management and Technology Services (IMandT), and soft services.
The Trust has a strong clinical project team
supported by external advisers, and they have re-engineered the
clinical practices, with clear separation of emergency services,
elective services and rehabilitation. There are integrated care
pathway programmes and clearly defined processes linked to the
modernisation agenda. The output specifications are clearly defined
for the private sector bidders, and the result has been greatly
improved clinical adjacencies and efficiencies. This will be a
ground-breaking modern IT-dependent new hospital.
Regardless of the Public Sector Comparator and
value for money analysis, there will be a valuable health gain
7. RETAINED EMPLOYMENT
Catalyst is involved in all three pilot schemes.
The Retained Employment Model can clearly be made to work, but
it may be difficult to demonstrate that it meets the three tests
set for it: that the management structure makes sense, that it
is value for money, and legal. It will also perpetuate the two-tier
workforce, as was highlighted today. The industry is recognising
that for good industrial relations and workforce stability, there
should be harmonisation of pay and conditions for all employees
whether transferred from the NHS or recruited in future. The 30-year
nature of a PFI compared to short term contracting is changing
the way the industry thinks and values its workforce.
8. PUBLIC SECTOR
In our experience and as was highlighted in
the oral evidence today, PSC assumptions have varied wildly. They
do not seem always to be a realistic basis on which to make planning
decisions about the reform of local health economies.
The PSC measure the cost of inputs. It doesn't
measure the benefit or value of the outputs.
Government policy is to improve the environment
for patients and staff, raise the quality of services, introduce
new technology and reform and improve terms and conditions of
employment for the lowest paid groups of staff. This has a direct
cost which would be incurred whether the assets are publicly or
privately financed. It is my view that this additional costs of
change must be pump-primed by hypothecation.
The provider of long term finance has a matched
alignment with the Public Sector. Both have an interest in the
project performing over its whole life to ensure repayment and
return on one side and service delivery on the other. The financial
return is directly related to the quality of the service achieved
as measured through the payment mechanism. The action of private
capital is integral to the delivery of PFI/PPP and will underpin
the delivery of the NHS Plan.