Risk can rew ward, MPs tell UCLH

A London teaching hospital has been congratulated for taking an opportunistic and successful risk after buying a failing private hospital for nearly£40m.

University College London Hospitals trust took just five months to identify the failing Heart Hospital, draw up a commercial case and buy it, in a deal which will see the cost of cardiac operations 'significantly' reduced, the Commons public accounts committee was told last week.

Committee chair Edward Leigh congratulated the trust: 'We, in Whitehall, are sometime accused of being risk-averse. You are to be congratulated because you took risks that produced results.' The committee said the way UCLH handled the deal's risks offered lessons for the NHS.

The trust was helped by a oneoff grant of£27.5m from the Department of Health's national capital underspends and a£9m subsidy from London directorate of health and social care over two years, the committee was told last week.

Giving evidence, UCLH chief executive Robert Naylor said the Heart Hospital, which was onethird full and had accumulated debts of£12m under previous owners Parkway Healthcare, would be past break-even point by April 2004.

'At the moment, the hospital is carrying out 2,400 cases per quarter and an extra 100 cases due to efficiency savings. When we get up to 2,800 cases per quarter, we will reach balance of expenditure against income.'

Mr Naylor told the committee that a number of factors, including failure to meet 18-month waiting targets, long trolley waits and poor facilities at the 200-year-old Middlesex Hospital, prompted the trust to look to the private sector for cardiac services.

'We were in negotiation with a number of private providers to see if they could help us. It was as a consequence of that negotiation that the Heart Hospital's appalling financial position came up and we realised we had a much bigger opportunity.'

Mr Naylor said that since the purchase in August 2001, recruitment had been improved. 'When we bought the hospital, it had 304 staff. Now we have 351 and we have a target of 424, so we are nearly halfway there. We are very confident that we will because It is a very good place to work and NHS contracts are held by many to be of better value than private sector contracts.'

Legal fees, drawing up a business case, VAT advice and other elements to complete the purchase cost£353,000 - around 1 per cent of the capital cost - compared to an average 2-4 per cent on a private finance initiative scheme. 'It was significantly cheaper than the PFI option, ' Mr Naylor added.

However DoH director of policy and planning Andy McKeon told the committee that there was no provision for the DoH to claw back the purchase cost from UCLH. 'It was an opportunistic deal, ' he said.

Labour MP Angela Eagle congratulated the trust and DoH officials for an 'innovative, quickly done deal that was very good value for money'.

'It took five months instead of the two years average length of capital procurement deals in the NHS. Could we streamline NHS systems more without risking value for money?'

Mr McKeon agreed that there were ways of streamlining NHS procurement systems, though 'this case was unique'.

'I think there are lessons for the way we handle risk. Part of this purchase was to assess what the risks were.'