I have shown that something like £27.8 mn of the increase in costs between 2000/01 and 2007/08 cannot be accounted for by the medical school expenses, by hospital-specific inflation and by the increase in the level of activity.
How much (if any) of this £27.8 mn is attributable to the PFI contract? It is impossible to say. As shown earlier (in table 9.3), the amount paid in the six full years of the PFI contract (2002/03 to 2007/08) for buildings maintenance averaged £3.0 mn a year (at 2007 prices). The amount paid for Group A services (grounds maintenance, domestic and portering, catering, car parking, security, laundry and waste disposal) averaged £10.0 mn (again at 2007 prices). The total of these two components is therefore £13 mn. Even if a third of these costs were additional and due to the PFI contract, the amount would be about £4 mn, 'only' a small proportion of the 'unaccounted for' £27.8 mn increase in costs.
We have seen that the extra rent payable due to the PFI contract is estimated to be £18.0 mn (in 2007 prices). There might be up to a further £4 mn of other extra costs due to the PFI contract but it would need a more detailed set of accounts than the published set to confirm or reject this. Therefore we have an extra minimum cost due to the PFI contract of £18.0 mn.
However this is not the end of the story. As headline after headline of the local papers testify, the NNUH is operating at a very high level of capacity utilisation and is frequently on red or even black alert (see box 9.1 below). As shown in table 9.8 above, in 2007/08, the average capacity utilisation at the NNUH was 89%.
Box 9.1 The high occupancy rates at the NNUH The maximum annual number of bed-days at the NNUH is 365 days * 987 beds. This is equal to 360,255 bed-days. Using the actual bed-days given in Table 9.8, the average occupancy at the NNUH can be calculated as 80% for 2000/01 and 89% in 2007/08. (But note that in a questionnaire from Panorama for a programme of April 27 2008, the NNUH occupancy was stated to be 94%). However even if we take the average figure as 89%, it is not surprising that there have been frequent 'red' and black alerts' at the NNUH. Red alert means that only emergency patients are admitted and black alert means that wards are full and the hospital can admit no more patients. The bed occupancy implied by red alert is between 92% and 98% and the black alert is over 98% (Eastern Evening News, September 22, 2006). There are two ways in which NNUH might deal with more patients. One is to speed up the turnover of patients but the NNUH already has a low length of stay (compared to the average for hospitals in England). The average length of stay for England in 2002/03 was 7.9 days (HES/inpatient data/primary care trust of responsibility - accessed in March 2009). In 2007/08 the average was 5.7 days, an annual decline of 4.8%. By contrast the average length of stay at the NNUH was 4.3 days in 2002/03 and 4.2 days in 2007/08. Thus there seems to be little leeway at the NNUH for reducing the occupancy by cutting down on the average length of stay. The second way of coping with an increase in the number of patients is to treat a growing proportion of them as day-cases and this has been done. As shown in table 9.6, the number of day-cases at the NNUH rose between 2000/01 and 2007/08 at an annual rate of 5.6% |
How if at all does the high utilisation of capacity at the NNUH add to the cost? It might add to the cost in two ways.
First it might add to the cost because of the greater likelihood of infections (MRSA and clostridium difficile) but this is by no means certain.
Secondly, the high occupancy at the NNUH might add to the cost if treatment has to be bought from private (higher cost) hospitals. For example, in 2005, Chris Humphris of the Southern Norfolk Primary Care Trust31 stated that; "the Norfolk and Norwich Hospital had purchased beds from the private sector at higher cost because it was unable to carry out all the work itself" (sixth page of the minutes of a meeting between Norfolk MPs and NHS officials held on February 11 2005). In a subsequent letter to Richard Bacon dated 17 March 2005, Chris Humphris stated that in the year 2004/05, the PCTs in Norfolk were expecting to spend £4 million on private sector work and that this was costing £800,000 more than if the NNUH had carried out the work. In 2007/08, the Norfolk PCT spent £2.1 mn on patients treated privately but this had risen to £5.1 mn from April 2008 to December 2008 (information provided by Norfolk PCT in a media response). The latter is equivalent in a full year to £6.8 mn32.
What is the extra cost of this compared to treatment at the NNUH? We have seen that the additional cost in 2004/05 was £800,000 on an expenditure of £4 mn. This £800,000 is 20% of £4 mn or 25% above the £3.2 mn cost if treated publicly. In 2004, John Hutton (the then Health Minister) was quoted as saying that the NHS was paying 43% more for private as compared with public treatment (Society Guardian website, accessed in November 2006).
Therefore an extra cost margin of 25% would seem to be on the low side. However if this margin is assumed, the higher cost incurred by the Norfolk PCT for private treatment in 2008/09 is 20% of £6.8 mn which is £1.4 mn. Thus the extra cost due to the small size of the NNUH was £0.8 million in 2004/05 and is likely to have been at least £1 mn in 2007/08.
31 The Primary Care Trusts (PCTs) were reorganised in February 2006 with the Norfolk PCT being formed from five former PCTs.
32 In April 2009, the Eastern Daily Press disclosed that many thousands of pounds have been wasted on the booking of private hospital beds that have sat empty. These beds were booked at the Spire hospital which is situated less than two miles from the NNUH at Colney. (Spire Healthcare was formed in 2007 from the sale of BUPA Hospitals to Cinven, a private equity company and by May 2008, it had become the UK's second largest private hospital provider - spire website accessed in July 2008). The beds were booked "in a bid to relieve pressure on beds at the busy Norfolk and Norwich University Hospital". However, the EDP went on to say, "NHS Norfolk bosses are still refusing to say how much