Innovation in the National Health Service - the acquisition of the Heart Hospital Public Accounts Committee 2003

Examination of Witnesses

Mr Steinberg

Mr Steinberg: When I read the report it was difficult to find anything to criticise you on, which is a great pity because that is what we are here for. I suspect you are going to have a very easy task. One of the biggest criticisms which the trade unions in particular have about PFI schemes - this is not really a PFI scheme but it involved the private sector from the beginning - is that working conditions and pay if not now will be awarded in the future. In paragraph 3.9 on page 24 both the private staff and the NHS staff have integrated successfully, which is to be applauded. Can you tell us what lessons can be learned from this exercise where there has been a transfer of staff?

Mr Naylor: Yes, I can answer that because I was directly involved in talking to both groups of staff at the time. One of the concerns which came up in this report and one of the things we shall have to think about if ever we do this again, was that the whole nature of the transaction was commercial in confidence and clearly it would have undermined our position had we been too open with anyone, particularly with our staff, during the process of negotiation. As soon as the deal had been agreed, we then initiated a communications programme with the staff to tell them what had happened, why it happened and what might happen to them. In that process the staff of both the NHS who worked for the Middlesex Hospital and the staff who have been working the private hospital had quite different perceptions as to what would happen. For example, the staff in the private hospital felt that the first thing we would do would be to reduce standards, reduce staffing levels and let the hospital run down. Many of them had worked there because they liked to work in that kind of environment. Equally the staff in the NHS had a perception that the staff in the private sector were being paid an awful lot more than they were being paid and therefore that would cause friction. The first thing we had to do was talk to both groups of staff individually, which we did within a matter almost of hours after the acquisition had occurred, and get both sides to understand that their perceptions were not necessarily the case in reality. It was only by getting the two groups of staff together, and the way we did that was by having a social function with both groups of staff in the Heart Hospital, inviting the NHS staff to meet with the private hospital staff that some of these concerns were assuaged.

Mr Steinberg: Did you give any guarantees under TUPE regulations?

Mr Naylor: We gave absolute guarantees to the private hospital staff, in fact to all of our staff, that they would be treated under TUPE regulations and we have maintained those guarantees.

Mr Steinberg: Did you give them guarantees that their conditions would remain indefinitely or for five years, three years?

Mr Naylor: We told them that under the terms of the transfer of undertakings their conditions of pay would be honoured.

Mr Steinberg: For how long?

Mr Naylor: For as long as they were prepared to negotiate any changes. In reality we have not attempted to negotiate any changes because we were quite surprised to find that the conditions of service of the two groups of staff were very, very similar indeed. There were marginal differences on pay to the benefit of the private staff, but there were other benefits to the NHS staff such as payment of overtime, additional pension and sick payments which compensated for small differences in extra remuneration. Up until now there has been no pressure from either group of staff or from their union representatives to negotiate an amalgamation of the conditions.

Mr Steinberg: Would it be fair to say that the private sector were transferring into the NHS?

Mr Naylor: Yes; absolutely.

Mr Steinberg: So that was obviously easier, was it not? As I see it, it is much more of a problem for people who are working for the NHS, or for that matter for a public industry, to transfer into the private sector.

Mr Naylor: Yes; I would agree with that. We also had to give staff on both sides an undertaking that there would be no compulsory redundancies. At the time we announced the acquisition, because it was so novel, so new, so innovative, there were concerns amongst the staff as to what was going to happen next, whether their jobs were safe. There were also concerns about how to bring the two groups of staff together because there were fairly equal numbers of staff in the private sector, as in the Middlesex Hospital and there was some duplication of function. We had very quickly to work out a hierarchy of structure so that everyone could be accommodated.

Mr Steinberg: What happens when somebody now comes in new? What scheme do they go on? Are you moving towards a set scheme for all staff? When new employees come in, do they go onto a specific new scheme or new pay scale or whatever? Are you aiming to get everybody on the same scale?

Mr Naylor: Eventually by attrition that will happen naturally because all new staff coming in, come in under NHS conditions of service. Over time the fairly equal distribution which occurred at the time of the acquisition will change in favour of the NHS.

Mr Steinberg: The reason I am asking this is because I have a brand new PFI hospital in my constituency and half the problem with the trade unions has been regarding working conditions and pay levels in years to come. What surprised me was that the private sector paid more in the lower specification jobs than the public sector. Is that right?

Mr Naylor: That generally tends to be the case in my experience.

Mr Steinberg: That the private sector pay more than the public sector.

Mr Naylor: Yes.

Mr Steinberg: In terms of nursing and laundry and portering and things like that?

Mr Naylor: That is generally my experience and that was the experience here. We found that the lower paid staff in the private sector were paid slightly more than the NHS staff but equally at the upper end the NHS staff were paid slightly more than the private staff. The differences were so small and they were more than compensated for by the fact that the NHS provides better other conditions of service than the private sector do.

Mr Steinberg: In paragraph 1.10, page 11, "The Trust also anticipated other benefits from the acquisition such as allowing the Trust to treat patients from other Trusts who had been waiting a long time. It expected therefore that there would be some reduction in pressure on Trusts within and outside London, for patients willing to be treated away from their local area". Have you had any take-up from other trusts anywhere in the country?

Mr Naylor: Yes, we have indeed. Up until now we have treated 130 patients from one of our other local cardiac units at Barts Hospital and we have a contract with them this year to treat a further 350 patients.

Mr Steinberg: I can understand that because it is in the vicinity but I was thinking more along the lines of from far afield.

Mr Naylor: As I explained on Monday with a pie diagram showing where our patients come from, more than 50% of our patients come from outside London. Because we are a national centre in many respects for the services we provide, including cardiac care, we do get a lot of patients who come to us from all the counties surrounding London, particularly the Thames Valley. What of course will happen as a consequence of recent national policy under the Patients Choice initiative is that there will be an opportunity for patients who are waiting longer than six months for cardiac treatment to come to us.

Mr Steinberg: Would it be possible for you to give us a list of the trusts throughout the country who are actually sending patients to your hospital, how many, where they are coming from and how you actually advertise your hospital? Could you let us have that?

Mr Naylor: We should be very happy to do that by commissioner, by health authority or by PCT. It would be more difficult to do it by hospital.

Mr Steinberg: One of the things I did take a little exception to in the report was page 13, paragraph 1.20. I might be totally barking up the wrong tree but it says that the clinicians rather than administrators run the hospital. Is that right? My experience of clinicians getting involved in administration is that frankly it causes more trouble than it is worth and they should keep their noses out of it, get on and treat patients, which is what they are paid to do, and leave the running of the hospitals to the administrators. This is saying that it works the other way round and I am interested.

Mr Naylor: Yes, indeed it does.

Mr Steinberg: I think that most of the trouble in hospitals at the moment is because of clinicians interfering.

Mr Naylor: Far be it for me to disagree with you as an administrator, but I am absolutely persuaded. I have been a chief executive for an NHS major teaching trust for many years and I am absolutely convinced that the best way to run any organisation, particularly a complex organisation like a hospital is by taking account of the views of the people who work in the organisation and in particular in an organisation like a hospital to take account of the views of the doctors and nurses. In my experience the best way of doing that is to create a partnership between the management of the hospital and the doctors, to involve the doctors in decision making. That is exactly what I have done for many years and what I did when I came to UCLH a couple of years ago. I involved a number of doctors who have the aptitude and ability and the interest to get involved in management. My personal experience and my broad experience is that we feel we have much higher confidence in the quality of decisions we now take than we had before because of that direct involvement.

Mr Steinberg: Does that mean that most clinicians who are helping with administration are doing less professional work in terms of their actual job or not?

Mr Naylor: Yes, indeed it does.

Mr Steinberg: We have a shortage of doctors. Is that not a waste of resources?

Mr Naylor: I do not believe it is. I believe that the quality of decision making by involving doctors is increased to such an extent that it more than compensates for the small amount of time individual doctors might spend involved in management.

Chairman: Mr Steinberg has made a very important point about the information available to his constituents, about how they can get an operation at this Heart Hospital much sooner, within six months, than perhaps they can get in County Durham. We might come back to that later.