Value for Money

One of the major differences between public and private companies is their attitude towards money, the private sector will look for ways to keep costs down, will carefully audit its income and outgoings and will look generally at a best value for all its financial transactions both internally and externally. The more successful they are, the greater the profit/sales and potentially the greater the market share they’ll acquire.

The public sector because they don’t generally work on the efficiency of their operation (although they should) but rather by its size and its budget. That means unless there’s a recession when a government might look to reduce budgets, then they tend to grow despite bad practice, often very bad practice.

Mail.

Wasteful health chiefs have been paying almost £50 for a £2 packet of pasta, it has emerged.

While many shoppers have been watching every penny they spend, it would appear some health service bosses have been acting far less frugally with taxpayer cash.

Not like it’s their money now is it? And hence the problem, no private company would have done this, or at least not been undercut by a competitor.

Now one NHS Trust has finally come to its senses and is getting patients to buy the packets in supermarkets for £2.

Everyone who previously had gluten-free pasta on prescription from the Eastern and Coastal Kent NHS Trust has now been advised to buy it themselves.

‘A £2 packet of pasta from a supermarket could cost the NHS up to £47,’ said Alison Issott, assistant director of medicines management at the Trust.

She added: ‘It will cost £5 from the manufacturer, plus a £1 dispensing fee, £1 pharmacy fee and a delivery charge up to £40.

Makes you wonder just how long this has been going on though and whether or not it was just the threat to their budget that brought the matter to a head? After all, what pressure will have been applied to simply have someone checking the costs, or even if they did, do something about it?

This isn’t an isolated case either…

In February it emerged the NHS is throwing half a billion pounds down the drain every single year by paying over the odds for hospital equipment.

A report by the National Audit Office found that even in the same hospital, different departments are needlessly buying lots of different types of the same product – at massively varying prices.

Across the NHS, trusts bought 21 different types of A4 paper, 652 types of medical gloves and an astounding 1,751 ‘cannulas’, instruments which are used for withdrawing or inserting fluid from a patient.

There were wide variations in prices paid – with a 180 per cent difference in price between the highest and lowest for one item.

The NAO predicts that, for just four common healthcare products, around £7million in costs could be saved every year if the number of orders was reduced to the level achieved by the best 25 per cent of trusts.

Meanwhile it was revealed that NHS desk workers are driving top-of-the-range rental cars that are funded by the taxpayer.

Strategic Health Authorities around the country have spent a staggering £1,000,000 every year since 2007 on the luxury cars. Shockingly, one ‘pen pusher’ was allowed to hire a £37,000 Porshe Boxster – costing taxpayers thousands of pounds.

This is always the problem with playing with other peoples money, there’s a lack of care in that there’s no best interest involved for the customer, it’s just money shaken from the money tree, it’s not a decision which might cost jobs or bankrupt the company, because there’s always more where that came from.

This is the lesson the public sector have consistently failed to learn under previous governments because there is no real penalty for failure when you can use the taxpayer to bail you out and certain political parties and unions play merry hob if anyone dares criticise the process claiming it will (always) affect frontline services.

The NHS is in dire need of reform, most people reading this realise this, however the inertia that has built up in the system means that its almost impossible to do without bringing down the government via the outrage that would be generated as you can bet that it will be the doctors, nurses and ancillary staff that will be targeted by the bureaucracy rather than the system itself.

So, the question I’m asking, is can the NHS be reformed, or will it have to be destroyed first?

Secondly, can it be done by an elected government?

18 comments for “Value for Money

  1. June 23, 2011 at 2:25 pm

    So, the question I’m asking, is can the NHS be reformed, or will it have to be destroyed first?

    Secondly, can it be done by an elected government?

    Reply

    Question 1. The concept “Free at the point of delivery” must go, except for the young and weakest members of society.

    Qustion 2. An honest party telling the truth across the board,(why not call it Veritas,) if properly reported in the media, and if backed by good research, making the case for an NHS mainly funded by a self-insurance scheme (such as in France or Australia)should be able to achieve a majority, again were such fundamental good sense able to be demonstrated in every main policy area.

    Those who vote, are I believe, far more thinking and intelligent than the opinion polls ever suggest. BUT the media and establishment are problems, both wishing to maintain the status quo. Anyway, such was my experience with the original Veritas.

  2. June 23, 2011 at 3:43 pm

    The problem is not so much the whole public sector but “placemen” within it. There is within the sector the same breed of chancers than one often finds in private industry whose are only willing to see things from their own perspective and work on their own image and progression.

    As a former budget manager in the public sector I am all too aware of money being added by others during the signing off process. I along with others have often tried to give back money or stop spending plans with sound justification only to be taken aside by managers who also happened to be statists to undergo some “attitude adjustment”. At the heart of the problem is not the many, but the few.

  3. Damo
    June 23, 2011 at 6:13 pm

    It is also not uncommon for council and charities that received public money to spend every single penny they get, even on useless projects, so their budgets are not decreased for the follwoing year.

    • Rossa
      June 23, 2011 at 7:25 pm

      Totally agree with this. I used to work for a software firm that supplied the public sector and we always knew the best time to get the order was at the end of the financial year when they had money left in the bank that had to be spent otherwise their budget for the following year would be cut. If they had spent up then we waited until the beginning of the financial year and bingo!

      Several other examples:

      I was once told in all seriousness by a Highways dept boss that they deliberately don’t repair the roads properly otherwise they would have to lay off the workmen and not be able to spend “their” budget!

      A friend of mine is a buildings surveyor (ex private sector) and was horrified to find that his council were paying £600 a year insurance on vans worth about £500 and paying out £2k to have a gearbox changed when for £50 a month they could hire the same vehicle.

      Same guy told me that when the “cuts” came in, instead of putting jobs out to tender only panel approved contractors got the job. He would go out to inspect an extension on a job and value the work at 15k. However, the contractor knew that the limit for the job was £30k so would put in his invoices for 28k and get paid almost twice what the job was actually worth.

      I did a project with my local council and sat in a meeting where the budget was doubled by the contractors who knew how the system worked. No argument. It was nodded through because it was what the council leader wanted. It was his pet project ‘cos he was up for election as an MP and wanted a good story to tell the electorate.

  4. June 23, 2011 at 6:48 pm

    The NHS has to be destroyed with garlic, a silver bullet and a stake through it’s heart. And if we can’t do that to the NHS then start with all NHS admins earning more than £80k.

    And no it won’t be done democratically while the Beeb exists to defend it.

  5. June 23, 2011 at 7:32 pm

    Be careful of what you wish for. Your opening paragraph lauds private companies for keeping their costs down but this doesn’t always translate to better value or service for us.

    Poor management in the public NHS may result in paying over the odds for pasta but it would seem pretty small beer compared to what is happening with our utlities following privatisation. A 19% hike in energy prices for us and a cost-cutting £10+ million a year for the CEO of Scottish Power??

    There’s nothing mysterious about good management – the NHS and its purchasing systems should be easy to fix provided the will is there. The trouble is that our political parties have been getting a lot of ‘donations’ to pass the NHS over to the vultures running hedge funds.

    I’m for reform. And of course it’s possible from an elected government – they just need to put the self-interested bureaucrats, quangos and management consultants in their place.

    Regards

    • June 24, 2011 at 5:28 am

      “Poor management in the public NHS may result in paying over the odds for pasta…”

      Not just pasta. If only it was!

      “A 19% hike in energy prices for us and a cost-cutting £10+ million a year for the CEO of Scottish Power??”

      So, you opt to get your power from another company. It’s called healthy competition. It’s also what the NHS needs. Monopoly providers encourage this sort of wasteful behaviour.

      • June 24, 2011 at 9:16 am

        “So, you opt to get your power from another company.”

        Is that a joke? Do you really believe that our other energy companies will not follow suit?

        “It’s called healthy competition. It’s also what the NHS needs. Monopoly providers encourage this sort of wasteful behaviour.”

        A rather odd position to take given your endorsement of the French healthcare system (below)!

  6. Andrew
    June 24, 2011 at 12:14 am

    “I’m for reform. And of course it’s possible from an elected government”

    No, no it’s not. The very nature of the system means it’s completely impossible. Look up “producer capture”.

    “Poor management in the public NHS may result in paying over the odds for pasta but it would seem pretty small beer compared to what is happening with our utlities following privatisation.”

    Entirely the Government’s fault through their green nonsense. And we’ve still got incredibly cheap power compared to purely state run utility services.

    • June 24, 2011 at 8:49 am

      To me, ‘producer capture’ is inseparable from bureaucracy and so is entirely reversible by a government committed to rolling back excessive state control. I would be interested to know why you feel this should be impossible.

      And while I agree about the green nonsense bit, as far as underlying power costs go, I’m not aware of any purely state run utility services with which to compare our own. Could you provide an example?

      What I do know is that I buy electricity from EDF here and in France: ‘worldwide wholesale supply prices’ have markedly less effect there – where the state still exercises some control – than they do here.

      • Andrew
        June 25, 2011 at 3:22 am

        “To me, ‘producer capture’ is inseparable from bureaucracy and so is entirely reversible by a government committed to rolling back excessive state control. I would be interested to know why you feel this should be impossible.”

        There’s no incentive. Sure, you can roll back the bureaucrats but within a few years they’ll be back again. It’s just the nature of the beast.

        Government’s interested in government, and that’s all. Century after century, decade after decade, year after year has shown this to be true. I think you’re being a little idealistic here.

        The simple truth is: any area you don’t want bloated and inefficient you don’t let the state run it.

        “And while I agree about the green nonsense bit, as far as underlying power costs go, I’m not aware of any purely state run utility services with which to compare our own. Could you provide an example?”

        The easiest example is here (the UK). Electricity prices have fallen by 25% since privatisation. (Ref http://www.fuel-savings.co.uk).

  7. Voice of Reason
    June 24, 2011 at 1:25 am

    You could always try the private healthcare system in the US. So efficient that it achieves lower life expectancies and higher infant mortality rates at only twice the cost.

    Insurance company employees generally get end-of-year bonuses that are up to 50% of their annual salary. The head of United Health Care last year received a compensation package of $744 million.

    • June 24, 2011 at 5:29 am

      Try the French system instead, then.

    • June 24, 2011 at 5:30 am

      Did I say I wanted a private health care system? No I just expect our public services to be run as efficiently as possible. The reason I brought up the private public service disparity is that private companies go bust if they don’t control their spending. When was the last time a public utility paid for by the taxpayer went bust?
      There is no incentive for them to be efficient, because at the end of the day there’s this magic money tree called the taxpayer…

      • June 24, 2011 at 9:12 am

        With respect QM, that magic money tree – didn’t we bail out the banks? Don’t we subsidise the so-called private rail companies? And who do you think is going to eventually end up paying for the crisis in the private care system?

        • QM
          June 24, 2011 at 3:19 pm

          With respect, “we” didn’t bail out the banks, it was a political decision made by the then Labour government to shore up the collapse of the banks one of which was right in their heartland, had they been based in a Tory heartland, I suspect a different outcome. The rail system itself is a prime example of a government privatisation ie a total dogs breakfast. The only areas the government should be involved in are those areas in which it would be unsuitable/impossible for a private company to be involved. Had the government not stepped in with the banks with our money then they would have gone to the wall, which rather makes my point about public services.
          I’m not saying government organisations be run at a profit, only that they be efficient, which they manifestly aren’t.

          • June 24, 2011 at 5:18 pm

            I’m sorry but I don’t understand your distinction: if it was our money, the taxpayer bailed out the banks, surely? Albeit, the decision was made for us but they argue that we had given them the mandate (no,I didn’t either).

            As for the bank,I assume you refer to Northern Rock. I agree that a lot of politics were involved but wasn’t it – and all the other rescued banks – in the private sector when the collapse occurred? How does that make your point about public services?

            While I agree with your underlying argument regarding efficiency, I think it’s no better in the private sector when there is an expectation that the taxpayer will foot the bill.

            Privatisation of any state function that cannot afford to fail leads to the worst of all possible worlds: a fast buck by the city and substantial profits for the shareholders all at the expense of minimal investment in infrastructure, more costly services for the consumer and no reduction in risk for the taxpayer.

  8. June 24, 2011 at 5:24 am

    “Makes you wonder just how long this has been going on though….”

    Sadly, the ‘NSH Blog Doctor’ blog closed last year and archived posts have been removed, but this gluten-free food racket was one of the many thorns in the side of the author.

Comments are closed.