I have carefully studied the Consultation Document
issued by Birmingham Health Authority as well as the full Selly Oak Study report produced
by the consultants, Urban Initiatives. I remain opposed to the building of a new
hospital on the battery site (now known as the Central option) but believe that the
"Plaza" option in the form originally suggested by Urban
Initiatives offers many advantages, not least a genuine single site solution for
acute services incorporating the Women's Hospital. There would be potential room for
relocation of the Royal Orthopaedic Hospital, should the ROH Trust consider this
advantageous (see attached map). This is not identical to the similarly named option
proposed by University Hospital Trust, which is too constrained by the retention of the
psychiatric hospital (QEPH) and employment services centre and lacks flexibility
for future developments that might take place in the next century. The Mental Health
Trust believe their current premises are unsatisfactory and would welcome the opportunity
to relocate. Furthermore, it would be unacceptable for their patients to receive treatment
in the middle of a building site. The QEPH site will also be needed if acceptable parking
arrangements are to be made for the construction period.
The enclosed map shows the
layout for the Plaza option produced by Urban Initiatives. They have
relocated QEPH on the other side of Vincent Drive but the accompanying text also suggests
a 'remote site' away from the immediate area.
The consultants acknowledge that the relocation of QEPH will slow down the building of
the new hospital but if we are to have a modern and efficient hospital that offers
maximum flexibility to take us well into the twenty-first century, it is worth getting the
project absolutely right.
Finance for a New Hospital
The initial capital cost given for the development of the hospital on the
Plaza site is £192.7 million. This includes a £9 million contribution
towards the cost of the new road, but excludes estimated land sales income (for the Selly
Oak site) of £14 million. Additional costs for the relocation of QEPH are also excluded
from the Trust's option.
The consultation document gives no indication of the effect of this expenditure on its
annual running costs. More efficient working will save on running costs but there will be
additional costs of paying for the new buildings.
NHS Trusts are required to make a 6% return on their average net assets, which, for UHB
are currently less that £90 million. With traditional public financing arrangements,
there would be greatly increased charges because of the increase in the value of the
All Trusts are required to test any major capital procurement for private finance
(PFI). Using PFI results in lower debt charges (because the borrowing is carried out by
the private company), but higher rental and other payments to the private company. I wrote
to the Chief Executive of the University Trust, Dr Jonathan Michael, asking what
assessment had been made of the impact of the proposal to build a new hospital using a)
conventional NHS finance arrangements and b) using PFI on resource availability for other
NHS priority investments in primary care and ambulatory care. Although it took Jonathan
Michael seven weeks to reply, I was none the wiser. He said:
"As any strategic outline case in support of our development has to be agreed
with the Health Authority and the Regional office of the NHS Executive, it would be up to
the Health Authority and the NHSE to confirm whether they felt that the development
proposals being submitted by the Trust had an impact on overall NHS financial arrangements
and how it fits into the priorities."
In earlier consultations, the Health Authority said it expects capital projects to
deliver a 13% return on investment. At that time, Jonathan Michael told a meeting of
Birmingham MPs that savings through new build of the order expected by the Health
Authority would not materialise. In my September 1998 response to Birmingham Health
Authoritys consultation, A Framework for Health Investment, I expressed concern
that the Health Authority had failed to provide the necessary information to justify its
expectation of a 13% return on capital investment. That concern remains.
The Health Authority is on record as accepting the view that we should not invest in
new models of hospital based care, particularly those which involve bed losses, without a
prior investment in primary care services. They have promised not to allow the
hospital development to go ahead at the expense of other priorities in Birmingham.
The importance of the impact on other services was also pointed out by the Independent
Advisory Panel, who considered that the costs of a new hospital should be such that they
do not jeopardise investments in other priority areas, particularly in primary care. The
Health Authority has failed to explain how it will keep its promise to ensure that a new
University Trust Hospital will not be built at the expense of other priorities. This is a
fundamental flaw in the current consultation, and the Health Authority should issue a
supplementary document addressing this point. My support for the new hospital is
provisional on the Health Authority honouring its commitment that other services will not
Once the Health Authority gives its approval for a new hospital development, it will be
necessary for the University Hospital Trust to produce an "outline business
case" for any capital investment, regardless of the eventual method of financing.
Where the procurement is by PFI, regulations require there to be a "robust public
sector comparator" and for the NHS to be an "informed purchaser" of
services during the PFI process.
The concern at this point is that, to be affordable, the size of the hospital will be
scaled down. At a meeting with Birmingham MPs, Jonathan Michael explained that the outline
proposal was for a new hospital with 950 beds, but that planning assumptions needed to be
agreed with the Health Authority based on their assessment of needs. In response to a
question about existing bed numbers, he said that, at present, there were 1040 open, but
that this number fluctuates. I wrote to Dr Michael on 5 July 1999, asking the number of
bed days it is anticipated would be available in the new hospital, as compared to current
arrangements together with any justification for reductions. The reply I received on 21
July, after several reminders, informed me that "the answer to the question is
346,750". I presume that this is number of bed days to be provided in the new
hospital, but noted that comparison with the present arrangements was avoided. Dr Michael
went on to note that "this is a preliminary figure based on the outline planning
assumptions to which we are limited at this stage in the procedure". My support
for the new hospital is provisional on assurances about the adequacy of bed numbers.
The full 'Plaza' option could provide the people of South Birmingham with first class
hospital services, as well as specialist hospital services for the wider region. The
constrained alternative being put forward by the Trust offers much less promise. The
Health Authority has a duty to ensure that proposals going forward to Government make
efficient use of resources over the long term and that hospital developments do not
jeopardise other much-needed service improvements. All of us concerned to get the best
possible health services for Birmingham people should join together to press the
Government for adequate funding by the most efficient route.