[oliwarner]

No, that's relatively new.

The NHS used to own its radiography suites. It used to own its land and buildings. It used to hire doctors and nurses and support staff directly.

But because of a [also recent] forced-tender system, and high breakthrough prices on in-housing projects, it was deemed "cheaper" to let private providers burden the upfront costs of equipment, land and building management, and short contract management.

Shock, horror! Letting "interface companies" extract profit makes services more expensive, and now we're paying more, it's even less affordable to talk about major public capital investment to bring these critical, primary services back in-house.

The NHS needs to stand up for itself and politicians need to start talking about 20y plans. Making ends meet today isn't enough. Giving up, adding insurance companies to the mix won't do anything but make it even more expensive.

[oliwarner]

If you're unaware of how tender breaks public services, here's an example.

Hospital needs a new MRI suite. To them, this would cost £2m for the machine, £400k for the room, and £500/h in running cost, £1.4m/year. The first 5 years costs are: £3.8m, £1.4m, £1.4m, £1.4m, £1.4m, ...

But which trust has £4m in their back pocket for y1 cost? Even if they did, it's a large project so has to go out to tender. A capital-investment-backed provider comes back with a flat cost of £2m/year. They might have the additional cost of land but many of these [currently, right now in many hospitals] operate in containers in the carpark. At £2m, they break-even after Y4 and produce £600k a year profit from Y5 for another 11 years. NHS loses £6.6m over 15 years.

And it's not that simple because their £2m bid will be interesting but there'll another for £1.5m at half-duty that will sell operational time to private providers, even direct-to-public (increasingly popular in the UK) at massive markups. They'll break even in Y3. Possibly even quicker if the hospital realises it needs full duty and pays triple-rate to book the machine out.

So the NHS picks a private provider. They make a 5 year saving, and take an 11 year beasting. And at the end of it, or even halfway through it when they discover they need even more capacity, they find out that their old suite is now a support ward. Or managers have moved in, or it's just fallen down. The cost to build a new suite isn't the £2.4m it would have been, it's £4m. To get so assuming we would now need two machines, it's an £8m y1 cost to bring this back in-house.

The long-term budgetary flexibility required to go back to running your own services is staggering and something that is very hard to sell to people not looking at TCO.

[1123581321]

What prevents them from accepting an offer that has economics closer to the in-house funding cash flow? I’m not from the UK so please forgive the question.

Also, since I’m from the US, your example reminds me of Bobby Bonilla Day, jeered at as an awful deal for the sports team but in reality a fair present value exchange for forgoing a large short-term contract. (I realize unit specific numbers are just an example.) Fun recap, analysis and interview: https://www.npr.org/2021/06/25/1010404697/bobby-bonilla-day

[oliwarner]

You mean an offer that delivers an equivalent 15Y cost to buying it yourself? There's no return on the investment. If the NHS had any sense they'd in-house finance brokering; try and thumb the scales towards the raw £22.4m instead of the external £30m, by offering 15y bonds, but spending time on putting together internal bids with external finance for tender seems to be frowned upon.

Publicly Funded Infrastructure is a thing for Big projects, but what usually happens is the people asking for the money are so local and desperate that those with the money call the shots. A recently built nearby hospital has it in their PFI contract that they have to repaint the whole hospital with a specific provider every year for 30 years at whatever number they come up with. I'm not sure if the NHS trust even ends up with the buildings. Many school-improvement projects go through PFI and end up with public land being transferred to private interest. "Give us your old buildings and land, and £50m and we'll build you a new shiny one that's further away that you can rent from us forever." It's the budgetary simplicity that sells these awful deals.

Where it's important to draw the distinction between the NHS and the Bobby Bonilla deal is the UK government can generate money for public capital infrastructure through public debt and taxation. When they need money for war, state funerals, or propping up banks, they just do it and we burden the cost. They could say "We need a dozen MRIs in the next few years", raise some tax revenue, make a bulk deal, and actually make the saving the NHS was designed to make. They could in-house road building, centralise a prefabricated school building factory, employ local government services directly.

But public debt is bad and saving up is apparently somehow worse, and in any way competing with private companies [with deep ties to Ministers] is strictly verboten so we're left bouncing between external private providers and PFI.

Even before the corruption, I do understand the scale of the problem insofar as anyone can understand volumes of money that end in "tn". But shying away from it, cowering behind awful deals while losing public assets isn't a solution either.

[1123581321]

Appreciate the response. Hopefully they regain financial aptitude.

[hotpotamus]

I don't have much to add, but I just took a re-watch of Monty Python's Meaning of Life. The opening scene (after the intro short film) is amazing in that it's only a couple minutes and shows many of the pathologies of a modern health system (despite being 40 years old now), while also being hilarious. It depicts the birth of a child where the mother is basically an afterthought to all the expensive machines that the doctors get to play with. As soon as they have the lady's legs in stirrups, a gaggle of onlookers is welcomed into the room, but the husband is asked to leave since he's "uninvolved". But most important the amongst the crowd is the administrator who explains how they cleverly use accounting to manipulate the costs of the medical equipment.

To cap it off, when the mother asks if the child is a boy or a girl, Graham Chapman responds, "it's a bit early to start putting roles on it".

[wil421]

How are you depreciating the MRI machine? Why is the year one cost so high? I would’ve expected the MRI machine to depreciate over a decade.

[chalst]

Depreciation is a term relevant to valuing assets and liabilities on the balance sheet and P&L accounts. oliwarner's figures are cashflow figures, a completely different kind of account, which is what you look to when asking how much financing is needed, a key factor in whether the purchase is given the go-ahead.

[oliwarner]

I'm not. I'm assigning a 15y lifespan, building in maintenance into the running cost and assuming we just run it into the ground; buying another every 15 years.

Year 1 is so high in the in-house models because that's what's paying for the machine.

[WastingMyTime89]

> The NHS needs to stand up for itself and politicians need to start talking about 20y plans.

If you are serious, I have bad news for you. The situation is going exactly as expected. That’s the traditional Tory plan. Defund, complain it doesn’t work now that it doesn’t have money then make private.

British voters can only blame themselves. Between Brexit and decades of voting for the worst of the Tory, if they were less stupid, their country situation wouldn’t be so bad.

[formerkrogemp]

> If you are serious, I have bad news for you. The situation is going exactly as expected. That’s the traditional Tory plan. Defund, complain it doesn’t work now that it doesn’t have money then make private.

> British voters can only blame themselves. Between Brexit and decades of voting for the worst of the Tory, if they were less stupid, their country situation wouldn’t be so bad.

I've yet to see, in decades of Tory rule, much but decline, neglect, and scandal. Tax cuts and service cuts. That's all everyone needs apparently. Unfortunately, labor seems so incompetent at gaining power that it seems almost like a "managed opposition." Maybe I'm being too generous to their electorate as well. The UK is a tourism attraction at this point, a historical relic found in a curio shop or flea market. Or soon will be at its current clip.

[oliwarner]

Not decades. It's only been 12 years, with every indication that it'll only be two more, perhaps not even that at this pace.

I've no illusions about the electorate but the Tories have spent their time distilling the party down to the extreme right wing element and that's —frankly— shown us all what a bunch of idiots they are. I can't remember a less electable bunch. https://twitter.com/UKPoliticalPics/status/15765728049624760...

[Schroedingersat]

The problem with that is the same as it is worldwide. The 'left' parties that replace them are now roughly where the neolibs were when the mess was started.

They'll make some noise about fixing it initially, but then it's back to the defund-privatise treadmill.

[linuxftw]

Socialized medicine was always going to be unaffordable in the long term. If it wasn't a burden, then the 'cost cutting' measures probably wouldn't have been implemented.

Having the government in charge of something means it's always going to be inefficient.

[WastingMyTime89]

> Socialized medicine was always going to be unaffordable in the long term.

Why? Sorry but that’s horse shit.

There is nothing preventing socialised medicine for working. It costs less per capita nowadays than it did when it was put in place and productivity skyrocketed since.

The economic arguments were always the very privileged hiding their greed and contempt for the rest of us behind a fine veneer. I truly believe some of them even came to believe it to help themselves sleep at night. It doesn’t mean we all have to drink it.

[linuxftw]

> There is nothing preventing socialised medicine for working. It costs less per capita nowadays than it did when it was put in place and productivity skyrocketed since.

That's because of the budget cuts. Service will continue to be trimmed until the system collapses.

[stevezsa8]

I feel you're kinda moving the goal posts here.

From "always going to be unaffordable" to "Service will continue to be trimmed until the system collapses"

[linuxftw]

That's what unaffordable means. If it's unaffordable, you can't maintain it indefinitely. You might maintain it for some time, but inevitably it's going to have its budget cut, which will induce more problems, rinse, repeat.

[jerojero]

Why having the government in charge of something means it's going to be inefficient?

Ultimately the government needs to be in charge of healthcare because healthcare is not a simple service but a human right. In many ways, we might trade the benefits of competition (which in the long run do end up ruining the system, just look at the USA) for the benefits of democratic ownership.

In any case, as others have pointed out, the system can be turned inefficient if government by government you dismantle the system a little bit and that's precisely what's been happening in the UK. However, this is not something that has happened in other countries in Europe and in general socialised healthcare gives us the highest life expectancy numbers.

[psd1]

> Having the government in charge of something means it's always going to be inefficient.

A peculiarly American dogma. The irony of trotting it out on the field of healthcare is lost on you, I suppose, but gave me a laugh. Thanks.

[VieEnCode]

This should be the top comment, but this place is full of Thiel Stans, hence their bemusement.

[stepbeek]

Yes! The UK has viewed private sector efficiency as axiomatic throughout my life. The New Statesmen has a good article on the systemic impact of such decisions in the current issue: https://magazine.newstatesman.com/2022/09/28/dieter-helm-cap...

[nonrandomstring]

Culminating with us more or less selling-out GCHQ to Amazon. A lot of voices are starting to frame this as national security. Regardless of political alliances and so-called "special relations" this is no longer about mere business. The frame of acquisitions, mergers, and contracts no longer adequately captures the risks. It's about where power lies and who actually runs a nation. If Huawei can be deemed a first-class threat, then so can Palantir, and this sort of revelation only makes that clearer.

[boomskats]

Sadly, selling it off to private US social care firms will be deemed the only solution to our recently imposed budget deficit.

[oliwarner]

Maybe, I don't think it'll happen quickly though.

Nobody wants US healthcare, not even the US; to willingly introduce it here would be instant political suicide. That gives me hope.

And Conservatives have screwed things so hard in the past 12 years, I think there's genuine appetite for public investment. The current Labour party isn't the government it very nearly could have been in 2017 but if their recently energy policy[1] is anything to go by, they're not afraid of borrowing to invest in long term savings.

Energy is a great example. If we could become independent of oil and not just swap that for lithium/cobalt dependencies, that probably is worth the outlay. Healthcare falls into a similar bracket.

The added bonus is that if Labour gets a PR-like voting system implemented, it might be harder for any one (or two) parties to dominate politics and we could focus on goal-orientated politics. Maybe.

1: https://www.theguardian.com/politics/2022/sep/27/labour-will...

[pessimizer]

This is an extremely cynical and conspiratorial thought, but I wouldn't be surprised if the Conservatives haven't made a deal to hand the next elections over to Labour in return for helping them get rid of Boris, and with this interim sacrificial government of Truss to ram through a bunch of things that even Tories would think it would be political suicide to publicly support.

Then Starmer can glide in, and do things that the Tories could never get away with doing, like privatizing healthcare.

> The added bonus is that if Labour gets a PR-like voting system implemented, it might be harder for any one (or two) parties to dominate politics and we could focus on goal-orientated politics. Maybe.

I doubt the PLP will ever show any serious effort to get this done. There's nothing they hate more than voting, and if there's any consistent policy from Labour it's that voting is an unfair commentary on things that average people are neither qualified nor deserving to discuss. They spend a significant amount of time as individuals trying to find people to remove the vote from.

[Schroedingersat]

> The NHS needs to stand up for itself and politicians need to start talking about 20y plans.

There's a 20 year plan.

Make sure the private system that replaces it after spending 20 years looting it is as profitable as possible.