NHS Hospitals Urged to Expand Overseas

High-profile U.K. hospitals to set up foreign profit centers as Britain posts unexpected budget deficit

Britain is urging major hospitals in its National Health Service (NHS) to look beyond the country’s borders in the quest for profit and offer foreign governments access to U.K. health services. The move is gathering steam just as the government posted a surprise budget deficit thanks to a fall in tax receipts.

The BBC reported Tuesday that the Department of Health and U.K. Trade and Investment intends to launch the move, begun under the Labour government, this autumn. High-profile hospitals such as the Great Ormond Street Children’s Hospital (famous for its ties to the late Sir James Barrie and Peter Pan) would use profits from private patients, who pay for care, to finance operations abroad in the hope of a return that could then be used to boost the NHS.

While Britain’s “ordinary” hospitals are not expected to take part, Great Ormond Street is just one of the high-profile facilities that would be encouraged to set up elsewhere to provide access to British-run health care. Other prominent hospitals such as Royal Marsden, Guy's and St Thomas' are also targets of the initiative.

Moorfields Eye Hospital in London has already built a facility in Dubai that opened in 2007; operating under the same name as its London parent, it generates 500,000 pounds ($788,050) per year for London.

According to Moorfields medical director Chris Canning, no taxpayer money was spent on the Dubai facility, which has been profitable for the last three years, bringing in funds to put back into U.K. health care and at the same time "raising the reputation and profile" of the NHS and the hospital. Great Ormond Street also already offers services in Dubai.

Labour Health Secretary Andy Burnham set up NHS Global in 2010, with the goal of offering NHS care on the global market to help raise funds for NHS operations domestically. A source connected with the current health secretary, Andrew Lansley, said that foreign investments by U.K. hospitals could only be financed by funds from private U.K. patients, and profits made abroad would be returned to the U.K. to support NHS.

The move is being touted by Health Minister Anne Milton as "good news for NHS patients, who will get better services at their local hospital as a result of the work the NHS is doing abroad and the extra investment that will generate.”

Milton also said it was "good news for the economy, which will benefit from the extra jobs and revenue created by our highly successful life sciences industries as they trade more across the globe. The NHS has a world-class reputation, and this exciting development will make the most of that to deliver real benefits for both patients and taxpayers."

Britain’s Patients Association is not impressed by the venture. Michael Watson of the group was quoted saying, "The key and only focus of an NHS hospital should be to provide treatment to patients on the NHS.”

He added, “We would be very concerned by any moves which would see commercial ventures, which are naturally going to be important for hospitals because they need to use them to raise revenue, would simply result in the attention of the hospitals being taken away from the core purpose—to treat patients in the U.K. and instead be focused on these hospitals abroad."

David Stout, deputy chief executive of the NHS Confederation, which represents organizations around England, challenged the assertion that the move would take away the focus of the NHS from U.K patients, saying instead that local services could see improvement thanks to an international exchange of ideas.

Asked if the NHS could actually end up underfunded by taxation because of larger sums raised outside the country, he said, "We are not talking about completely skewing the way the health service funding comes in—this will be marginal in the scheme of a 100-billion-pound organization in the NHS."

Shadow health minister Jamie Reed was also critical, however, of the coalition’s endeavor, saying, "At a time when staff are losing their jobs and waiting times are rising, the government's priority should be sorting out the mess it has created in our NHS. Under David Cameron we're seeing a rampant commercialization of the NHS. He needs to get a grip and start focusing on patients, not profits."

The notion of extra funds coming into the country must seem extra welcome in the wake of news that a sharp drop in corporate tax receipts caused the British economy to post an unexpected July budget deficit. Bloomberg reported Tuesday that while much of the shortfall was due to the oil and gas industry, thanks in part to a shutdown of Total SA’s Elgin gas field in the North Sea after the discovery of a leak in March and also to a drop in oil prices, it was still a surprise.

The Office for National Statistics reported that the shortfall was 557 million pounds ($878 million), compared with last year’s surplus of 2.84 billion pounds. Economists surveyed by Bloomberg had predicted a median surplus of 2.2 billion pounds.

The news, coming on top of a shrinking British economy that has already cost Chancellor of the Exchequer George Osborne considerable support, could push him into changing his increasingly unpopular austerity plan.

British Chambers of Commerce Chief Economist David Kern said in the report, “The figure highlights the huge challenges facing the U.K. in restoring stability to its public finances. To maintain credibility, we need to persevere with spending cuts, but supplement them with forceful policies to boost growth.”

On August 15 the British magazine New Statesman reported that Osborne’s position is increasingly unpopular. Of the 20 economists who had signed onto an open letter of support in February 2010, prior to the last election, only a single one “was willing to repeat his endorsement.”

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