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Press Release - Innovation in the National Health Service - the acquisition of the Heart Hospital

19 December 2002

• Full Report - Innovation in the National Health Service - the acquisition of the Heart Hospital

The acquisition of the Heart Hospital represented an entrepreneurial and novel approach to improving patient services, Sir John Bourn, head of the National Audit Office, reported to Parliament today. The NHS acted quickly to take advantage of an unusual opportunity and acquired the hospital and its equipment at a good price. Activities at the Heart Hospital are already bringing benefits to patients, though there are some risks to manage going forward to ensure that the full benefits of the acquisition are realised.

The new hospital will enable the University College London Hospitals (UCLH) NHS Trust to meet a priority need: higher levels of cardiac treatment. Coronary heart disease is responsible for around 110,000 deaths each year and at the time of the acquisition there was a shortage of cardiac treatment capacity in North Central London, where UCLH is situated. When the acquisition took place in September 2001, some patients were waiting 12 months for a revascularisation (a procedure to improve the blood supply to the heart). The new hospital gives UCLH capacity of some 2800 revascularisations per year by 2003-04 (around twice the previous capacity), which will help it meet its own treatment targets and help other Trusts meet theirs. One year on from the acquisition, maximum waiting times for revascularisation at UCLH had fallen to 6 months, against a target of 12 months.

The Trust decided that it needed to complete the deal quickly and that it did not have time to follow the standard NHS capital investment process. It therefore developed its own fast-track process. It did this successfully and produced a robust case for the acquisition. UCLH paid £27.5 million for the property and equipment of the hospital, some £8.5 million less than the independent valuation of the hospital and equipment and an estimated £17.5 million cheaper than the cost of a new build.

The transition to a public sector hospital was smoothly managed and, one year on, more patients are being treated than in the old cardiac unit at the Middlesex Hospital. To achieve the full benefits of the acquisition, the NAO warns that the Trust and the Department of Health need to manage carefully:

• Recruitment of specialist doctors and nurses, which are in short supply. To meet its targets the Trust needs to recruit 21 per cent more staff in line with plans that are being achieved to date. It is monitoring recruitment activity and the acquisition does not appear to be harming other Trusts. The Trust will need to continue to monitor this.
• The prioritisation of patients. The Department paid for the hospital which the Trust now owns. The purchase has allowed the Trust to transform its ability to meet its cardiac targets. The Trust retains discretion over the precise flow of patients, who are treated on the basis of clinical priority. The Trust Board and the Department of Health will need to make sure that the treatment of patients from different geographic areas is balanced.
• Operating losses. Because it took over an ailing business, losses of some £9 million will be incurred until the hospital achieves full capacity in the 2003-04 financial year. The Directorate of Health and Social Care (London), which meets these losses, will need to monitor progress carefully and seek to incentivise the Trust where possible to ensure no further losses.

Sir John Bourn said today:

"This is a good example of a public sector body acting quickly and taking risks that were well thought through and which paid off in providing real patient benefits. This report contains important recommendations for the Department of Health which will help it replicate this success and encourage innovation more widely."

Notes for Editors

1. UCLH Trust is based in the Euston area of central London and recently achieved a 3-star quality rating. It has an annual budget of around £300 million and is therefore one of the largest Trusts in the country. At the time of the acquisition, the Trust managed six NHS hospitals including the multi-disciplinary University College and Middlesex hospitals and four specialist hospitals covering dentistry, neurology, tropical diseases and obstetrics. Before the acquisition, the Trust’s cardiac services were based in the Middlesex hospital, in an environment dating back from the 1930s.
2. Press notices and reports are available from the date of publication on the NAO website at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
3. The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office employing some 750 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

Press Notice 79/02
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