If an NHS trust has £1b budget and £800m is maintaining the buildings then it maybe understandable why funding doesn't reach the core services.
A commercial operation with £1b of profit to invest, the £800m would not contribute much to increasing the profits for next year and so represents a poor investment. There would be a serious look at how to reduce it and no option would be off the table.
But there is more in the detail that does't make sense. The builders and labourers repairing and maintaining the building earn more than the nurses repairing and maintaining the patients. The architects and lawyers earn more than the doctors. This can be explained partly by supply and demand but doesn't make it right.
The organisation of the NHS is primarily there to administer health care free of charge at the point of delivery. Everything else is non-core and should be outsourced to someone better able to deliver those services. From cleaning, to the manufacturing of medicine, to building maintenance. At least that is the traditional idea of accountants to make the companies look more profitable and efficient.
The way it works is that money paid to a third party (even if essential to delivering the core business) is money that in theory can be reduced by re-tendering for suppliers forcing them to reduce their costs. In practice it doesn't often work that way. An example.
A care home company was persuaded by their accountants to sell of their property and rent it back. This reduced the capital in the company and made it look more efficient and therefore more profitable. share price went up, the banks were ready to lend more. The directors were so pleased they gave themselves a bonus.
The land that they owned was going up in value and the new owners wanted more rent. The old folk had fixed and limited incomes and couldn't pay more. The company could afford it at first as they had their pot of money from the sale and cheap loans from the banks. But in just 5-years they were in trouble and 7-years they were bust. The increased value of the property would have made them financially look inefficient but would not have made one jot of difference to the core business.
What they had forgotten was not that the property was their core business, but that it was a core tool for their business.
In the case of the NHS it would be like employing all the nurses from an agency. Obviously nuts as these nurses get paid much better and the NHS couldn't (and can't) afford it. But what is so wrong with the NHS having its own in-house building services? It is clearly a major cost and must therefore be a core tool to deliver the service. No buildings no NHS.
Of that £800m they are paying out there will be at least £200m of profit to the suppliers. Bringing that in-house would effectively double the amount of money available to deliver health care.
Although I've made this about the NHS this applies to other business that have outsourced parts of their business that are essential. While I don't admire him Rupert Murdock brings everything that is core inside. In the UK Sky have built and operate their own satellite earth stations. Not core to producing a TV Channel, (otherwise everyone would have one) but without it no TV and Rupert has learnt that you can't be held to ransom from the print unions and others. He even owns TV content producers like 20th Century Fox, so he can run the supply chain end to end without anyone else.
A commercial operation with £1b of profit to invest, the £800m would not contribute much to increasing the profits for next year and so represents a poor investment. There would be a serious look at how to reduce it and no option would be off the table.
But there is more in the detail that does't make sense. The builders and labourers repairing and maintaining the building earn more than the nurses repairing and maintaining the patients. The architects and lawyers earn more than the doctors. This can be explained partly by supply and demand but doesn't make it right.
The organisation of the NHS is primarily there to administer health care free of charge at the point of delivery. Everything else is non-core and should be outsourced to someone better able to deliver those services. From cleaning, to the manufacturing of medicine, to building maintenance. At least that is the traditional idea of accountants to make the companies look more profitable and efficient.
The way it works is that money paid to a third party (even if essential to delivering the core business) is money that in theory can be reduced by re-tendering for suppliers forcing them to reduce their costs. In practice it doesn't often work that way. An example.
A care home company was persuaded by their accountants to sell of their property and rent it back. This reduced the capital in the company and made it look more efficient and therefore more profitable. share price went up, the banks were ready to lend more. The directors were so pleased they gave themselves a bonus.
The land that they owned was going up in value and the new owners wanted more rent. The old folk had fixed and limited incomes and couldn't pay more. The company could afford it at first as they had their pot of money from the sale and cheap loans from the banks. But in just 5-years they were in trouble and 7-years they were bust. The increased value of the property would have made them financially look inefficient but would not have made one jot of difference to the core business.
What they had forgotten was not that the property was their core business, but that it was a core tool for their business.
In the case of the NHS it would be like employing all the nurses from an agency. Obviously nuts as these nurses get paid much better and the NHS couldn't (and can't) afford it. But what is so wrong with the NHS having its own in-house building services? It is clearly a major cost and must therefore be a core tool to deliver the service. No buildings no NHS.
Of that £800m they are paying out there will be at least £200m of profit to the suppliers. Bringing that in-house would effectively double the amount of money available to deliver health care.
Although I've made this about the NHS this applies to other business that have outsourced parts of their business that are essential. While I don't admire him Rupert Murdock brings everything that is core inside. In the UK Sky have built and operate their own satellite earth stations. Not core to producing a TV Channel, (otherwise everyone would have one) but without it no TV and Rupert has learnt that you can't be held to ransom from the print unions and others. He even owns TV content producers like 20th Century Fox, so he can run the supply chain end to end without anyone else.
