Scotland gets the green light for first commercial NHS hospital

Anger will not stop health bosses going private, reports John Arlidge

BRITAIN'S first private NHS hospital, where all patients will be treated by medical staff working for profit-making firms, is to be established in Scotland.

The Scottish Office has given the go-ahead for the private sector to build, equip and run a new public hospital in Stonehaven, near Aberdeen. More than five companies have already offered to fund the pounds 6.5m centre, which will provide a wide range of services, including casualty, for up to 20,000 people.

The Stonehaven project is a radical extension of the Government's Private Finance Initiative, which is designed to attract new investment into the health service. It has provoked a political storm with Labour, health unions and the British Medical Association saying it marks the first, decisive step towards NHS privatisation.

Under the scheme, private investors will build and equip the new hospital at a cost of pounds 4m. Local GPs will provide the in-house medical care but Grampian Health Authority will ask private firms to supply all clinical services, including nursing.

Although Grampian Healthcare Trust, the local NHS provider, is also expected to bid for the pounds 2.5m-a-year contract, observers say that, with political support from the Scottish Office, a private company is set to win. Firms will submit their bids this autumn and managers will make a final decision early next year. Because it is an NHS contract, treatment will continue to be free.

Health authority officials are turning to the private sector because, they say, it can act faster than the cash-starved NHS. Frank Hartnett, general manager of Grampian Health Authority, said: "The public sector cannot fund this project now. If we went through the traditional NHS procedures, it could take up to 10 years to raise the funds and at the end of the process all we would get is a bog-standard NHS institution. But top-quality private companies want to invest here right away and we can meet their costs from our own resources from the taxpayer. By using these firms, we can get a hospital quickly and at no extra cost to the public."

Scottish Office officials argue that if the private sector builds and runs the new hospital, more public money will be available for other NHS projects. Lord James Douglas-Hamilton, the Scottish health minister, said: "This is a good deal for the people of Stonehaven and for the NHS."

But doctors' leaders and opposition MPs bitterly oppose the plan. They insist it threatens to destroy the NHS. Dr Sandy Macara, chairman of council of the British Medical Association, argues that "the very essence of the NHS" is at stake. "If, as ministers want, a private company wins the Stonehaven contract, it will mark a decisive shift away from the centrally planned and resourced health service, which has provided cheap, high-quality care across Britain for 50 years, towards a fragmented, privatised service. That would be an unprecedented act of vandalism," he said.

Labour and the health unions say the scheme will hit staff morale. They question how Grampian Health Authority will monitor standards in the new hospital. George Robertson, the shadow Secretary of State for Scotland, said: "Once you take a hospital out of the public sector like this, it makes it difficult to ensure that the very high national standards of care in the NHS are upheld. Once again the Tories are using Scotland as a testing ground for dangerous, extremist policies. First it was the poll tax, now it is NHS privatisation."

Last month, Mr Robertson wrote to Michael Forsyth, the new Scottish Secretary, urging him to withdraw his support for the Stonehaven scheme. But Mr Forsyth, who has adopted a conciliatory tone in recent weeks, shows no sign of wavering. In an interview last week he promised to "revolutionise public spending in Scotland by bringing in private capital".

The Scottish Office and Grampian Health Authority are adamant that private investment will secure the long-term future of the health service. Mr Hartnett said: "I am not privatising the NHS. I am simply trying to improve the service for patients. Under our scheme, healthcare will continue to be be free at the point of delivery. The only difference will be that the badge on workers' uniforms may not be an NHS badge but that of a private company."

If the Stonehaven scheme proves successful when the hospital opens in 1997, ministers expect the private sector to take over a growing number of NHS institutions.