A BID to create vital new wards at Edinburgh’s cramped Royal Infirmary has been delayed because of the latest legal wrangle with the private firm which runs the hospital, it was revealed today.
Health bosses planned to spend £4 million to turn redundant offices into two new wards in a bid to avoid a repeat of last winter’s beds crisis.
But it has now emerged that the extra 31 beds, which it had originally been hoped would be ready this summer will now not be in place until at least late January or early February – after the peak of seasonal winter pressure – due to a dispute with Consort, the company which built and runs the hospital.
Today, MSPs accused the firm, which nets £60 million per year under the Private Finance Intiative deal, of “despicable game-playing” and even “financial blackmail”, pledging to raise the issue with the Health Secretary.
While Consort insists it is simply working within the “parameters of the existing contract”, NHS Lothian sources say that to get the project moving they have now been forced to agree to a no-penalty clause.
One source said the firm had them “over a barrel”, adding: “We are not happy about this but providing good, safe, clinical care is our reason for being. We need these beds, so we don’t feel we have a choice”.
Edinburgh Southern SNP MSP Jim Eadie said that he would be ramping up his campaign to have the issue of the Royal Infirmary contract discussed at a Holyrood debate.
He said: “This is yet another example of Consort’s blatant profiteering at the expense of the taxpayer.
“The people of Edinburgh and Lothian will be just as outraged as I am to hear revelations of Consort’s abuse of power with NHS Lothian.
“Financial blackmail has no place within the NHS and it is utterly scandalous that Consort is attempting to hold NHS Lothian to ransom in this way.
“I will be raising this issue with Health Secretary Alex Neil as a matter of urgency to see what further action the Scottish Government can take to address these failures.”
The planned expansion would see office space above A&E converted into new general medicine and orthopaedics wards.
It is seen as vital to avert a situation like last winter’s crisis which saw hundreds of patients stuck in emergency departments on trolleys or treated in inappropriate areas due to a lack of space.
NHS Lothian sources said that they believed they had reached an agreement with Consort over the two new wards, which will see the health board pay around £4m to Consort to arrange the extensive building conversion and infrastructure work on its behalf. But the firm then “moved the goalposts” by refusing to carry it out unless it was agreed that penalty points, which can be imposed by the NHS if things go wrong under the terms of its contract and potentially lead to its cancellation, would not be imposed for five years if there are issues with the building work.
It is believed that Consort changed its position after four of the 11 banks which lent money to the firm to finance the building of the hospital refused to sign off on the new supplementary agreement to the PFI, which is needed every time there is a major change to the building.
Consort’s lenders want the stipulation around deficiency points added as they feel that building work adds risk from their perspective. If too many deficiency points are accumulated over a set period of time, NHS Lothian is entitled to cancel its contract with Consort, leaving the banks to find another operator which would mean they would lose money in the interim period. The five-year amnesty therefore gives them added peace of mind.
Scottish Conservative health spokesman Jackson Carlaw said it was time for Consort to “start behaving like it wants to take running a hospital seriously”.
“This despicable game-playing with the welfare and potentially lives of patients across Edinburgh and the east of Scotland has to stop. What more confirmation should be needed that this contract is a complete and utter disaster for the health board and the taxpayer.
“People will look at this in disbelief, that a range of banks and businesses strewn across the world are effectively standing in the way of a fairly straightforward improvement for patient care.”
While NHS Lothian will still be able to claw back money if issues arise with the building work, the sums which they are able to claim for poor performance have been described as “buttons” by senior health board sources.
Crucially, the inability to impose deficiency points if issues arise with the new work means that banks which finance Consort and the new hospital under a mortgage-type arrangement will not be aware of the problems, and will not impose pressure on Consort as they have done in the past.
NHS Lothian is also concerned that the move sets a worrying precedent.
The health board’s well- documented need to treat more patients means that further redevelopments at the hospital are likely to be needed in coming years.
Can’t afford legal battle
Lawyers have been consulted by NHS Lothian over the legality of Consort’s position and while NHS bosses were told they may have a case, it was decided that they could not afford a lengthy legal battle with beds needed as soon as possible.
A wrangle over a land- transfer so that the new Sick Kids Hospital could be built at Little France delayed the project for years.
NHS Lothian board is to be asked to sign off on the new agreement with Consort next week, but the latest delays mean the new beds are now not expected to be ready until late January or early February “at the earliest”.
One senior NHS Lothian source described the process of agreeing any changes with Consort as “slow, complicated and painful,” adding: “Consort takes a very commercial approach. We know that they want the best deal for their investors and to move risk where possible. We would really like to see a more realistic approach from Consort.
“Getting change agreed is far too difficult as there are 11 investors in Consort who are very slow to agree.”
Susan Goldsmith, NHS Lothian’s finance director, said: “We are working closely with our PFI partner Consort to progress this project as quickly as possible.
“The process of agreeing the terms for this work has taken longer than we would have liked but is now coming to an end. We anticipate these new beds will come into use early in 2014.”
A spokesman for Consort said: “Consort is working closely with NHS Lothian to progress the additional beds at the hospital as soon as possible.
“Both parties continue to work together within the parameters of the existing contract to deliver services at the Royal Infirmary of Edinburgh.”
12 penalty points in 12 months
CONSORT was awarded the PFI contract to build and run the Royal Infirmary in 1998.
It was one of the first deals of its kind ever signed – a fact that has been blamed for many of the issues that have developed over the years.
Shares in Consort are owned jointly by Balfour Beatty, the firm that built the hospital, and Barclays Integrated Investment Fund.
The 11 banks who funded Consort have never been publicly revealed. However, the consortium was originally led by Dutch-based Rabobank, and more recently by Royal Bank of Scotland.
Consort owns the hospital and is responsible for building work and maintenance. It also provides services like cleaning, security and runs the car park.
Under the terms of the deal, NHS Lothian is entitled to impose deficiency points when Consort’s performance is not up to standard.
While deficiency points do not hold any monetary value, if enough are awarded the NHS could kick Consort out of the Royal Infirmary.
The points have been compared to penalty points on a driving licence – if the facilities service collects 48 points over a 12-month period, it would be called a “serious issue event”, meaning NHS Lothian could question Consort’s ability to carry out services and terminate the deal.
However, information obtained by the Evening News has shown that between March 2004 and March 2013, just 24 deficiency points in total have been imposed in respect of the facilities service, which includes mechanical and electrical services, landscaping, medical gas provision and other specialist services.
The most given over the course of one financial year was 12, in 2011-12. Then, one point was imposed due to Consort’s self-reported score in the area dropped to between 94.5 and 97.5 per cent. The other 11 were imposed after power was cut to the hospital and back-up generators failed.
NHS Lothian has said that the fact that Consort had never been awarded an amount close to the 48 needed to terminate the contract means that the risk to banks is in fact very low. But four banks still insisted on imposing the five-year deficiency points amnesty, believing that with new building work, there is more chance of things going wrong.
For services offered by Consort other than facilities, such as car parking, catering and waste management, it would take 235 points over a one-year period to constitute a “serious issue event”.
Between 2004 and 2013, just 83 deficiency points – an average of just over nine per year – have been given.
In 2004-05, six points were added in respect of the domestic service due to floor cleanliness. In November 2006, 16 points were added mainly because Consort failed to meet training requirements set out in NHS Lothian’s fire policy. Use of deficiency points has become rarer in recent years, with 74 imposed by NHS Lothian between April 2004 and March 2007.
Ten years of turmoil
September 2003: Edinburgh’s newly-opened flagship hospital is left without power for an hour. Brian Cavanagh, then-chairman of NHS Lothian, brands the incident “intolerable”.
October 2003: The hospital is again left without power due to storms. Consort says it is retraining staff.
June 2004: A food hygiene scandal breaks out at the hospital after a TV exposé reveals poor standards at Consort’s supplier.
August 2006: NHS Lothian is urged to quit its deal with Consort after the Royal is declared the second-dirtiest hospital in Scotland.
October 2007: Nurses are left vulnerable after panic alarms stop working and a Consort contractor responsible opts not to inform staff.
September 2011: The relationship between Consort and NHS Lothian is criticised by the Healthcare Environment Inspectorate after inspectors find dirty wards and toilets.
December 2011: A baby is born by torchlight as power fails in the birthing unit.
January 2012: It emerges Consort has cleared 580 staff to work without carrying out criminal background checks, as reported above.
April 2012: A patient has to be sewn up by torchlight after the theatre is plunged into darkness when workers cut the power at two theatres at the Royal Infirmary, as reported here. There are fresh calls for the deal with Consort to be axed.
June 2012: Operations are cancelled after flies believed to be from a dead pigeon carcass are found in operating theatres, as reported below. Two theatres have to close for a combined 11 days, while another is shut due to a leaking roof.
December 2012: Operating theatres are shut down again after a fly is found in an operating theatre.
April 2013: It emerges that NHS Lothian is able to impose fines of just £28.24 per day after Consort blunders caused the operating theatres to close.