Quality Problems Plague Britain’s Largest Privatized Laboratory

The Guardian newspaper reported a decline in quality at the Kings College Hospital trust and the St. Thomas Hospital trust’s recently privatized pathology services.

The report cited in the article found an increase in clinical ”incidents” in the first year of the for-profit laboratories operations, and failure to reach “ agreed targets for the “turnaround times” for processing pathology tests 46 times in 2011, with “critical risk levels” breached 14 times.”

Serco, the multinational outsourcing corporation involved in the private laboratory, promised to upgrade the computer system which has also not gone well.

“In January 2012 a patient was given “inappropriate blood” when their medical history was not “flagged” up by the system. In May 2012 patients’ kidney damage results were calculated incorrectly after a “software fault”. The September 2011 performance review complains of the pre-operative blood transfusion interface failing at the same time every week… (GSTS’, the public –private-partnership running the for-profit lab) annual accounts show £2.7 million had to be written off in 2011 due to “potential clinical uncertainty” caused by its new [computer] system.”

The new for-profit lab has continued to lose money.  The joint venture lost 6 million pounds in 2011 which had to be covered by payments from the public hospitals involved in the partnership.  In other words, funding was taken from other public programs to pay for losses in the privatized laboratory services.

GSTS, the joint venture running the labs, is a partnership between Serco and the two hospital trusts. Serco is a British transnational company with revenues of 4.3 billion pounds, a 2009 profit of 258 million pounds and 70,000 employees. Government contracts account for most of its income.

While it is still early in the process, the largest laboratory privatization in Britain has started out poorly.

The information was uncovered by Corporate Watch, an organization dedicated to critical corporate research and is  “based on Freedom of Information disclosures, leaked documents, interviews with staff and an analysis of the company’s accounts.” Their report and the coverage in The Guardian can be found at:

http://www.corporatewatch.org/?lid=4550

http://www.guardian.co.uk/society/2012/sep/30/pathology-labs-takeover-failures

British P3 Lab Looses Money

The flagship public-private lab partnership in Britain between Kings College Hospital Trust, Guys and St. Thomas Hospital Trust and Serco, a multinational government services company, lost money in its first half-year of operation.

The audited financial statements for the first six months show that Kings College, which owns 33% of the partnership, lost 217,000 pounds on the venture.  Frank Wood, a biochemist and Union steward, reports that this is a dramatic  turnaround for a pathology service that used to make money for the hospital.  Historically, the hospital’s labs have successfully competed for, and profited from, selling services to private hospital and other trusts.

While it is early in the history of this public-private business, similar attempts in  Calgary and Toronto in Canada all eventually dissolved with the work going back into the public system.  The ventures were not profitable enough for the private business and two cumbersome and costly for the public system with little added value.

In the spirit of Edmund Burke’s words, “those who don’t know history are destined to repeat it,” perhaps Britain’s National Health System would be better off trying to improve its public laboratory services rather than repeat failed public-private approaches.

England Repeats Canada’s Lab Mistakes

England’s public medical laboratories are consolidating, increasing the use of competitive market management techniques like LEAN and Six Sigma, and contracting more for-profit companies as part of the neoliberal restructuring of the National Health Service (NHS).

Private laboratory corporations have existed outside the NHS to service England’s network of private hospitals. Under funding pressure and organizational changes to an internal market NHS hospital laboratories have begun entering into joint ventures with private firms. The largest of these, now the largest pathology service provider in Britain, is a partnership between the Guy and St. Thomas Hospital Trust, Kings College Hospital Trust and Serco.

Serco is a British transnational service company with revenues of 4.3 billion pounds, a 2009 profit of 258 million pounds and 70,000 employees. Government contracts account for most of its income. Serco owns a third of the joint venture with Guy-St Thomas-Kings College and is expecting an income from this partnership of 110 million pounds of government health care money over the next 10 years.

The British public-private laboratory partnerships seem very similar to that between MDS and the Toronto General Hospital in 1995. The public hospital does the bulk of the lifting: being responsible for staff, equipment, space and providing patients. Serco minimizes its risk and maximizes its income by helping with management responsibilities. A major difference between the British and Canadian ventures is that MDS was a legitimate private sector laboratory company whereas Serco’s main expertise is convincing government’s that it can manage essential public services better than public servants: an unproven ideological statement.

The MDS-Toronto General Hospital joint venture, called the Toronto Medical Labs, eventually fell apart in 2007 with all assets reverting back to the public hospital system. A similar fate met the partnership between Sunnybrook and Gamma-Dynacare in Toronto and the MDS-Kasper-Dynacare-Calgary Health Authority lab. Part of the explanation for the failure of these public-private labs is that they were not lucrative enough. MDS’ public reason for getting out of the clinical laboratory business in Canada was limited growth prospects. This is particularly true for inpatient work in a universal publicly funded system. Tighter financial controls on the public sector and the variations, stat requirements, and manual tests involved in hospital laboratories all lead to smaller profit margins for inpatient work. The private sector prefers to hive off the easier more routine work leaving the tougher stuff to the public providers.