Not-for-profit good?

The Conservatives are obsessed with legislating away our jobs. But one thing that few people realise is that they are also obsessed with legislating away their own jobs. Frankly, the reason is that they cannot be bothered to run public services, although it beggers belief why they were so desperate to get elected to do the job, if they really do not want to do it.

Look at Lansley's "Big Society" plan. Lansley is incompetent, he knows that he is incapable of running a healthcare service and the fiasco of the lack of publicity over the flu jab this winter shows this: for some reason he thought it was not necessary and now we are finding hospital resources are strained by the large number of people needing specialist respiratory care when it could have been avoided if they had been vaccinated. Lansley says that it is the fault of GPs for not telling their patients about the flu jab. This should be a heavy hint to GPs about what is in store for them in the future: they will be blamed for all of Lansley's legion of mistakes.

Lansley's "Big Society" big idea is to turn every hospital into a "social enterprise". What this means in practice is that the government (ie Lansley) will have no responsibility for hospitals. Your hospital is failing? Don't contact Lansley because he'll tell you that it is not his responsibility. He treats hospitals like supermarkets - if you do not like one supermarket you simply go to another one, it is called "choice" and you have no right of complaint or recourse to the government if your local supermarket fails. Your hospital will be a supermarket.

Hospitals will be "social enterprises". Social enterprises are private businesses.They are not owned by the public. Lansley tells us that he wants to create "the largest and most vibrant social enterprise sector in the world". Not only is he incompetent, but he does not do his homework. If he could be bothered to look over the Atlantic he would see that out of 5,795 hospitals in the US, half (2,918) are not-for-profit, non-government, social enterprises. There are about 450 hospitals in England, how Lansley thinks that 450 is larger than 2,918 is anyone's guess.

Let's look at just one aspect of US social enterprise hospitals: executive pay. The following is from the Nonprofit News website:

A survey of nonprofit hospitals in the Puget Sound [Washington state] area found that 19 top executives and doctors earned more than $1 million in 2008. Public radio station KUOW in Seattle reported Monday that an additional 59 employees at the hospitals earned at least $500,000 that year.

A salary of $1 million is a lot more than the Prime Minister earns. Remember that metric? Who earns more than the millionaire who draws a salary that he does not need? Well, nineteen of the not-for-profit hospital execs in Washington State earn more than him.

The report also says:

A hospital’s board of directors ultimately is responsible for executive compensation. MultiCare Health System, which runs three hospitals in Tacoma and Good Samaritan Hospital in Puyallup, paid CEO Diane Cecchettini $2 million in 2009 and more than $5 million in 2008.

Wow, that's a good salary, yet these are not-for-profit? Isn't that like a charity? No. While some social enterprises have charity arms, all of them are private businesses that simply do not make a profit. They are supposed to plough the "surplus" back into the business to improve the service, but they could equally plough the "surplus" back into the business as executive remuneration. Clearly in Washington state, this is what they are doing.

So who is there to restrain executive pay? It is the executive board. Since US social enterprise hospitals have no shareholders and have no public accountability the only restraining influence on executive pay is the executives themselves. They decide on the level of their salary. Remember when we had a similar situation in the UK with MPs' pay?

This situation is effectively what we will get if Lansley gets his way. A social enterprise hospital will be a private business, so presumably the executives will want to be paid private sector rates. According to the NHS Confederation:

NHS chief executives' counterparts in the private sector are paid, on average, £424,000 - around three times the average salary within the NHS

So when a hospital is newly "liberated" as a social enterprise, how long do you think it will be before the pay of the executive directors starts to creep upwards?

Complain? By all means try, but it will be pointless because a social enterprise is not a public body and so your elected representatives will have no responsibility over the hospital. Look at how spineless the government has been over bankers' bonuses, it'll be no different with hospitals. Welcome to to the world that Lansley is creating because he is too lazy to run the NHS!