Ali Parsa, chief executive of healthcare company Circle, tells Victoria Vaughan where the NHS has gone wrong and where it can be put right.
Ali Parsa is viewed with suspicion by many in the NHS.
The CEO of healthcare provider Circle has accrued significant column inches with his caustic comments on the state of the health service and his vision for improving it (which can be boiled down to: ‘do more with less money’).
Small wonder he’s not exactly Mr Popular among NHS professionals.
No one can say, however, that he doesn’t understand the numbers. The former Goldman Sachs director notes that the UK’s expenditure on the NHS has risen over the last 60 years from 1% of GDP to 9% and that “McKinsey say that in 2050 we will spend 40%” of our GDP on healthcare. “What that tells you is it’s unsustainable, we just can’t fix this anymore.
“The economic value of anything is quality over price. In healthcare, quality is defined as clinical outcome plus patient experience. Look at what we’ve done in the last ten years. We went from spending £40 billion a year to £120 billion. The vast majority went into salaries: 70% of that £120 billion went into personal profits. I can’t get in my head how people’s expectations have gone up, the aging population has increased and medicine costs have gone up, but that difference has gone into people’s salaries.
“Agenda for Change ensures each hospital worker is promoted every year, so even though there is a pay freeze wages are going up by 3% or 4%. But at the same time the government wants to lower the cost of healthcare.
“With 70% of costs going up and your revenue reducing you don’t have to be a mathematical genius to know it’s going to fail. That’s going to be the case for everyone in the entire country, every hospital will go in the red.”
“What we have to do is become more productive. Do more work for the number of people we have got, and if there is no more revenue we need to have less people.”
But how? The Iranian-born entrepreneur aims to demonstrate the effectiveness of his philosphy with Hinchingbrooke Hospital. The East of England Strategic Health Authority (SHA) selected Circle as their preferred partner in 2010 following a 14-month tendering process involving 19 initial potential bidders, and they inked a 10-year deal with the firm last November.
Circle became the first ever non-state provider to deliver a full range of NHS district general hospital services when the contract commenced in February.
Lessons learned from Hinchingbrooke include a meeting where 1,200 of the 1,700 staff turned up, and one of the top five things raised was that “people who are not producing enough – we should have the courage of letting them go”.
“It’s what the staff say, nobody suffers more, when people are not delivering what they are supposed to, than their co-workers. So we give it to the clinical units we allow them to make their own decisions and as a result we have a whole layer of productivity we can gain.”
These clinical units are the main thing Parsa points to in turning things around for the £40m indebted hospital. The units are small enough to allow people to “take control and feel energised to make things better”.
By way of example he cites the Hinchingbrooke’s kitchen where ten cooks became 20 and the helpers were cut down from 30. The team was then coached by Michelin-starred chefs and food satisfaction has gone from 50% to 93%.
For Parsa the way to fix the NHS is by removing the barriers to entry and allowing anyone and everyone to find the solution to the problems, in the way that Steve Jobs, Bill Gates and Michael Dell made computing affordable.
“There are companies which can deliver healthcare at a fraction of the price. There is one in India which delivers cataracts for £50 as opposed to the £1,000 in this country. They have cut costs by 95%. Why are they not in this country?
“Because of the barriers erected to protect the vested interests in Britain – all the people who consume £120 billion. I have a vested interest, Circle receives some of it, so does every doctor, nurse, drug company – we all have a vested interest. To reverse that is the job of the government.”
Does the Health Act go any way to doing this? In truth, Parsa increasingly lost interest in the Act as it got amended, stalled and amended again. To him it’s “motherhood and apple pie” to bring down barriers and get the people closest to the patient, the GPs, to be the advisors.
He agrees that the decision-making should be with the people closest to patients as “they have an incentive and a pressure to make the right decision”.
But he says the potential for conflict of interest to allow GPs to commission and provide is a “fudge” and something GPs will have to watch. “I hear GPs from time to time who say in conferences, in meetings, where GPs stand up and say ‘that means I can provide the services myself’.
“The chair of the Royal College of GP’s, Dr Clare Gerada, always argued that effectively, by saying they are asking us to do something that could put us against our patients, and I think the RCGP was right. Safeguards should be put in place to protect the totality of the GPs against the few who would put their economic interests first.”
He calls those who have a problem with competition in the NHS “hypocrites” and says we may as well be a communist state if we don’t allow private sector companies to work with the NHS.
“Hinchingbrooke would not be news in Germany. There, the private sector runs more hospitals than the public sector does and the Germans are happier than we are. It doesn’t matter who does it as long as it’s universal and free at the point of delivery. That’s how we run our society as a whole. It’s such a hypocritical standpoint. The same people who eat in a private restaurant, use a private telephone company and all those things that provide them a good service which they judge is good value for money [critcise private sector involvement in health].”
Parsa says that if we think the most efficient way of delivering healthcare is publicly without turning a profit “then we should do it for every aspect of our society and then we’d become the Soviet Union. That’s what they thought, that if the state runs everything it will be more efficient”.
Isn’t the problem with a private company providing healthcare that as profits must be made to satisfy shareholders, patient care may suffer?
Not so, says Parsa, as “if I am not the best provider of quality I would never make profits”.
But he does have a “problem” with GPs as private businesses. “There are some GPs who make £5,000 or £6,000, some who make £250,000 – a lot that do that. The difference between £70,000 and £250,000 is the profit. They call it something else but we all know it’s profit.
“What we need to do is create an environment where the profit motive and the quality align.
“If you ask me how much money I have got, I have got no idea and I am not that rich. I own only 2.5% of shares of Circle so I don’t care. What I care about is creating an organisation that does good and that I can be proud of.”
There are many who will find this hard to believe. But Parsa is not fazed by the critics. Paraphrasing Mother Teresa he says: “If you are successful… you will make enemies but succeed anyway… it’s between you and God, it was never between you and them.
“I honestly don’t bother and I think it’s natural if you come to help change a system people won’t like what you are trying to do. Einstein used to say to try and achieve anything there is no mediocrity you have to go through hell. People got crucified, Galileo got beheaded.”
Parsa is a man of beliefs. A belief that healthcare can be delivered much better than it is now and a belief that it’s far too important not to do it.
If Parsa is proved right and he succeeds with Hinchingbrooke it will indeed pave the way for more NHS hospitals run by private companies, not least of all Circle.
“I am telling you we want to run a lot, and if we run a lot we are still running a lot less than very successful private hospital groups are doing for the German people with very high outcomes and happy customers,” he says adding that it would still only amount to a fraction of the NHS spend as Circle is a £100m business.
“My interest is to change the way people think about how these things can be run, and in the process I hope we do a lot but we will never touch every patient. The way to do that is to show it can be done.”
So all eyes will remain on Hinchingbrooke to see whether Parsa’s vision of better patient care at a lower cost comes good. If he’s right then the NHS may have to reconcile itself to further privatisation.