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From a private medical tourism hospital to a UK public National Health Service hospital in eight easy years!

Empty hospital bed

Considering investing in a medical tourism venture? Planning the next healthcare city? “Those who do not learn from history are doomed to repeat it...“ Professor Brian Hay from the School of Arts, Social Sciences and Management, at Queen Margaret University, and Professor David Botterill  from the Department of Tourism, Hospitality & Events Management at the University of Wales tell the story of a medical tourism ‘white elephant’ that became an NHS hospital.

In the early 1990s, a private-sector, purpose-built hospital designed to attract international medical tourists to Scotland became a centre of medical excellence – but one wholly owned and managed by the National Health Service in Scotland (NHS), and not as originally intended as an international centre for medical tourism.

The main players and the rationale for a medical tourism hospital

The Scottish Development Agency (SDA) was responsible for the economic development and regeneration in most of Scotland. Through its extensive funding powers, the SDA was able to give direct grants and loans to the private sector for projects to both carry out physical developments and create additional jobs at the Scotland level.

In 1989/90 the SDA assisted Heath Care International (HCI) to develop a private hospital in Scotland. HCI was a US venture part-funded by doctors who had a vision of “global healthcare” in which patents would be travelling the world in large numbers for major surgery.

Clydebank, near Glasgow airport became the location of the HCI International Medical Centre. The hospital was built in a derelict former ship building area, in great need of regeneration, and major developments in this location were eligible for substantial public sector grants. Opening in 1994, the hospital, cost £185m, providing space for 540 beds. However, only 52 beds were ever made ready and used for patients, along with state-of-the-art operating facilities. Staff were employed directly by HCI, who paid wages higher than NHS Scotland; they were supported by specialist doctors mainly brought in from South Africa. Along with the 540 beds, the hospital had six operating theatres, MRI and CT scans, and space for expansion. Alongside the hospital and sharing an entrance and facilities such as car parking, utilities, catering, 170-seat tiered auditorium and grounds was a new 240-bedroom, four-star hotel, the Beardmore Hotel and Conference Centre.

It is difficult to understand just which markets HCI were hoping to attract, but the emphasis seemed to be on UK and European patients who had access to private health insurance. In 1994, only three months after opening the hospital, the company responsible for building it went into receivership.

Initially, the SDA had provided financial assistance to the HCI hospital through its grant scheme to develop the site and was very keen to show that its capital funds were not wasted on another major project, as had happened elsewhere in Scotland. This medical tourism hospital and hotel seemed like a dream project because it created jobs, and showed that Scotland and the Scottish Executive welcomed major developments. (It is important to note the Scottish Tourist Board (STB) was not involved in the development of the project, despite having at that time, the power to provide grants for the development of new tourism facilities and to provide advice on the tourism potential of large-scale projects.)

So, a new buyer for the hospital had to be found.

The UAE invests in medical tourism to Scotland

Following the sharp increase in the price of oil in the 1980s, Middle East countries were awash with money and looking to invest in profitable projects. In order to manage such funds, a number of countries established separate development companies (quasi-independent of government) and they sought projects that would not only increase profits, but also provide a service to their citizens and present a positive image of the their country internationally. One such company was the Adu Dhabi Investment Company (ADIC), based in the United Arab Emirates (UAE). Given the poor quality of their own health service, and their need to both build more facilities and to train additional staff in their own country, the ADIC decided that one method to improve the quality of life of its citizens was to develop/manage an already functioning hospital that could treat Abu Dhabi citizens in need of heart operations.

The Scottish Executive and the SDA were looking for high-profile signature projects to show how successful they were in managing the Scottish economy and the ADIC was seeking investment in health-care facilities, it was almost inevitable that they would find mutual ground for discussion. The ADIC wanted a quick return on its investment, but the planning and building processes in Scotland would take far too long to build a new hospital. The ADIC and the SDA, therefore, looked at what already existed in Scotland, which would match the requirements of both organisations.  The Clydebank HCI Hospital was the answer.

From 1994 to 2002, the hospital (still known as the HCI Hospital) operated as a private hospital controlled by the ADIC, to provide a service to wealthy Middle East clients, poorer citizens from the UAE whose treatment was funded their State, and private European patients.

Issues in the management of the hospital and hotel

This hospital and hotel were managed by two completely separate management teams, both reporting directly to the ADIC board, through two separate limited companies. Although both facilities were of a very high quality in terms of their design, they faced a number of issues which contributed to their eventual closure and transfer in 2002 to the public sector NHS Scotland. These included:

  • The hospital was regarded by the residents (or maybe more correctly the local Council) as ‘not for them’ as it did not meet their health needs (as local NHS patients) and this led to resentment in the area. The local Council (West Dunbartonshire) were very much against the hospital, even although it provided jobs for local residents. A good example is that it took three years for the Council to provide directional road signs. 
  • The doctors were recruited mainly from South Africa, but did not live in Scotland; instead they flew in from South Africa and stayed only a few days, using the associated hotel accommodation.
  • The UK private patients, who used the hospital, found that the main two providers of private health care in the UK threatened to blacklist their doctors, as they wanted to maintain, what was in effect, a cartel.
  • The nurses were recruited locally and were paid wages substantially higher than comparable NHS rates; therefore the hospital was seen as taking trained staff away from the area’s hospitals – and they could ill afford to lose skilled staff.
  • The support staff (cleaners, receptionists, etc.,) were recruited locally, but did not have the necessary service skills, to provide a high-quality service.
  • It is difficult to say if racism was an issue, but the hospital was known locally as the ‘Arab Hospital’, but this could just be local Glasgow humour.
  • Initially the hotel found it challenging to attract non-medical tourism business, because many patients and their visitors used the hotel facilities, and ‘ordinary’ tourists did not like to see people in their dressing gowns and drips in the hotel’s public areas.
  • However, the hotel did prove to be attractive to non-medical tourists, and did make an operating profit. It attracted a lot of group business from both the UK and overseas tourists. It also did well in attracting NHS conferences and given its closeness to Glasgow Airport, generated some non medical tourism conferences. It was also popular for wedding receptions.
  • There were no direct flights from the UAE to Scotland, which made it difficult and stressful for patients who had to fly to London or Manchester and then transfer, either to Glasgow airport or overland to the hospital. There was also an issue of patients using oxygen, when transferring through the London airports. However, today Emirates Airlines does fly direct from Dubai to Glasgow.
  • Although most of the patients were from the Middle East, a number of UK and Scandinavian companies signed contracts with the HCI hospital to provide private medical services for their clients. NHS Scotland also used the services of the hospital to decrease NHS waiting times, especially towards the end of their financial year.
  • It was a period of political change in Scotland, as the planning authority was being transferred from Strathclyde Region to West Dunbartonshire Council, so local political support for the hospital was weak.
  • The investment company, ADIC, although owned by Adu Dhabi, was managed from London. The company had a policy of buying distressed assets, developing them and running them as a going business, before selling them as a profitable asset. The hotel side of the business generated a profit, but the hospital did not.


Failure to deliver medical tourists in significant numbers

The volume of patients was never high enough to fill the 540 beds (let alone 50 beds!) and in order to tackle some of the above issues, the hotel and the hospital undertook the following:

  • They opened up their under-used facilities to NHS patients with heart problems and operations were performed by HCI surgeons at subsidised costs to the NHS. This was a difficult issue for the Scottish Executive which was controlled by the Labour party, because it went against the ethos of the NHS. 
  • The hospital agreed to contribute financially to the training of NHS nurses and undertook to provide clinical training at the hospital.
  • The hospital and hotel agreed to give preference to local people in their applications for support jobs at the hospital and hotel.
  • The hotel provided special accommodation rates for friends and relatives visiting local people.
  • The hotel allowed local people to use the hotel’s sports facilities.
  • The hotel provided free use of its swimming pool to local schools at quiet times.
  • They held open days and recruitment fairs aimed at local people.

The closure decision and process                    

By 2002, some 2,500 NHS operations were being performed each year at the hospital – it had become a ‘de facto’ NHS hospital, albeit operated by the private sector. The grand plans for an international medical tourism centre had been abandoned.

At the time of its closure in June 2002, still only 52 of the 540 beds were in use, and the hospital had incurred a cumulative debt of £82m (Scottish Parliament, 2002).

In early 2002, the ADIC informally told the Scottish Executive that because of continuing losses it was planning to close the hospital and entered into detailed confidential discussions with the SDA/SE about the future of the HCI hospital. In June 2002, the Scottish Labour Government, elected in 1999 to the newly formed Scottish Parliament and still in its first term of office, announced that it had agreed to buy both the hospital and hotel for £37.5m (Scottish Government 2002a). These were both transferred to the NHS, along with some ten consultants, over 100 nurses and 170 support staff, as well as 90 staff who worked in the hotel (BBC, 2002b).

In order to estimate the full cost to the public of the takeover of the HCI hospital a number of costs need to be taken into account: including various direct grants, subsidies and building grants from the SDA and the Scottish Government, and the indirect costs to the NHS of the HCI hospital over the years. Although difficult to calculate accurately, it has been estimated that over ten years (1992-2002), total public expenditure to support the HCI hospital could be as high as £140m (Scottish Parliament, 2002). So the full cost to the public purse of buying the hospital was much higher than the initial direct purchase costs of £37.5m in 2002.

The hospital was managed initially as a National Waiting Times Centre, with the prime aim of driving down waiting times for operations, which was a major issue in the early 2000s and one which generated a lot of negative press for the Scottish Executive (now Scottish Government). The hospital specialised in heart surgery, but also undertook knee and cataracts operations, as well as plastic surgery. It also provided a local diagnostic capacity.

In order to distance the hospital from its history as a private and medical tourism hospital, it was renamed the Golden Jubilee Hospital (BBC, 2002c). The aim of the renamed hospital was to increase the number of NHS operations from 2,500 in 2002 to some 5,000 operations in 2003, and by 2008, about 28,000 operations per year were performed and all 540 beds were fully utilised (NHS Scotland, 2009).  

Lessons learned

There are some clear lessons to be learned for those who are considering medical tourism projects and investments elsewhere in the world.

  • The hospital project was development driven, not market driven. The developers and investors failed to understand the market drivers, and vastly overestimated the level of demand.
  • The hospital tried to work in isolation from the culture of the local community – an island of excellence, in a sea of poverty (but it did employ local people).
  • The question was posed: Is it right to recruit doctors from other countries, when their own country may have had a greater need for them.
  • The difficulty of travel for patients from the Middle East was just too great to overcome (but it was convenient for UK and European patients).
  • Even although the hospital was managed from London, it was seen by the ADIC as a tax write-off, with the owners living far way who never understood local issues and concerns.

References

  • BBC News (2002a, April 17). Private Hospital Takeover Talks. Retrieved May 17, 2009, from BBC News
  • BBC News (2002b, June 20). HCI Sale.  Retrieved May 27, 2009, from BBC News
  • BBC News (2002c, December 16). New Name for HCI Hospital. Retrieved May 27, 2009, from BBC News
  • Beardmore Hotel & Conference Centre. (2009). History of our Site. Retrieved. May 27, 2009, from http://www.thebeardmore.com
  • Johnston. I., (1993). Beardmore Built: The Rise and Fall of a Clydeside Shipyard. Glasgow. Clydebank District Libraries & Museum Department.
  • NHS Scotland (2009). Golden Jubilee National Hospital. Retrieved May 28, 2009, from http://www.nhsgoldenjubilee.co.uk
  • Scottish Government News Release. (June 2002a). Executive Set to Buy HCI at Clydebank.
  • Scottish Government News Release. (June 2002b). Deal Signed on HCI Purchase.
  • Scottish Parliament Debate (2002, June 20). Ministers Statement and Discussion.
  • Tassell, S. (2009, July 26). Personal communication.
  • Timmins, N. (1996). The Five Giants: A Biography of the Welfare State. London. Fontana Press. 
  • Woods, K.J. (2004). Political Devolution and the Health Services in Great Britain. International Journal of Health Services, 34 (2).
  • Walace, I. (2009, July 28). Personal communication.
  • West Dunbartonshire Council. (2009). Retrieved May 28, 2009, from http://www.west-dunbarton.gov.uk


Comment

Brian Hay

After gaining his Ph.D. from Texas A&M University, Brian worked for twenty years (including the period covering the development of the HCI Hospital, where his Uncle underwent a NHS heart by-pass operation) as Head of Research at the Scottish Tourist Board (STB), where he managed its full spectrum of research studies. Since leaving the STB, Brain has held a number of academic appointments in Scotland, and is currently a Visiting Professor in Tourism at Queen Margaret University, Edinburgh. For a copy of the full paper, please contact Brian at BHay@qmu.ac.uk.

David Botterill

David Botterill is Professor Emeritus in the Welsh Centre for Tourism Research, University of Wales Institute Cardiff. He has experience working with a range of external and industry partners including Tourism Concern, the Wales Tourist Board and the Tourism Training Forum for Wales. David has held research leadership positions at UWIC for 15 years.

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What a great piece of research and object-lesson. Thank you.

Scott

Scott Frankum (25/07/2011 16:19:38)