Why is "profit" a dirty word?

Pointless pic.

Private companies – without profit there’d be no investment in business. If a company wants to expand it might ask people to invest cash, those investors want their money back later with a bit extra to make the investment worthwhile. Companies choose either take loans or offer equity to get this money – the more money needed the more likely it will be in the form of equity. So those that get equity are now partial owners of the company and will get a share of it’s future profits, it is likely that the equity will never be bought back by the company so the holders of the equity will want to be able to trade it if they want their cash back. The value of that equity will reflect expected future profits so the price will rise and fall based on how well the company is doing.

All in all this works pretty well really.

Public companies don’t have the same pressures on being profitable, this can be a good thing in some ways – perhaps encouraging a longer-term approach to things. Private companies are generally very concerned with profit as equity holders can replace the management if they choose to, or sell to another company if they think being part of the other company would result in greater profitability.

So are private or public companies better for the economy? Hard to imagine what our society would be like with only publicly owned supermarkets – higher wages, higher food costs, lower choice?

Hard to imagine what our society would be like with only publicly owned supermarkets – higher wages, higher food costs, lower choice?

There are lots of good co-operatives around the world – fewer now in the UK than there used to be, but the co-operative movement was a brilliant way of getting cheap, good food to lots of people.

mudshark – Member

Pointless pic.

Not at all. It’s an excellent way of highlighting the absurdity of the extremists who want to introduce the profit motive everywhere.

Obviously you wouldn’t expect anyone with a profit fetish to like that picture.

It would be a pointless pic if we* didn’t have hospitals being run by Virgin Healthcare. They’re not in it to help people, they’re in it to make a profit.

*well, when I say “we”, I mean “you” – we don’t have that madness here in Scotland. Yet.

“We need to start again, The money, who gets the money?

“No one, its all spent on the sick”

Wow, all the money is spent on the sick?

I thought that the majority of the NHS budget was spent on staff wages?

Look at Cuba for an example

Aren’t they under sanctions for everything? Not really a fair comparison is it?

I thought that the majority of the NHS budget was spent on staff wages?

Staff for curing sick people…

Look at Cuba for an example

the world would be a better place if we all did

ninfan – Member

Wow, all the money is spent on the sick?

I thought that the majority of the NHS budget was spent on staff wages?

That’s stunningly idiotic even by your standards Z-11…..the suggestion that medical costs don’t include staff wages ! 😆

bencooper – transport is an important public service so how about we follow your principles and put your bike shop under public ownership? what exactly is it that you do that adds any value over a bike shop run by the public sector and why should we allow you to make a profit on it? 😉

You’re making a big assumption there 😀

so it’s a not for profit? By accident or design … 😉

It would be a pointless pic if we* didn’t have hospitals being run by Virgin Healthcare. They’re not in it to help people, they’re in it to make a profit.

Yes but the implication is that the hospital is an NHS hospital – it has a budget and no profit. Efficiency is the key, maybe private hospitals can be more efficient? I don’t know.

A privately owned hospital takes in cash to pay for the service and needs a surplus to cover the investment costs – otherwise no point in making the investment. The Gov’t, rightly or wrongly, considers the saving it makes on not making the initial investment worth doing this; curious to know how ongoing costs/service compare to NHS hospitals. BTW, from the figures I’ve seen Virgin Healthcare isn’t profitable at the moment – is that good?!

curious to know how ongoing costs/service compare to NHS hospitals.

Virgin, Circle, Care_UK etc cherry-pick services – and leave the complex/tricky/messy/expensive stuff for the NHS. They leech off the NHS, in other words. Moreover, the “hiving-off” of routine elective activity actually undermines and fragments acute care.

They add no value to provision, in my view. It’s fugging rich of CMD to bleat on about how he supports NHS, given that the present reforms are spannering things on the frontline.

“Virgin, Circle, Care_UK etc cherry-pick services – and leave the complex/tricky/messy/expensive stuff for the NHS.”

if that’s true then you have to wonder why the “easy” services these organisations cherry pick were run so badly by the NHS, and how patient satisfaction and clinical outcomes can be improved so quickly despite very little additional investment. Perhaps the answer is in the competency of NHS managers or the motivation of front line staff and managers to improve the services they work in?

were run so badly by the NHS, and how patient satisfaction and clinical outcomes can be improved so quickly despite very little additional investment

Who says they were being run badly? And who says outcomes are being improved? In fact, judging by the increasing amount of stuff being buck-passed by “other providers” into A&E, I’d say things are getting much worse. The current reforms more-or-less enforce the outsourcing of services (fudging in “competition” has merely resulted in an increase in bureaucracy and costs – not surprising given that the utterly-byzantine commissioning process), regardless of consequence (e.g. see the concerns re emergency cover & the BUPA contract for MSK services in West Sussex).

It’s telling that many of the more recent advances in healthcare (e.g. improvements in rapid treatment for Stroke) have resulted from collaborative working. But what do Beardy & co gain from that?

how patient satisfaction and clinical outcomes can be improved so quickly despite very little additional investment.

Is it not the case that private companies are under bidding and running them at a loss to get the contracts, then.when the NHS capability is.gone they can put up prices and fleece us?

Profit is a dirty word because everyone is still using words like “recession” and “current climate”.
Well that’s behind us now so we can all start making profit.

Just5minutes, the 3 local (to me) examples of newly-private run services are not proving any more successful than previous nhs providers either in financial or outcome/satisfaction terms so far. And that is me being very tactful given my username being my actual name, what i do for a job and who pays my wages. Perhaps it is different elsewhere in the country? I also wonder about the likes of circle and virgin playing the long game, ie maybe it’s ok for them to suck up a loss for the first few years. Given that staff costs are the major component of most branches of health provision (essentially they are the materials, means of production and product) and given the magic of unions and tupe, maybe the real savings in operating costs are yet to be made. If this were to be the case, however, what is interesting is recruitment issues ( ie supply and demand of the main resource ie health professionals) leading to many private providers affering to match/honour pension holiday and pay arrangments for people leaving the nhs to work for them.

Have a read of this: http://www.theguardian.com/society/2014/aug/14/nhs-eye-operations-private-provider-musgrove

Cataract operations outsourced to “super efficient private company”, who completely screwed up and the NHS pays to fix all the damaged eyes…..

Total cost to taxpayer is far greater than just keeping it in the NHS in the first place…

Profit is neither a good or a bad word in isolation – merely the difference better revenue and costs. Profitablity on the other hand is a more interesting calculation. Then add the associated risk and we start to have an interesting conversation.

Again the size of profits are largely irrelevant other than pointless headlines – if you have billions/millions of capital employed, you should be making millions in profits.

Imagine what would happen to government services if no one made profits!

Julianwilson, can you remind us again how much the NHS is now paying out for its own negligence, the 6,000 avoidable deaths in year and the tens of thousands of serious untoward incidents a year? Isn’t it heading quite rapidly towards £25m a week?

How many patients died at Mid Staffs?

Some balance is always good…

How many patients died at Mid Staffs?

If anything, the current reforms increase the chances of a MidStaffs-type meltdown (eyes-off-the-ball managerialism at the expense of an over-stretched and under-staffed frontline) – to put it another way: the out-sourcing of routine activity/services does nothing to improve care on elderly care wards. And it’s not as if the private healthcare sector is especially gleaming in terms of safety (or publishing data).

That things need to be improved (and areas like elderly care and mental health have long been ‘Cinderella’ services) is not in question – but these reforms will not achieve that, IMO. They seem to be shaping up as some kind of yard-sale.

It helps if you channel some of those profits into the pockets of Tory MP’s. You get it back in spades…

£1.5 Billion in NHS contracts awarded to companies with links to the Tory party

Probably just coincidence, and they’ve all got our best interests at heart

It’s not a “dirty” word, I just have no time for anyone who prioritises it over decency.

Binners – have you got a link to the facts referenced in the guardian piece? The article only repeats claims from Unite but there doesn’t seem to be any evidence…

“Unite claims that 24 Conservative MPs and peers who voted in favour of the government’s health reforms have links to 15 private companies that have won up the contracts since 2012.

Unite said the research spanned a period of around a year and was based on freedom of information requests, analysis of company reports and clinical commissioning group accounts, as well as the electoral register and register of interests.”

Unite very clearly names names, if Unite has made false allegations concerning individuals then they could be, and would be, sued. Something which they and their legal department would of course be acutely aware of. They are not protected by parliamentary privileges immunity.

Unite is fighting the health reforms, you would expect them to carry out such research, I wouldn’t expect the government, the Daily Mail, or many other organisations to carry out simular research.

Let the 24 Tory MPs and peers sue Unite if the claims are false.

Not Unite’s research, but there’s a pretty comprehensive list of Lords/MPs (all parties) and their links to healthcare firms at this site.

It’s no secret that the likes of Care_UK are, uhh, well-connected.

Just5minutes, what has mid staffs got to do with privately run hosptals not improving on standards of care on services they took over? I was providing a little balance to your suggestion that private companies contracts have turned around failing services or improved on standards of already successful ones. I also suggested that since the main cost component is staff, that they will have a hard job to improve anything major and turn a profit at the same time without making some considerable efficiencies with both working arrangments and salaries of frontline/clinical staff, which under tupe arrangments will not happen overnight.

i wasn’t aware that mid staffs had been contracted over to private enterprise. 😉 If and when that happens, before you judge it an example of the success of the health and social care act, you will also need to factor in whether the funding remains the same, whether the whole or part of the hospital’s services are taken over and whether the new hospital managers are chasing the same byzantine set of targets/kpi’s that the old managers there were several years ago.