The NHS is in talks with Mitie about the outsourcing company taking over the disposal of body parts and hazardous waste after the existing contractor allowed huge stockpiles to build up, triggering health concerns.
NHS chiefs fear the current contractor Healthcare Environmental Services (HES) could collapse and are urgently trying to find a replacement firm to undertake some or all of the work done by the company.
“Mitie are in the hotseat to take this on. They are the only company that the NHS is talking to at the moment,” said one well-placed NHS source.
HES sparked a major national incident by allowing large quantities of hazardous and non-hazardous waste from hospitals to build up at three of its five disposal sites across England – in Yorkshire, Newcastle and Nottingham. That included infectious waste, dangerous medicines used in cancer treatment, needles and “anatomical waste”, which includes body parts.
NHS bosses dealing with the incident have made it clear that all the materials have to be “handled sensitively to mitigate health and environmental risks”.
HES is run by a husband and wife who have paid themselves almost £1m in dividends over the past two years despite the company losing around £1.7m.
The company collected £31m last year in payments from its contracts with mostly NHS hospitals to collect and dispose of body parts and medical waste.
Garry Pettigrew, who has run the company for 21 years, and his wife, Alison, collected £480,000 in dividend payments in the 2016-17 financial year (the latest one available), according to filings at Companies House. The couple also paid themselves £480,000 in dividends in 2015-16. The payments were made despite the company making a pre-tax profit of just £30,000 in 2016-17 and a loss of £1.7m in 2015-16.
The couple were also paid salaries totalling £297,000 last year and they charged the company expenses of £170,000.
The accounts reveal the couple are loaning the firm £500,000 a year at a rate of 8.5%, far above the Bank of England base rate of 0.75%. They earn £29,000 a year from the loan.
The Environment Agency has launched a criminal investigation and said HES had breached its permits at five sites in England. “We are taking enforcement action against the operator, which includes clearance of the excess waste, and have launched a criminal investigation,” the EA said.
NHS England hopes Mitie will be able to step in at short notice and help ensure waste from hospitals – which includes amputated limbs – is safely removed and disposed of, often through incineration.
Mitie already offers “a comprehensive hazardous waste management service” and undertakes such work in the car, drug, chemical, aerospace and manufacturing industries. It is one of the few companies in Britain with the expertise to help the NHS resolve the crisis, NHS officials believe.
NHS England is planning for the possible collapse of HES, which in the last year has been served with 13 warning notices and two compliance notices by the Environment Agency as NHS waste has piled up at its three sites. It allowed five times the amount of waste – which should have been prepared there for burning elsewhere – to build up at its disposal plant in Normanton, West Yorkshire.
A four-page NHS England briefing paper on the affair, dated 14 September, obtained by the Health Service Journal, said both HES’s plants in Normanton and Newcastle were at risk of closure.
The same document warns: “The collapse of Company 1 [HES] would significantly impact the management of waste within both hospital and primary care services across the NHS (including the NHS England contract for waste management in primary care).
“There remains a risk that any proposed EA suspension actions against Company 1 would cause pressure on NHS hospitals and/or destabilise Company 1 to a point of collapse,” it adds.
NHS contingency plans to handle the emergency could see about 50 NHS hospital trusts from whom HES collects waste storing their waste in trailers provided by the government as a temporary measure. They have been advised not to pay HES any more money for contracts which are in breach.
HES said: “Healthcare Environmental has highlighted the reduction in the UK’s high-temperature incineration capacity for the last few years. This is down to the ageing infrastructure, prolonged breakdowns and the reliance on zero-waste-to-landfill policies, taking up the limited high-temperature incineration capacity in the market.”
HES is run by husband and wife Garry and Alison Pettigrew who have paid themselves almost £1m in dividends over the past two years despite the company losing more than £1.7m.
Mitie is one of a number of UK outsourcing companies that provide services for other firms and the government that has come under substantial financial pressure in recent years, as costs have risen and profit margins have been squeezed.
In the last two years its share price has almost halved after the company was forced to issue three profit warnings in four months, while the chief executive and the finance director both departed.
Mitie already works closely with NHS trusts, with several multi-million-pound contracts to provide catering, domestic cleaning, vending and other services.
It runs an immigrant detention centre at Heathrow, manages juvenile centres, runs social housing services and repaired the roof at the Palace of Westminster. Around a quarter of its £2bn in revenue relate to central and local government contracts.
The firm is now a year into a turnaround plan, led by the former boss of British Gas, Phil Bentley.
The problems forced Matt Hancock, the health and social care secretary, to convene a meeting of Cobra, the government’s crisis response committee last month.
The Department of Health and Social Care stressed that the build-ups do not pose any risk to human health because the materials involved are contained in secure sites.
A government spokesperson said: “We are monitoring the situation closely and have made sure that public services – including NHS trusts – have contingency plans in place. There is absolutely no risk to the health of patients or the wider public.
“Our priority is to prevent disruption to the NHS and other vital public services and work is underway to ensure organisations can continue to dispose of their waste safely and efficiently,” they added.
Dr Kathy McLean, chief operating officer and executive medical director of NHS Improvement, which oversees NHS patient safety, said: “The NHS has contingency plans in place for clinical waste and patients should be assured that their care will be unaffected.”
