Examination of witnesses (Questions 40 - 59)
WEDNESDAY 17 JUNE 1998
MR
GEOFF SCAIFE,
DR PETER
COLLINGS and MR GERRY
MARR
40. But some claims can
be so large in monetary terms that, looking at what the medical
and dental defence union have in their kitty, three or four big
claims could wipe that out. Therefore, do you not think it would
be more sensible to take a wider view, not necessarily that the
horror story may actually occur and you may end up with far more
cases and a much higher provision needing to be made, but it is
a safer way of dealing with it, is it not, to look at the potential
claims? It is not that you cannot find them because your clinicians
will know when something has happened which may be interpreted
as or which may be a negligent act. Whether or not a case then
comes forward is a different issue.
(Mr Scaife) Yes, our systems rely on picking up
claims or the possibility of claims rather than the recording
of incidents that might or might not lead to a claim. I accept
the point.
41. You lodge a claim when a letter before
action comes in from a solicitor. What I am saying is that most
doctors or clinicians who might be accused of medical negligence
or who may be involved in a case know when an incident occurs
that may give rise to such a claim. Would it not be better to
log incidents at that point? It would be an internal thing. You
would not have to broadcast it to the world but it would give
you better information?
(Mr Scaife) I am clear about the point and accept
that it is a valid one. The work that we have been doing with
the team of lawyers who work in the NHS in Scotland—in Scotland
we still have an in-house central legal office of lawyers employed
by the NHS—we have been working with them and working with
economists to try to test, to model, the predictability of incidents
leading to claims.
42. You do not have to have an economic
model of the predictability. You just need the clinicians to tell
you when an incident occurs which in their professional judgment
may give rise to a claim. It is quite straightforward. Fifty to
75 per cent. of incidents are either gynaecological or obstetric.
You can target down where the issues are going to arise. Of each
100 cases that are investigated, in my experience, about ten are
actually issued in the courts and about one is won. These things
are relatively commonly known. Why can you not just ask your clinicians
to give you a list of dodgy incidents when they occur instead
of having economic models?
(Mr Scaife) Chairman, I am not clear how practical
that proposal would be.
43. Can you tell me whether or not you would
separate legal costs from the size of awards in reporting the
amount of money that medical negligence costs the NHS?
(Dr Collings) The figures are combined figures,
although where there are particularly large cases we can separate
them.
44. You have in-house lawyers who work for
the Department of Health. Do the Trusts employ their own lawyers
or are all these cases referred back to your in-house team?
(Mr Scaife) Chairman, these lawyers are employed
by the NHS. We have a central NHS agency which employs the lawyers
on behalf of the NHS.
45. And they would defend all medical negligence
cases?
(Mr Scaife) Within their competence, yes. It is
possible that very specialised cases would be passed to commercial
lawyers.
Maria Eagle: I was looking to see whether or
not there could be duplication in legal fees which, as you might
all appreciate, could add up to substantial sums of money but
you do not seem to have quite the problem we have in England about
that. Thank you very much.
Mr Wardle: Chairman, just thinking about Ms Eagle's
line of enquiry, I wonder if it is possible to ask the C&AG
to let us have a note on future accounting policy on contingent
liabilities, bearing in mind what Ms Eagle was suggesting in terms
of clinicians notifying the Trusts when they think a problem has
been triggered.
Chairman
46. A good idea. Would you like to reply?
(Mr Le Marechal) I would be delighted to do that.
I think it would have to be a joint note with the Treasury, whose
formal responsibility it is to issue guidance on accounting rather
than audit, but we would be delighted to work together.
Chairman: You might sweep up this discrepancy
between England and Scotland while you are at it.
Mr Wardle
47. Mr Scaife, my colleagues have been picking
up the salient points of the C&AG's Report. I wonder if I
might, in the next few minutes, wander through the undergrowth
of the notes to the summarised accounts of the NHS Trusts. I appreciate
that we were in the year under review in a cash accounting world,
that resource accounting is coming, and the C&AG has referred
to that in paragraph 8. I appreciate that summarised accounts
here probably—I am not an accountant—do not amount
to a true consolidation but they give us a broad picture and I
wonder whether Dr Collings, if you will allow him—it is
up to you—might be able to answer some questions just to
see if there is any information in those notes which might throw
a little light on management performance, and I agree they are
incomplete. I agree they are incomplete. If we look at note 12.1
to the Summarised Accounts of the NHS Trusts where there is a
schedule of fixed assets, I assume under "equipment"
it is not just medical equipment but everything else including
motor vehicles and the lot?
(Dr Collings) That is right.
48. Can you indicate roughly how much of
the amount under equipment there is medical equipment? Have you
any idea how much it is?
(Dr Collings) I cannot give you a figure.
49. But medical equipment is in there, is
it?
(Dr Collings) It is in there, yes.
50. If you just look at that column on 12.1
under equipment you see that depreciation of equipment during
the year under review was 57.6 million. That is pure cash flow,
that has been charged against the profit and loss statement as
it were. Yet when you look a little further up you find additions
in the year were 31.5 million and at first glance, unless there
is an obvious explanation, it looks as if in spite of the fact
that all of these Trusts had a cash flow just purely from depreciation
of 57 million they spent not much more than half of that on new
equipment. Is that because the Trusts are so well equipped they
do not need any further equipment or is there any reason that
alludes me?
(Dr Collings) The Trusts' expenditure on equipment
has to be found out of the total amount made available for capital
expenditure in the NHS in Scotland. It is their judgment of the
relative priorities which different forms of capital expenditure
would take within that total.
51. So am I to conclude from that that as
they look at their financial controls, and they will have more
in a year or two with resource accounting, they are saying that
simply from depreciating the medical equipment they have and the
other equipment, whatever that is, they have got other priorities
rather than spending that cash flow, redirecting it back, re-investing
it in new equipment? On the face of it it seems that barely half
was spent that way.
(Dr Collings) It is a matter of other priorities.
Other priorities would include new hospitals, refurbishment of
hospitals. The other point I would make is that there is a move
towards using operating leases for some medical equipment rather
than buying it out of the capital.
52. Yes, and I see that other leases as
opposed to hire of plant and machinery in note 5.2 suggests that
£10.2 million is spent. Even if you add that to the 31 million
it does not match the cash flow that has been produced from depreciation.
Can we look at note 13. If you look at total stocks and work in
progress against the turnover, as it were, the operating income
so to speak is nice and small, it is less than two per cent, and
that looks terribly efficient. I wonder if you can explain why
it is that raw materials and consumables, and I suppose that means
consumer medical supplies basically, increased by 5.4 million
or 13.3 per cent when, in fact, the income from continuing operations
only increased by 3.5 per cent? Although the numbers are huge
it does seem to suggest that control of those consumables, if
you accept this generalised picture here, is not as tight as it
had been in previous years and I wonder if you know why?
(Dr Collings) A large part of this will be the
increased expenditure within hospitals on drugs.
53. Are you saying that when we see the
accounts for next year we will see the same pattern? It does look
as if stocks are on the increase relative to turnover, increasing
faster than turnover. If one takes what you have just said literally
does it not mean that per patient the cost of drugs has suddenly
soared?
(Dr Collings) The cost of drugs per patient is
increasing substantially because of the introduction of new expensive
drugs and in the ways of treating patients. That will not be the
whole of the explanation but that will be a substantial part of
that explanation.
54. Turnover up 3.5 per cent, if I can use
that word "turnover", activity, and stocks up 13.5 per
cent. These are not trick questions, I am trying to find out ahead
of resource accounting how all of you, the top management of the
NHS in Scotland, actually play the keyboard of financial information.
Let me move on and try another one. Again, they are all obvious
ones. Notes 14 and 16, debtors and creditors. Every good business
tries to extend its creditors where it reasonably can, it tries
not to pay as swiftly as it should, and I know there is some criticism
of that from smaller companies but here you are apparently with
a revolution because in the year under review although your turnover
increased just 3.5 per cent your creditors, your payables, were
cut back by 28 million. Particularly that was amounts paid to
NHS creditors effectively. Why should there be that sudden fluctuation?
Who changed the ground rules and why, and is this just a one-off?
(Dr Collings) I think this will partly reflect
changes in the way that GP fundholding works. The other point
there is that this will also have been the Government's initiative
on prompt payment, not just to the private sector but also to
other public sector bodies.
55. That would explain it. It is a fairly
drastic improvement in which case as good citizens you should
pat yourselves on the back because instead of owing 68 million
at the end of the year you owe slightly less than 42 million.
That is a helpful explanation. Can we go back to note 6.4, remuneration.
Here my question is simply seeking information rather than a reflection
of management performance. I see that 2,840 clinicians and 128
other people, in other words nearly 3,000 employees, were paid
between £40,000 and £115,000 a year and of that number
some 600 clinicians were paid over £65,000 a year. Are you
able to tell me how many of those clinicians add to their income
from private practice, what their contracts are likely to suggest
the split is, so that this Committee and the watching public,
to the extent that there is any watching public, can have some
idea of what these clinicians really take home gross? Are you
able to tell us?
(Dr Collings) No, I am not. We do not collect
that information.
56. Let me see if I can fish a little bit.
Presumably each of those clinicians has some sort of contract
which allows nine-elevenths, or whatever the terminology is that
is used these days, I am out of touch, or so much of their time
to be spent on private practice. What is the typical split? Are
you able to tell me, Mr Scaife?
(Mr Scaife) I am not able to give you answers
in detail. What I can say is that in Scotland there is considerably
less private practice delivered by consultants who also work in
the National Health Service than there is in England, less than
half.
57. That is a helpful comment but I am not
comparing it with England. I am curious to know what clinicians
may be earning on top of this figure. Can you not give me a general
answer on that?
(Mr Scaife) No, Chairman. We would not collect
data about what clinicians earn in a private capacity.
58. No, that is not quite my question and
if it is I apologise for phrasing it badly. Are you able to tell
me how many of the clinicians working in the NHS in Scotland actually
have contracts that allow them to do private work?
(Mr Scaife) No, we would not have that information.
59. So although these people have their
main employment with you you do not have at your fingertips, Mr
Scaife, any information that tells us what else they are doing,
perfectly legitimately of course? You do not appear to be able
to tell me.
(Mr Scaife) Chairman, the information we would
expect NHS Trusts to have as employers of the clinicians concerned
is information about their job plans, information about what it
is that consultants ought to be doing for each session for which
they are contracted to work for the NHS. Obviously we pay salaries
according to the time that consultants work for us.
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