Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)



  40. Would you support a scheme that moved all existing radiologists or existing pathologists from an existing National Health Service hospital to a private sector partner if that seemed to be better value for money and better service for patients? The extra capacity is already there.
  (Mr Milburn) If we could avoid that that would be preferable. However, as you are aware at the moment we have discussions going on in the private sector and with relevant trade unions about the retention of employment model that we are exploring in relation to the private finance initiative, which, effectively, is trying to find a way of ensuring the lowest paid people in the National Health Service, the cleaners, the porters, the cooks and the laundry workers do not automatically have to go to the private sector for their employer in the event of their being a PFI scheme in their local hospital. We are trying to find a way they can retain their National Health Service hat on National Health Service terms and conditions. We are making progress with that and we are in negotiations and discussions but nothing is finalised at the moment. If we can bring that retention of employment option off there it is possible that we could apply that same model, for example, in pathology labs.

  41. You would only allow that scheme to go ahead if the clinical staff, as you see it, stayed as National Health Service employees?
  (Mr Milburn) That is the current position.

  42. Even if a scheme was put forward by a private company would be better value for money?
  (Mr Milburn) I should say we have had three schemes to date where we brought the private sector in for pathology, where in two cases, as I remember it, staff have transferred and in one case staff have not transferred.

  43. In the cases where the staff have transferred we have had clinical staff transferring under a partnership scheme.
  (Mr McKeon) Not the consultants.

  44. Why is there a distinction there?
  (Mr Milburn) That is why it is important that we try get this retention of employment options working. There are good service reasons why we should try to retain people, for labour market shortage, for the reasons that we set out earlier, but there is also a cultural thing, by and large people like being part of the National Health Service.

  45. I agree.
  (Mr Milburn) They are quite important members of staff. At the moment because we are having to embark on a trade-off between getting additional capacity into the National Health Service and some members of staff having to leave the National Health Service that is a trade-off that is currently taking place under the PFI and under the PPPs that we could envisage for pathology services. The reason the retention of employment option is actually quite significant, not just for cooks, porters and cleaners, is that potentially it provides a means of avoiding that having to be a trade-off. We need to try to make the retention of employment option work, if we can. All I will say is that it is phenomenally difficult.

  46. If you had National Health Service management that had things that seem to identify more with the private sector in your brief, I hope, I am confident that you would say, you would also be associated with some National Health Service management innovative ideas, risk taking abilities, and so on, if you had such a National Health Service management that wanted to take over the maintenance of the building of a PFI hospital and the cleaners or another part of staff would that be considered or, in your view, does the maintenance always have to go with the construction of the building?
  (Mr Milburn) Are you talking about PFI now?

  47. Yes.
  (Mr Milburn) I think there is a natural distinction, to tell you the truth. Remember what you are procuring under PFI is a managed asset over a period of years. PFI is very controversial but the one great advantage it has is that it gets the local NHS management and the commissioners and everybody else out of the business of having to worry about whether the building is maintained for 30 years. The only way you can maintain the building as new for 30 years, or 60 years, with a break clause usually after 25, is if you have the staff who can look after the building. The point I want to make is that I think there is a distinction to be made between those NHS staff whose necessary function is the maintenance of the building—the engineers, the ground maintenance people, the electricians and so on—and those people who more naturally are aligned with mainstream NHS clinical services. I know you want to come back in but let me finish the point because this is really important. There was a view at one time that NHS cleaning services did not really matter, you contracted them out, you got the cheapest deal, nobody gave a damn, and people were amazed when hospitals got dirty. What we have done over the last few years is try to re-integrate the cleaner back into the NHS team, and that is why we have got the matron back in fact.

  48. I accept all of that, but what if NHS management said, "Actually, what we would like to do in our hospital is accept one less patient, we will accept 90 per cent of maintenance because we want instead to experiment and do something different, all the things which the PFI schemes say, so we can give better value for patients, better service for patients and better value for money for taxpayers as a result"? Do you dogmatically rule that out or would you consider such a scheme?
  (Mr Coates) Are you the envisaging the trust itself borrowing the money?

  49. No, somebody else builds the building and they have some staff—cleaning or something else—but not maintenance staff.
  (Mr Coates) The problem I think is really the security of the money. You are saying to the banks which lend the hospitals several hundred million pounds, "Trust us, we will deliver it back to you and pay the bills on time without any security." If you are going to do that method, you have to find some way of the trust itself providing security to the banks, and that begs the question, who is borrowing the money then, and perhaps you might find that actually the NHS is better at borrowing money than an individual trust.

  50. I understand that. It is a dogmatic rule you have to stick to for Treasury rules.
  (Mr Milburn) Poor old Treasury, it always gets it in the neck.

  51. Yes. A lot of what you have talked about is trying to move away from spot-purchasing by the private sector and moving instead to long-term agreements.
  (Mr Milburn) Yes.

  52. If you had those long-term agreements buying operations for NHS patients, that means private sector nurses in those hospitals providing the support and care for NHS patients. Is that any different from contracting out clinical services?
  (Mr Milburn) It could mean the BUPA nurse providing the service but, as I indicated earlier in the example I was using to the Chairman about Kent, it depends what you are contracting for, it depends what you are actually buying. We were talking earlier about the purchase of the London Heart Hospital, and as it happened the staff came along as a sort of consequence of the purchase of the asset. Primarily what we were buying—and it was fantastic to have some more nurses and great to have some more trained doctors—was the asset. In a lot of these instances under the Concordat and under some of the arrangements I outlined to Mr Burns for the future, what we are interested in is procuring more assets, more capacity, more hardware. Very often in these instances, it will as much involve the NHS nurse and the NHS doctor treating the NHS patient in a different location as it will the BUPA nurse treating the NHS patient in their hospital.

  53. But in many cases it is the BUPA nurse as well, so in that sense the clinical services are contracted out?
  (Mr Milburn) It could be but we are not taking a group of NHS staff and lobbing them over to the private sector, saying, "There you are." That is what used to happen with cleaners. We are trying to get to a position where that does not happen. What we are trying to do is to purchase the maximum capacity from the BUPA hospital, or whichever hospital it is, which happens to get the maximum capacity out of the people they already employ. It does not involve the transfer of staff. If the idea is that somehow or other this is akin to some sort of privatisation of clinical services, that would be an allegation I wish to refute.

John Austin

  54. I very much welcome your recognition of the Medical Laboratory scientific officers' key role in the NHS and the fact they want to work in the NHS, but you recognised in the last pay round the demoralisation there was amongst pathology staff and that was recognised by the substantial increase. In terms of the professions allied to medicine, for those who are outside the Pay Review Bodies, what is your timescale for bringing them within the Pay Review Bodies because it is clearly in those areas, where staff have been outside the Pay Review Bodies, where we have seen the greatest demoralisation and gap.
  (Mr Milburn) There is a negotiation going on. I am the employer and there are trade unions, and one of the trade unions' demands, one of the MSF's demands as it happens, is that they want to have their people inside the Pay Review Body. But we are in negotiation, in the middle of that right now. Agenda for Change, which is the negotiation, which is how we have modernised NHS pay across the piece, including looking at who should be in and outside the review bodies, has been going on for some considerable time. It is slow going, I know that, it is pretty frustrating all-round, both for the unions and indeed for us, but it is not surprising it has been slow going when you are negotiating with a whole host of different people with quite different agendas. I cannot say when it is going to come to fruition and nor can I say what the outcome will be, because we are in negotiation.


  55. We want to look at the overseas patients programme and I will move to Simon Burns in a moment but on capacity can I ask one final question. You will remember, when we looked at mental health, we expressed concerns about the way in which we felt the use of the private sector had retarded the development of more appropriate accommodation within the National Health Service. We gave examples of particular patients placed in private sector secure units in Yorkshire who were primarily London-based patients, and we did not see a great deal of logic in that policy when a key part of their treatment was to try and care for them in the community they came from and had lived in. My worry about this is that it is very short-term thinking. You talk about longer term arrangements, will that include a longer term evaluation of whether the use of the private sector in what was, in mental health, initially the short-term but it has become the longer term, is really value for money and offering proper quality services? At lunch time I was talking to a health service manager who was telling me we are spending £35 million a year in London alone for private placements of acute psychiatric patients outside London. That does not seem to make sense to me.
  (Mr Milburn) The corollary of a longer term relationship, which is what we have been discussing and what I have been trying to outline today, is that we have to make sure we get the benefits back, and that means we do have to assess the value for money implications if we are contracting with the private sector to provide certain services, mental health services, secure beds, from the point of view of the taxpayer. That is why I was saying earlier that whilst it has been true that thus far under the Concordat local health services have very much made their own deals with the local private sector provider—and frankly have paid quite differential prices as a consequence—if we have a longer term relationship which guarantees to the private sector greater continuity of custom from the National Health Service to treat patients, the corollary of that is that you would expect to see movement on price and expect us to use the benchmark of NHS reference costs when we are undertaking those contracts. That will take us into new terrain and terrain we have not been into so far. Point one is there will be a deal to be struck. Point two is that I think the obligation on us, if we are doing more contracting with the private sector in that sort of way, in value for money terms will be to make sure we are undertaking the appropriate monitoring to get the best possible deal for the patients. I have no doubt that organisations, whether it be the National Audit Office, or others, will be taking a real interest in this area. I do not have a problem with that at all. The third and final point is that on secure beds, you are right, historically the National Health Service effectively contracted out the provision. We are changing that, as you know. One of the real things that we have achieved in the mental health field is to begin to address the real gap in capacity round the secure bed provision. We have put in 400 or 500 beds in the last five years and I hope we are getting them into the right areas of the country. There have been for very many years historical problems in London, which is why you have patients shipped up to Yorkshire, we will have to address that over time.

  Chairman: Now we go overseas.

Mr Burns

  56. I want to ask you one or two questions about the overseas patients. I fully accept that given the court ruling was only three months ago you may have difficulty in answering questions because it is too soon and things have not bedded down.
  (Mr Milburn) Sure.

  57. I understand that there are pilot schemes at the moment with some patients going to Germany. How do you envisage, if we put aside for a minute the cost implications or the cost estimates, on the nitty gritty things, for example, like the travelling from the United Kingdom to presumably, a logical conclusion, anywhere in Europe for treatment and the cost of taking a family member with you to look after you and help you both getting there and returning to the United Kingdom? What is the situation in those countries? Correct me if I am wrong, in Spain, for example, you have to provide your own food or the family has to provide the food for the patient who is in hospital, which is a system totally different to here. What happens in those circumstances? What happens if there are adverse clinical incidents or post operation complications, who is responsible? What is the route for help and redress, and whatever?
  (Mr Milburn) I think all of those are very, very telling points, that is why I will start with the big point and then to deal with some of the specifics. That is why those who see the sending of patients from this country to other countries in Europe as a panacea for the National Health Service are wide off the mark. I think it can help, I think particularly in those parts of England that are close to the Continent, potentially it may be attractive for some patients to travel 30 miles to the North of France rather than travel 30 miles further northwards in England, it may well be. There are a couple of caveats round it that are very, very important, and I will raise some of them: (1), if we are going to do this then it has to be with the consent of the patient. There is no question whatsoever of sending patients abroad against their will. (2), it has to follow a full clinical assessment of their needs. (3), we have to put in the place the appropriate arrangements to ensure that we get good value for money for the taxpayer and a guarantee of clinical standards of the highest level for patients.

  58. Can I pick you up on the first one, where you said it has to be with the total agreement of the patient which, of course, is absolutely right. Is there not a problem where a patient is confronted with an either/or situation, where they are told that they need an operation and they are told that if they want it in London the waiting list, as far as it can be judged, is 10 to 12 months, but you can have it in two weeks' time if you travel to Northern France or Germany. That voluntary element is slightly removed in some ways because of the temptation that they could have their operation in two to three weeks' time rather than having to wait 10 to 12 months?
  (Mr Milburn) Those might be extreme ends of the spectrum.

  59. Do you think it would be extreme?
  (Mr Milburn) I will solve that dilemma for people.

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