Select Committee on Health Minutes of Evidence


Memorandum by General Healthcare Group (PS9)

1.  SUMMARY

  The needs of patients should be the core of any review of public private partnership in the NHS. General Healthcare Group believes that increased partnership need not compromise the fundamental principle upon which the NHS was built, that health care should be available to all and free at the point of use. A public sector monopoly over provision is not a precondition for a strong and sustainable National Health Service.

  The starting point for GHG is that future healthcare needs could be met more effectively by further developing a regulated, mixed economy in NHS provision. This is less radical than it sounds. What critics of this perspective fail to acknowledge is that we already have a mixed economy in health. Successful partnerships have already been developed between the private sector and the NHS in a number of important areas. Indeed the Health Committee was itself broadly supportive of the private sector operating as it does in mental health, under strict regulations and monitored by Health Authorities. However, more benefits for patients could be delivered by using private sector capacity to help alleviate pressure on the NHS if it were undertaken on a more systematic basis. Current arrangements are short term and characterised by tight timescales and generally very short lead-in periods.

  To help improve the present position, GHG recommends that:

    —  at all levels of the NHS a concerted effort at examining the scope for developing long term partnerships should be made (page 6 of this memorandum);

    —  there should be an increased exchange of data between public and private sectors on NHS patient surveys to enhance the delivery of patient-focused approaches through the Concordat (page 7);

    —  work be done to refine and enhance mechanisms to enable effective price comparisons (page 7);

    —  work on a standard contract be prioritised by the Department of Health and that it should be updated and amended as required in the light of its experience, and then made freely available as a model form for use (page 8);

    —  consideration be given to the establishment by the Department of Health of acceptable price scales or ranges for the undertaking by the independent sector of concordat work (page 8);

    —  the scope for private sector facilities to contribute to NHS capacity should be carefully considered before the scarce resources available to the NHS are devoted to new Diagnostic and Treatment facilities (page 9);

    —  the location of these Centres is linked to areas with waiting list problems (page 9);

    —  serious consideration needs to be given to speeding up the lead time on these new facilities, including alternative funding outside the PFI (page 9);

  In the right circumstances, GHG would be prepared to build and operate a Centre at its own expense for use by the NHS. This would involve:

    —  GHG capital not Government funds—circa £30 million;

    —  a quick delivery time—two years;

    —  no up-front NHS contracts—at our own risk;

    —  locating the Centre in an area with severe waiting list problems.

  GGH does not see a role for itself in capital-only partnerships such as PFI. The process is cumbersome, expensive and currently does not recognise the ability of General Healthcare Group to deliver high quality clinical provision.

  In conclusion, GHG notes that in the field of psychiatric care (inter alia) private provision has been an unremarkable reality for many years and that this partnership with the NHS is recognised in many quarters (including the present Health Committee) to be productive and worthy of strengthening. If the patients' perspective is paramount, they could be forgiven for wondering why the provision of acute healthcare should be regarded differently: if schizophrenia is treated in a setting of mixed provision, why not heart disease? The reality is that when asked the question the patient is predictably pragmatic about the locus of treatment. Government policy should follow the lead given by patient opinion.

2.  OVERVIEW

  The needs of patients should be the core of any review of public private partnership in the NHS. General Healthcare Group (GHG) believes that increased partnership need not compromise the fundamental principle upon which the NHS was built. That is, healthcare should be available to all and free at the point of use. Acknowledging the primacy of this principle does not prevent recognition that the delivery systems used by the NHS can, and should, evolve to deliver this core objective. A public sector monopoly over provision is not a precondition for a strong and sustainable National Health Service.

  The NHS is experiencing unprecedented demands for its services. This is reflected in long waiting lists and evidence of care inequalities across the UK. The need to reform the NHS is driven by increased appreciation of where it is failing to deliver. It can no longer guarantee the uniformly high standards across the country that patients have a right to expect. GHG firmly believes that structural change is required. Increased public private partnerships can play an important part in this. The public shares this view. MORI research[1] has found that two thirds of the public accept the idea of the NHS paying independent hospitals to provide health services for NHS patients. Over 90 per cent agree that waiting lists would be shorter if private hospitals were allowed to treat NHS patients.

  The starting point for GHG is that future healthcare needs could be met more effectively by further developing a regulated, mixed economy in NHS provision. This is less radical than it sounds. What critics of this perspective fail to acknowledge is that we already have a mixed economy in health.

3.  EXISTING PARTNERSHIP ARRANGEMENTS

  Successful partnerships have already been developed between the private sector and the NHS in a number of areas.

Medium Secure Psychiatry

  Operating under the name "Partnerships in Care"[2], GHG delivers medium secure psychiatry and acquired brain injury services for the NHS. It was pleased to receive a visit, and positive reactions, from members of the Select Committee at its facility, Stockton Hall[3], in 1999. Partnerships in Care provides over 275,000 days of psychiatric care annually to some of the most challenging NHS and social services referred patients. These patients represent a significant proportion of the third of all state psychiatric patients who are referred to the independent sector.

  Rigorous standards of care are maintained through Service Level Agreements in place between Partnerships in Care and its referring NHS or social services agencies. These define service and quality levels, the scope of treatment and care to be provided and target outcomes. Aligned to this are individually tailored care plans for each patient, regular reviews of their progress and the active participation of the referrer in helping define the patient's treatment. Our ongoing work in this area reflects the high standards of patient care that we are able to deliver for some of the most vulnerable patients within the NHS.

  The Health Committee has itself recently considered the role of the private sector in the field of mental health and reached generally positive conclusions. In its 1999 report on regulation[4], the Committee recommended that ". . . health authorities . . . should review ways in which the independent sector . . . can contribute to the planning mechanisms, [believing that] the outcome of such a process should be the provision of optimum services determined by the NHS and provided in a manner which ensures a high quality of care for patients and maximum value for public money . . .". Earlier this year, in its report[5] into head injury rehabilitation, the Committee recommended that the statutory services recognise the contribution in this field of the independent sector, and that they collaborate actively with them to provide the best possible service for the patient.

Acute Surgical Treatment and the Concordat

  GHG works in the acute sector under the name "BMI Healthcare"[6]. Our work with the NHS in the acute sector is complementary to the services provided by traditional NHS providers. We also have partnership links based on sharing facilities. Local purchasers have long been able to purchase services from BMI's hospital network. We welcomed the opportunity to extend this work under the Concordat. Since November of last year we have treated some 20,000 NHS patients. Over the same period independent providers have treated some 70,000 cases. We are pleased that the sector has been able to contribute to meeting local needs in this way.




  The growth in patients treated under Concordat should be welcomed. They have received care more quickly than if the NHS had to rely entirely on its own capacity to provide services. The reality is, however, that concordat patients represent only a small proportion of the total of patients treated. This is the case, whether one considers total NHS patients treated, or total private patients treated. NHS patients represent only 5 per cent to 10 per cent of the independent sector's output. In some respects, the figures for the Concordat are disappointingly low. They should not, however, be underestimated. General Healthcare Group estimates that without the operations carried out under the Concordat, NHS waiting lists would now be some 70,000 patients higher than their current level.

4.  PERCEPTIONS OF THE CONCORDAT

  GHG believes that the Concordat is a valuable initiative but that its full potential has not yet been realised because there are still negative perceptions of independent acute surgical healthcare. Some criticism has suggested that developing links under the Concordat is a bridgehead to the "privatisation" of the NHS. We take this to mean that in some way the essential character of the NHS, that it is free at the point of delivery, would be adversely affected by the involvement of the independent sector in service delivery. Certainly this has not been the experience in mental health, and there is no reason why it should be in acute surgical treatment. Changing this essential ethos of NHS service is no part of GHG's strategy towards the NHS—and we do not believe it reflects the intention of other independent providers.

  A core aspect of our expertise lies in building and running small elective surgical units of up to 250 beds, not in managing large District General Hospitals; we are not planning to bid to manage units beyond our present competencies. Given the existing problems of waiting lists and growing patient demand, GHG believes that the current priority should be to explore how the private sector can offer complementary services to meet local needs for elective surgery. Talk of "privatisation" distorts the true reform agenda.

  GHG has also been concerned about press reports regarding sending patients abroad to receive treatment. It has been suggested that this has become necessary because the prices of private providers are too expensive. GHG totally rejects this claim. This misunderstanding has been created by a failure to understand the way in which private sector pricing works. Prospective patients can pay for their care in various ways. A patient approaching a private facility and paying by cash on a one-off basis would pay a one off price, a so-called "spot price". These prices are inevitably higher than those negotiated by bulk purchasers—such as, say, the NHS. A NHS purchaser will have in place mechanisms to estimate where their capacity will be inadequate and therefore where it might need to make purchases from a local private provider. A purchaser making properly planned multiple purchase will be able to secure a cost-effective rate from the private sector. It will certainly be competitive in comparison with continental suppliers. It will also be preferable in terms of patient convenience and by giving the purchaser greater confidence that the proper standards of care will be delivered. Certainly this was the experience in a recent concordat initiative[7] undertaken in East Surrey.

  Critics have also called for resistance to the Concordat because of concerns about staffing issues. GHG rejects the notion that its staff are not properly treated or that they are not motivated by the keen desire to deliver the best care possible for their patients. GHG's staff are a critical element in its ability to deliver care successfully. Our policy is to treat them with respect and, as far as possible, involve them in making decisions that affect them. Authority is delegated to front-line service staff wherever possible. All GHG's staff are engaged on clear written terms and all employees enjoy full employment protection. Clinical staff enjoy benefits broadly comparable to those that they would have in the NHS. There is no premium payable over NHS. Our internal research indicates that staff work in the independent sector because they enjoy the work and the delegated management style.

  GHG pioneered the use of flexible terms and conditions and led on return to nursing programmes. GHG encourages staff to see the real value in front-line service delivery. It adheres to the highest ethical standards in its recruitment and staff management practices. As in any sector, employers should be judged on the actual way in which they operate. Knee-jerk reactions to private sector employers are not helpful; they misrepresent the approach of individual providers and impugn the reputation of our highly committed and professional staff operating at all levels within GHG.

5.  DEVELOPING THE CONCORDAT

  Using private sector capacity to help alleviate pressure on the NHS could deliver more benefits for patients if it were undertaken on a more systematic basis. Current arrangements are short term and characterised by tight timescales and generally very short lead-in periods. This may be appropriate where the objective of the commissioning NHS unit is to reduce patient waiting times/numbers.

  However, it is unlikely to be totally effective and does not represent a means of providing a long-term solution to capacity problems. Longer-term service arrangements for acute elective surgical treatment would enable a more measured approach to waiting list management and maximise the scope of the independent sector to effectively complement local NHS resources. GHG recommends that, at all levels of the NHS, a concerted effort at examining the scope for developing long term partnerships should be made.

  Some headline issues could be addressed to facilitate this general recommendation:

Enhancing the Development of Clear, Measurable Quality Standards

  The passing of the Care Standards Act 2000 and the development of a comprehensive set of healthcare standards for the private sector, modelled on those prevailing within the NHS were excellent initiatives. They have been crucial in ensuring a common platform for service quality across both the NHS and the independent sector. These measures have also raised standards for small operators working at the periphery of the independent sector. The new standards now allow for direct comparability[8] between NHS and independent providers. This is invaluable for greater co-operation through the Concordat.

  However, a number of independent sector providers (including GHG) participate in additional external accreditation and quality measurement programmes such as HQS, HAP and ISO. This helps support the delivery of appropriate service quality levels and provides an external assurance to service purchasers (both independent sector and public sector). A number of NHS Trusts have also joined such schemes, again helping ensure that service provision benchmarks are set appropriately and at levels consistent with the experience of both sectors.

  These developments are extremely positive but more could be done. The independent sector has established a strong tradition of patient follow-up to monitor and measure patient satisfaction. This has been a very strong factor in shaping service delivery to patients' own preferences, and will help ensure that any NHS patients treated benefit from a fully patient-focused approach. GHG recommends that there should be an increased exchange of data between public and private sectors on NHS patient surveys to enhance the delivery of patient-focused approaches through the Concordat.

Demonstrable value for money, against public sector comparators

  In addition to quality, cost-effectiveness is a critical factor for the successful development of the Concordat. The recent publication by the NHS of reference costs has allowed direct comparisons to be made when considering whether the independent sector could be used for cost-effective service provision.

  A recent East Surrey waiting list initiative, for example, was able to undertake a full comparison between the cost of using independent sector hospitals and holding patients within the NHS. This enabled the independent sector to focus on what it did well—delivering short patient lead times from consultation through to surgery—in a manner that was compatible with the full cost of service within the NHS.

  East Surrey concluded that, on a directly comparative basis, using the private sector was often cost effective. Twelve procedures were analysed[9]. In seven cases the NHS reference cost was higher than the independent sector charge. In the other five cases the independent sector charge was the higher.

  What is clear is that the publication of reference cost data is critically important in allowing proper, objective comparisons to be made in support of "best value" decision making. Enhanced price transparency will be important in assessing the optimal choice of provider against three considerations: overall service quality; immediacy of access; and relative price. GHG recommends that work be done to refine and enhance mechanisms to enable effective price comparisons.

Developing the Contracting Process

  Private/public partnership in medium secure psychiatric services has been fostered by a clear contracting procedure, supported by clear and unambiguous contract terms. This works by setting out the respective roles and responsibilities of both the service provider and the commissioning organisation. The same position prevails in those other areas of healthcare where contracting with the independent sector is an established part of NHS provision. The position in the acute elective sector has not been so well developed, with individual health authorities and commissioners developing their own contractual arrangements and contractual terms. This adds cost to the purchasing process and draws resources from front-line services. Much of this activity "re-invents the wheel" as the work has been done, and tested, elsewhere.

  GHG supports the development of a standard form contracts for use between the independent sector and the NHS. Work in this area is already underway and will draw on best practice already developed under the Concordat. This will cover, for example: the nature of the activity; quality; cost; and, importantly, the absolute scope of the service being provided and where the service start point and finish points[10] are. It would benefit all involved in Concordat service commissioning and provision if a standard could be promptly agreed for the purchase of acute services. General Healthcare Group recommends that work on a standard contract be prioritised by the Department of Health and that it should be updated and amended as required in the light of its experience, and then made freely available as a model form for use.

  In addition to the time being expended on the contracting and documentation processes, much time is also being consumed in price negotiations. The work being done at each locality often duplicates work that has already been done elsewhere within the NHS. For that reason, and subject to the competition constraints applicable, GHG recommends that consideration be given to the establishment by the Department of Health of acceptable price scales or ranges for the undertaking by the independent sector of concordat work. This would improve overall service cost-efficiencies, help reduce NHS transactional costs, and most importantly bring treatment even faster to waiting patients.

6.  THE PRIVATE FINANCE INITIATIVE

  GHG does not see a role for itself in capital-only partnerships such as PFI. Although General Healthcare Group was involved with one of the first PFI schemes[11], it has concluded that while the focus of the PFI is on "bricks and mortar" rather than the delivery of front line service, the contribution we can make is restricted.

  We would, however, make some observations about this initiative. The debate on the PFI is highly politicised. The value of this discussion is sometimes reduced because of this. Political perspectives (both pro and anti) have sometimes simplified the debate. For example, much of the criticism of the PFI has been focused on the number of hospital beds created, rather than about the efficiencies of their configuration or the throughput that they will permit. Continuing focus on service inputs is misplaced and fails to take account of the potential of the PFI approach. The real question is how the new PFI based units that have been created will function in practice. Number of beds is simply one indicator. How those new, PFI funded beds and the related operating theatres and support services are used is the critical question. Put bluntly, poor management practices are unlikely to be transformed simply by moving them into new premises.


7.  TREATMENT AND DIAGNOSTIC CENTRES

  GHG has been following the development of the Treatment and Diagnostic Centre initiative with interest. The creation of these facilities could be an invaluable tool for the NHS to address waiting list problems. However, we would make the following observations:

Existing Private Sector Facilities

  While the creation of dedicated NHS units will provide local purchasers with more capacity, pursuing this option will involve (a) delay as projects are developed and (b) expense as additional funds have to be devoted to build them. It must be recognised that there are over 200 private hospitals in the UK, many with facilities and the capacity to undertake the same sort of work that Treatment and Diagnostic Centres would. The ability of private facilities to provide quick results for NHS patients should not be underestimated. GHG recommends that the scope for private sector facilities to contribute to NHS capacity should be carefully considered before the scarce resources available to the NHS are devoted to new Diagnostic and Treatment facilities.

Match Up with Waiting List

  Treatment and Diagnostic Centres could be a very significant means of addressing waiting list problems. Certainly, the public perception is that this is the key objective of such centres. However, the list of schemes announced bears little relationship to areas where waiting lists are most problematic. GHG recommends that the location of new Treatment and Diagnostic Centres is more closely linked with waiting list problems.

Delivery Under the PFI

  The PFI is a key means of developing new Treatment and Diagnostic Centres. However, of the 29 facilities so far announced, only two are expected to be completed by the end of 2002, with only four completed during 2003. In total only 12 will have been completed by the end of 2004. The rest are not expected to be completed for four or more years. GHG recommends that serious consideration needs to be given to speeding up the lead time on these new facilities, including alternative funding outside of the PFI (see GHG proposal below).

8.  PROPOSAL FOR A TREATMENT AND DIAGNOSTIC CENTRE

  GHG believes that there are opportunities for private sector involvement in this important initiative that are not being properly pursued. In the right circumstances, GHG would be prepared to make its own contribution to this initiative by building and operating a Centre at its own expense for use by the NHS. This would involve:

    —  GHG capital not Government funds—which we estimate would be around £30 million;

    —  a quick delivery time—we estimate we could have a centre up and running in two years;

    —  no up-front NHS contracts—this would be done outside the PFI and at our own risk;

    —  locating the Centre in an area with severe waiting list problems—also likely to be a relatively deprived area that could not benefit from the Concordat because of a lack of existing private facilities.

  All GHG requires to undertake this initiative is a commitment from the Government that no political impediments to such a facility building a long-term relationship with NHS purchasers will be introduced. GHG would not want to build a Centre that would not be used after a couple of years because the Government subsequently decided to reject using private sector provision.

  GHG would also require action dedicated to removing remaining local and institutional barriers to the purchase of services from private sector facilities (see recommendations on Concordat).

9.  CONCLUSION

  GHG commends to the Committee that the Government should provide a clear commitment to long term partnership between the private sector and the NHS and should actively examine how barriers to private/public co-operation can be reduced.

  In conclusion, GHG notes that in the field of psychiatric care (inter alia) private provision has been an unremarkable reality for many years and that this partnership with the NHS is recognised in many quarters (including the present Health Committee) to be productive and worthy of strengthening. If the patients' perspective is paramount, they could be forgiven for wondering why the provision of acute healthcare should be regarded differently: if schizophrenia is treated in a setting of mixed provision, why not heart disease? The reality is that when asked the question the patient is predictably pragmatic about the locus of treatment.

  Government policy should follow the lead given by patient opinion.

General Healthcare Group

September 2001



1   Research conducted by MORI in 1999, and referred to in LSE-New Statesman 1999 Annual Conference Background Paper, The Role of the Private and Voluntary Sector in Healthcare. Back

2   Background information on Partnerships in Care has been supplied to the Clerk to the Committee. Back

3   Since the Committee's visit in 1999, the unit has been completely redeveloped at a cost of £20 million. The Committee would be welcome to visit the new facility. Back

4   The Regulation of Private and Other Independent Healthcare, Health Committee Fifth Report, Session 1998-99. Back

5   Head Injury: Rehabilitation, Health Committee Third Report, Session 2000-01. Back

6   Background information on BMI Healthcare has been supplied to the Clerk to the Committee. Back

7   See footnote 10 below. Back

8   The Consultation Paper introducing the new standards noted that the standards had been prepared by reference to, inter alia, ". . . the standards that apply in the NHS, including the relevant national service frameworks . . . ". See Consultation Document, National Minimum Standards, July 2001, Project Method, page 15. Back

9   See Health Services Journal, 6 September 2001, table on page 26. Back

10   An important consideration at East Surrey was to define the services that the individual providers were not being contracted to provide, so as to allow for absolute clarity in the scope of what was being provided. Back

11   The Norfolk and Norwich Hospital. Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 15 May 2002