Examination of Witnesses (Questions 240-259)
8 DECEMBER 2004
RT HON
JOHN REID
MP, MR RICHARD
DOUGLAS AND
MR JOHN
BACON
Q240 Chairman: You have got the time
of travelling. Why not do the work where he is based, or she is
based? I do not understand the logic of it.
Dr Reid: Because you need extra
capacity and equipment as well as persons. What you are going
to get over the next few years is not a transfer of work from
the NHS in net terms to the independent sector, you are going
to have an NHS that is vastly increasing its capacity and output
and supplement it by other assets that are being brought in or
built up. The NHS a couple of years ago was doing of the order
of five million operations. By 2008 it will not be doing less
than five million, it will be doing—this is NHS direct employees—six
and a half million, of that order. On top of that there will be
500 to 700,000 operations that will be supplementing the expanding
NHS from the independent sector but it will be purchased at the
NHS price and provided to patients free. That is the big change
from a few years ago. What was happening a few years ago is that
you were purchasing at way above the NHS price and your points
would have been quite legitimate, because you were transferring
value out of the NHS direct employees into the independent sector.
That is not going to be the case now. You are getting a flexibility
and a degree of choice to the patient and a greater capacity,
but you are getting it free at the point of delivery and at the
NHS price. How are we achieving that? By changing the market position.
Q241 Chairman: What I do not understand
is why, when they have got capacity at local level, they are forced
use their own consultants working in the private sector to treat
their patients. The assumption that we are going to be up to 15%
of procedures in the private sector is a huge jump, and I am not
sure whether you have thought through fully the consequences of
shifting that purchasing from the local or key providers. I have
looked at the current proportion of purchasers from the independent
sector in West Yorkshire. The average is about 2%. Moving that
to 15% will mean a significant impact upon your key hospital work,
because that will be business lost to PFI providers, PFI hospitals?
Dr Reid: I am sorry, Chairman.
Q242 Chairman: Let me finish the point
I am making, Secretary of State, because the concern that has
been put to me is where we are moving into PFI schemes, and I
have got one coming up, as you know, in my own area and I am very
grateful for the fact that we have got a new hospital, but what
concerns me and concerns others looking at the longer term impacts
of this change in purchasing policy is can we make assumptions
about the income for those hospitals in future when that substantial
amount of work will be going out of the local hospital in my area?
Dr Reid: Why I interrupted is
that your premise is completely wrong. It is only right if there
is a static number of treatments and operations. Then, indeed,
it is a zero sum game where you cannot transfer to the independent
sector unless you take it away from the direct NHS, but there
is not a static number. The number of operations will be going
up—and this is operations themselves—from around five
million to over seven million over that period. Why? Because we
want people to be getting operations in weeks, not waiting 18
months or years. So when you have a rapidly expanding provision
of treatment, it is possible both to increase NHS treatments as
well as having a greater number from the independent sector. It
is not a zero sum game because you are not dealing with a static
figure.
Q243 Chairman: I know you are not. Let
me put to you one point, because this responds to exactly what
you are saying. The assumption in terms of increased treatments
is that a lot of those treatments will in future take place within
primary care.
Dr Reid: Yes, some of them will.
Q244 Chairman: More and more?
Dr Reid: Yes.
Q245 Chairman: So, although I accept
your point that the figure will be rising, I do not accept this
change that you are proposing in terms of purchasing will not
impact upon your acute hospital activity, because much of the
increase will rightly be done within primary care?
Dr Reid: All other things being
equal, even if you had no independent sector, if you were transferring
treatments from the secondary sector to the primary sector that
would happen anyway, and the other great thing here is that what
is missing from the contribution is that it exclusively concentrates
on providers. We are approaching this and saying the primary purpose
of what we are doing is to give a better service to patients,
and this undoubtedly gives a better service to patients: it increases
the capacity for everybody, it speeds up the efficiency and quality
of treatment they will get, reducing it in some cases from years
to months and then to weeks, and it gives them a greater degree
of choice of the quality they are getting in the secondary sector,
and we are now beginning to expand that in the primary sector
as well.
Q246 Chairman: Let me expand on one point,
and then I am going to bring colleagues in, because I have gone
on probably much too long. What you are saying is that this requirement
to spend up to 15% in the independent sector—
Dr Reid: It is not a requirement,
Chairman. I have used these figures since I came in for 18 months.
Let us be clear on this. When asked what did I envisage would
be the round total of the percentage—I was first asked by
Dave Prentis—I said that I envisaged what I needed was around
10% of treatments but up to 15%; and that was meant as a reassurance
for those people who suspected that there was some great plot
to turn the NHS into a commissioning organisation only with 50%
or 80% of our operations being commissioned. I have said that
in my political lifetime—and I do not mean this as Secretary
of State for health—I do not see us needing more than 15%.
Actually around 10% of treatment provides me with a market and
at the moment we have commissioned about 7%, including the second
wave of treatments that was mentioned by the Prime Minister recently.
Q247 Chairman: So you can give me an
assurance that, in your view, that change in purchasing by PCTs
will not impact in a detrimental way on the acute hospital sector
in the NHS.
Dr Reid: If you are asking will
it have any effect in the acute sector? Yes, it will. I am not
going to lie to you, because I cannot make this a better NHS for
patients—
Q248 Chairman: I said detrimental?
Dr Reid: It is not detrimental
for the patients. Does it place the acute sector individual hospitals
under a greater challenge to provide better quality whether you
have the independent sector or not to know that the patient can
go elsewhere? Yes, it does present that challenge. If you regard
that as detrimental, which I do not, I regard that as hugely beneficial
from the point of the patient, but that is nothing to do in principle
with bringing in the independent sector, because, even if I did,
I would want the patient to have the right to say with increasing
capacity, "The Hinchliffe Hospital is not giving me the service
I need, I want to go to the Bradley Hospital." So that degree
of insecurity is commensurate with giving the patient a greater
degree of choice.
Q249 Chairmanman: Are you comfortable
about the impact on funding streams for PFI projects of the kind
that I will have in my area?
Dr Reid: Yes, I am comfortable
with that. There are two different things: one is PFI. Does it
give us a greater degree of security and minimised risk in the
long run? Yes, it does, but it is accompanied by payment by results,
Chairman. Does that increase the risk to any individual hospital?
Yes, it does. Payment by result puts them under a greater burden
to provide a better quality to everybody, because they know that
although 90% to 100% of people want to go to the local hospital—that
is what people want, they want the best service in the world as
near as possible, with instant access—nevertheless, if they
are not getting that, people want, and should have, the right
to say, "That is not good enough for me. I want to go to
the hospital down the road." If you give patients more choice
to go elsewhere, you give a greater degree of burden of risk on
hospitals—that is inevitable—but you do not regard
that as detrimental.
Q250 Dr Taylor: When we were so rudely
interrupted by the division bell last time we were talking about
the spare unfunded capacity in NHS treatment centres?
Dr Reid: Yes.
Q251 Dr Taylor: I want to put to you
a question direct from NHS Elect, if I may: "We need to understand
how the Department of Heath plans to utilise the capacity it has
provided within the NHS treatment centres and why it has commissioned
extra activity from the independent sector that is entirely unnecessary
in most parts of the country and has led to further problems in
under-utilisation within NHS TCs"?
Dr Reid: Let me give you a straight
response to this. When these quotes have been given, Dr Taylor,
I always ask, not as a politician, as a story, who is saying it
and what interest do they have in saying it? Every lobby group
in the world thinks that the case they are lobbying for is the
most important; every lobby group in health thinks they are not
getting enough money; every trade union will tell you they need
more of their type of staff; and every organisation will tell
you that any change is a great threat which is detrimental to
everyone unless they are getting the most out of it. I make that
as a comment. What is the treatment capacity that we are dealing
with at present that would be the optimum one? The optimum one,
according to the bed survey that was carried out in the year 2000,
is about 82 to 85% capacity. That is the optimum for terms of
quality and throughput. What is the capacity at the moment in
our treatment centres? It is about—and again will stand
corrected—78 to 82%. That is the capacity that has been
taken up. As we progress and as we get payment by results and
as the system which is going in over three years increases, that
will increase as well. They may go up to around 85%. There is
a degree, 10 to 15% in our present hospitals, on average, and
in the optimum theoretical level of bed occupancy treatment centres
and hospitals of about 10 to 15% extra capacity above what they
have at any given time in terms of throughput, which is the optimum
position. I do not think we are miles away from that, and therefore
I do not worry unduly about some of the comments that have been
made, but we are only at the beginning of a three-year transition.
Q252 Dr Taylor: I would rather argue
with you, Secretary of State, that NHS Elect is not a lobby group.
It is a group that was set up by the Department of Health to improve
choice for patients within the NHS?
Dr Reid: But it is a group which
has a self-interest, and I have great admiration for them and
I will listen carefully to what they say, as I will listen to
the independent sector, the trade unions, the various lobby groups
in health. What I am saying is that I do not regard the present
position as being dangerous, deleterious or detrimental to the
patient. Nor do I regard it as being hugely away from the optimum
level of occupancy which we have discovered that is accepted internationally
in terms of quality of treatment to patients, which is about 82
to 85%. I think I am correct in saying that the present occupancy
is about 78/82?
Mr Douglas: It is about 78 to
81, I think.
Q253 Dr Taylor: On my understanding,
that is commissioned capacity rather than the actual available
capacity. The figures I have got for NHS Elect suggests that they
could do about half as much again as they are doing already. If
the money was given direct to PCTs so that PCTs could buy it from
the NHS treatment centres—
Dr Reid: That suggests a 70% capacity,
so that you could do half as much again at 100% capacity. What
I am saying is that I think the capacity actually being used at
the moment is higher than that since those figures were put out,
and, secondly, the optimum capacity use in a hospital is not 100%.
Q254 Dr Taylor: That is when you are
taking into account emergency admissions?
Dr Reid: No, it is not.
Q255 Dr Taylor: With treatment centres
you are not taking into account emergency admissions?
Dr Reid: No, it is not, Dr Taylor.
I will write to you on the basis of the bed occupancy study done,
I think, in 1999 and issued in 2000, which suggests that if you
want the most efficient safe use of hospitals and better quality
use of time spent and convenience and quality for patients, it
is about 82 to 85% in terms of efficiency and quality. At the
moment we have that generally in our hospitals. My understanding
is that we are getting near that with our treatment centres, but
in some of our hospitals we are actually running considerably
higher than that, which is the problem of inherited under capacity,
and we are hoping that that will reduce as time goes on.
Q256 Dr Taylor: I would argue actually.
The whole point of the treatment centres is that they do not have
any emergencies; therefore they do not have to run with the spare
capacity to accept emergencies?
Dr Reid: It is not just treatment
of emergencies. For instance, in tackling MRSA, as some of your
colleagues will point out, if you are running at a capacity rate
of 95, 100% in your hospitals, it is much more difficult to deal
with MRSA than if you are running at a capacity of 80%. If you
want quality and time for patients, for nurses to wash their hands
as they go from one place to another, there is an optimum level
of occupancy, which I have not decided but which I am advised
is about 82 to 85% in hospitals and treatment centres. It is certainly
true that treatment centres a year ago, as we were establishing,
did not start off at anything near that rate of occupancy. I think
they are approaching that now, but I will give you the full details.
It is between 78 and 81%, the occupancy rate. It is not far off
at all the optimum occupancy rate.
Q257 Dr Taylor: A last question. Are
NHS treatment centres allowed to compete on a level playing field
for the same work with independent treatment centres?
Dr Reid: Yes, they are, although
we are paying a premium in the first instance for the set up costs
of the independent sector, which largely accounts for 108% purchase,
but other then that—
Q258 Dr Taylor: But you are giving to
the NHS treatment centres the chance to tender for the work that
is at the moment going to the independent sector?
Dr Reid: We have not done so far.
John, would you like to say something?
Mr Bacon: I think we need to think
about where we are in the process of development of this method
of treatment. There is no competition, in the way that you describe
it at the moment, between the NHS treatment centres and the independent
sector. We specifically sought competition from the independent
sector for the sort of activity the Secretary of State was making.
Dr Reid: And I specifically gave
a guarantee that more than 50% of treatment centres would be NHS.
I could not keep that guarantee if I laid everything open to competition
because the independent sector may have won all of them. I would
say that more than 50% would be NHS treatment centres.
Mr Bacon: What is important is
that from next year, when we offer choice to patients and we have
a menu from which they can select, NHS treatment centres will
be able to compete for individual patient choice with the private
sector—that is where we are moving to—and what you
are seeing is establishing the capacity and the range of choices
available so that individual patients can make those decisions
for themselves with advice from their general practitioners.
Dr Reid: Where I want to get to,
at the risk of bringing the Chairman and I into another discourse,
is I have promised three things by 2008. One is that there will
be an end to hidden waits, so that all waits by then will be judged
from your first meeting with the GP through to your surgery door
and treatment; the second thing is that that wait will be a maximum
of 18 weeks in the five alternatives provided by your PCT—an
average of 10 weeks, a maximum of 18—and, thirdly, I have
said, because I can do this knowing that if I can do the first
two then most people will be perfectly satisfied to go locally,
but I have said if they are not, they will be able to choose from
any hospital in England, private, charitable or NHS, subject to
three conditions that they must meet, that means the GP must verify,
they have a need for that particular operation, the hospital they
chose to go to meets NHS standards registered with the Care Commission
in so doing and it meet NHS prices. So it cannot charge, by law
it will be illegal to charge, higher than the NHS prices. So you
can see where I am going. I am bringing down the independent sector,
and I know that I can offer that by 2008, because if I have brought
down the waiting list to an average of 10 weeks with all the extra
capacity, then the vast majority of people will want to go to
their local hospital, but they will have the right. What I am
doing is extending capacity and quality and I am extending choice,
and the independent treatment centres will be competing on a level
playing field with everyone else, including the NHS treatment
centres.
Q259 Dr Taylor: How will you prevent
them from cherry picking the easy cases?
Dr Reid: The whole nature of treatment
centres, whether independent or inside the NHS, is that they will
do breaching cases one after the other, but they will be paid
commensurately, so the payment that you will get—payment
by result—will pay less for what you call the easy case
than it will do for the complex case; so hospitals which are dealing
with complex cases, which will take a little more time and a little
more complexity, will be paid more money.
| 
