Examination of Witnesses (Questions 60
- 79)
THURSDAY 9 MARCH 2006
MR KEN
ANDERSON AND
MR BOB
RICKETTS
Q60 Dr Taylor: Do you think there
is going to be any further movement? Could you see a situation
where we would get down to the NHS tariff rates?
Mr Anderson: We will have to.
The intention of the Department through the policy push is to
get everyone a tariff and if private sector providers cannot compete
at tariff once that is instituted then they will not be providing
the care to patients.
Q61 Anne Milton: Can you tell me
how much the ISTC programme has cost to date?
Mr Anderson: Just in terms of
the procedures that we have bought, we have done 49,000 procedures,
it is £106 million.
Q62 Anne Milton: Do you think that
is good value for money? The three things, the ISTCs, the NHS
Treatment Centres and then there is what would happen in the NHS
normally, how do they all compare?
Mr Anderson: You have to understand
that if the NHS could have created this capacity and they told
us they could not—There is an incremental cost to providing
new treatment centres even in the NHS. You have to go out and
build a building and theatres.
Q63 Anne Milton: Or you could use
the theatres overnight.
Mr Anderson: Based on the evaluations
that we did on the bids—and we went through a very robust
procurement process and a resultant force within that was the
fact that the spot-purchase market came down significantly—we
did achieve value for money and we had a set of procurement tools
that we utilised and then ultimately the decision was based on
a value for money calculation and we achieved value for money
within that environment.
Q64 Anne Milton: I am missing a bit
of this story. You said you achieved value for money based on
what? How do you measure that? What is your evidence for making
that statement?
Mr Anderson: Our evidence for
making value for money statements is that we went out with a mandate
from the local NHS who said we needed to go and have capacity
put in place to take care of patients and bring down waiting times.
The value for money process is based on the fact that the NHS
could not do that, that we had a robust procurement process in
place and that we went out and procured the appropriate—as
specified by the NHS—throughput at prices that we could
benchmark against an NHS equivalent cost.
Q65 Chairman: Let us move on now
to Phase 2. I realise it has not been laid out in many ways. How
will the location of Phase 2 ISTCs be decided? You hinted that
the first ones were decided on the basis of the need for elective
surgery. Presumably surgery lists were a good indicator of where
they should go in geographically. Is that going to be the case
for Phase 2?
Mr Ricketts: Phase 2 is about
additional capacity in some health economies. In some places there
is still a need for significant capacity to do 18 weeks. Cumbria
and Lancashire would be a good example of that, Chester and Merseyside,
Greater Manchester and West Midlands South. Some of those are
a combination of elective capacity and what we call ICATS, so
it is like a combination of diagnostic capacity and assessment,
a bit like an assessment centre for patients that then go on to
electives. It is therefore not the same as schemes in the traditional
Wave 1 programme, but that is very much based on local economies'
needs in terms of delivering 18 weeks or whether they need to
change services. Some of it is around there being a need for capacity.
There are issues around improving access. In West Midlands South
we were asked to look at a mobile service to improve access. We
have also had a look at that in some of the more rural areas like
the south-west peninsula and so on. There is also the need in
some locations to improve patient choice and in other areas we
have said that we need to use the independent sector programme
as one of the levers to improve NHS productivity and responsiveness
in a given economy, which is what is behind some of the schemes
in Avon, Gloucester and Wiltshire and Essex and so on. The exact
rationale does vary from place to place. In some places it is
absolutely about pure capacity to do 18 weeks; in other places
it is more around creating some further competition to drive up
standards in the NHS and/or it is greater financial choice. It
is much more variable in terms of the reasons why we are proposing
putting something somewhere than in Wave 1.
Q66 Chairman: On the issue of choice,
I mentioned very early on this awful word contestability which
I think we have now got rid of and said it is competition. Where
you have got a situation where an area has effectively not had
a great call on the independent sector in the past—My area
would be one of those areas. There are some independent sectors
there but not on the scale that there are in other parts of the
country. A cynic might turn round and say that the reason why
the second wave is going in there is because they want competition
and the only way that you really get it is by bolstering the independent
sector by bringing in a second wave ISTC. What do you say to that?
Mr Ricketts: It would be inappropriate
to comment on South Yorkshire—
Q67 Chairman: It is an area that
does not have an independent hospital.
Mr Ricketts: There are various
ways of getting competition. The point of competition—and
it is not something we are pursuing in its own right—is
to drive up NHS productivity and standards in those areas. In
some cases you can deliver competition and those improvements
through the Foundation Trusts' programme. That is one element
of getting increasing competition, to drive up standards and so
on. In the independent sector we have the main ISTC procurement,
we also having something called Extended Choice, which is focused
around using some of the incumbent independent sector to offer
patient choices at tariffs and we have the main procurements.
What we have been doing is looking in each of the areas at what
is the right balance. If you take somewhere like South Yorkshire
then it is difficult. Yes, arguably there is a lot of patient
choice in terms of Foundation Trusts, but we also have two PCTs
where over 90% of their elective work comes from one provider.
I think there is quite a sensitive discussion to have around that.
In certain circumstances an NHS provider can so dominate a local
economy, but you need to have a discussion around how you make
sure that the commissioners, working on behalf of patients, have
enough leverage to make sure that that big provider is responsive
to patients, keeps up-to-date with clinical practice and so on.
That balance of is there enough choice and is there enough contestability
are the sort of factors that would be taken into account before
ITNs are issued for areas and it is one of the factors that has
been fed back to us by both the Foundation Trust chairmen and
clinicians in South Yorkshire and that Lord Warner is considering.
I think it is right that we consider those things. You might have
Foundations Trusts but, equally, you might have a very big NHS
provider where there is an issue around whether you need to strengthen
PCTs' ability to commission the right services to their patients.
Q68 Chairman: Presumably you have
more than anecdotal evidence that work practices are changing
inside the National Health Service primarily because of ISTCs.
Mr Ricketts: It is very difficult
to quantify that. We have got a lot of anecdotal evidence from
both the NHS and the independent sector of people saying their
behaviour has been changed—not just because of the ISTC
programme but the combined influence of choice and payment by
results. Trying to say there has been X improvement in Y place
specifically because an ISTC was proposed or it is the effect
of choice, you cannot make those conclusions. Unfortunately the
evidence is anecdotal.
Q69 Chairman: You have put the case
that that may be one of the reasons you would put a second wave
into an area.
Mr Ricketts: I think it is one
of the reasons why I would explore putting it into that area.
We would want to look at the implications, which is why ministers
are very keen to look at the proposal in the round and at the
implications before they take the decision to issue an ITN.
Q70 Chairman: Will additionality
still continue to be a part of the ISTC programme?
Mr Ricketts: We have said that
for Wave 2, apart from diagnostics where there are still major
skill shortages, we are relaxing it for those groups of staff
where we do not have a problem. For those groups like radiology,
radiography and orthopaedic surgeons it is still an issue. For
the time being we still think there is that need to protect the
NHS and also to encourage independent sector providers to bring
in additional capacity. If we have still got skill shortages in
radiographers, radiologists, orthopaedic surgeons and other groups
it does make sense to incentivise IS providers to try to bring
them in from outside the NHS.
Mr Anderson: Wave 1 was blanket
additionality with no exceptions. Wave 2 has been looked at on
a case-by-case basis.
Q71 Chairman: What about first phase
funding? We have all got anecdotal comments about money having
to be put in even if the elective surgery did not take place.
Is that going to be the same for Phase 2?
Mr Anderson: Again, you have a
maturing market and a maturing provider base. We anticipate—and
I cannot tell you categorically this will happen—that as
these providers become more a part of the NHS landscape they will
want to rely less on us and more on their ability to attract patients
to their facilities. We have made it very clear as we have gone
out for tender on the Wave 2 procurement that that is what we
are looking for. We have given a very clear steer to the providers
who were involved in this that we are anticipating that we have
a more mature market. Underpinned volumes will become less of
an issue within the contracts.
Q72 Chairman: Effectively the funding
is not going to be guaranteed as it was in the first phase; it
is something that will have to be worked for. Would that be the
right expression?
Mr Anderson: It will be variable.
It is our intention that it will be significantly less on the
guaranteed side than it was on Wave 1 or at least it should be
if we did our job correctly on Wave 1.
Q73 Dr Taylor: I was a bit rude about
the Preliminary Overview Report. In contrast, I think your detailed
report on the whole thing in our green book is very helpful. You
have given us the cost of delivering an 18-week target time, which
will be £1.4 billion in 2006-07 and £2.7 billion in
2007-08. This is not the right time to ask you how the NHS is
going to find the money. How much of these totals will go into
ISTCs? Is that something that you can answer?
Mr Ricketts: We can definitely
tell you that we approximate 3% of total elective activity will
be provided by ISTCs in 2006-07 and that will rise to 7% of elected
activity by 2008.
Q74 Dr Taylor: 3% of elective activity,
2006-07; up to 7% to 2008.
Mr Anderson: That is correct.
Q75 Dr Taylor: We can take roughly
the percentages of those figures.
Mr Anderson: That is specifically
elective activity. That is not total surgical activity. That is
the elective component of surgery.
Q76 Dr Taylor: Are ISTCs doing anything
other than elective surgery?
Mr Ricketts: They are doing an
increasing volume of assessment and diagnostics.
Q77 Dr Taylor: None is doing any
sort of emergency work?
Mr Ricketts: No.
Q78 Dr Stoate: I am particularly
concerned about training. Much of the evidence we have taken has
concentrated on the fact that if you take cases away from trainees
in NHS hospitals there is going to be a possible impact on training.
How are you going to make sure that provision for training is
included in Phase 2?
Mr Ricketts: I have to apologise
to the Committee. Sir Nigel and I met Bernard Ribeiro and other
clinical colleagues a couple of months ago and we recognised that
there was a need for the Department to clarify the position of
ISTCs on training. In the last day, we have sent a draft statement
to the colleges, the BMA and other staff associations, spelling
out that it is for consultation, a very clear statement of ISTC
engagement in training. We can make a copy of that available for
you but can I take one minute to take you through three or four
key points? It may be helpful for your next conversation. That
statement says very clearly that ISTCs will be expected to play
their part in training medical and other clinical staff. The ISTCs
in Wave 2 are being required contractually to provide training
across the full range of the clinical services they provide for
the NHS. That would be medical, nursing and AHP. They may also
be required to provide some training where it is requested in
non-clinical skills like outcome measurement, audit and so on.
The training provided in ISTCs will be required to meet the same
standards as training in NHS organisations. This was a concern
from the colleges. The responsibility for setting those standards
will rest with the accrediting bodies. There will be no compromise
around training standards. Training will be funded through the
Multiprofessional Educational Training Levy, as for the NHS, and
where ISTCs provide training clearly they will be entitled to
their fair share of those funds although, as you know, we have
now moved to a commissioning arrangement in terms of medical training.
It will be for deans locally to decide from whence they want to
secure their training. Mr Anderson has required independent sector
bidders, as part of the process, to submit two sets of prices,
one price including training provision where it has an impact
on productivity so that one can insist that IS providers, where
deans and local communities want them to do the training, do so.
Strategic health authorities will be responsible for ensuring
that that training is delivered. They are likely to discharge
that through Deans and the PMET board arrangements. There is more
detail in the statement but I thought it was important that you
and the Committee knew that the department has stated that as
clearly as we can. It is in draft form for initial discussion
with the colleges, the British Orthopaedic Association, the BMA
and others. Once we have had their initial comments, we will issue
something formally for consultation in April but it is an area
where we recognise that we need to provide a much clearer statement
to the NHS and the colleges around our ISTC responsibility for
training.
Mr Anderson: The initial Wave
1 was all about going out and trying to bring waiting times down
and therefore patient suffering and the other things that go along
with that quickly. Towards the end of the Wave 1 procurement,
we did start addressing a lot of the training issues. Nottingham
is a good example of that where £4 million was included in
the contractual value and it was specifically for training. The
provider base that is providing services to patients absolutely
wants to be involved in training as far as we can tell. We have
had conversations with the providers and they are very up for
doing the training. Wave 2 will be a completely different environment.
Again, it goes back to the services' and more importantly the
patients' need to integrate this into the wider NHS provider framework.
Q79 Dr Stoate: That is a very detailed
answer you have both given. I have been concerned about this for
some time. It still leaves one concern and that is, where an ISTC
effectively takes over a large chunk of work from a local DGH—for
example, all the elective hip operations—do you see that
as undermining the training of the generalist surgeons in orthopaedics
or ophthalmology for the future, because my worry is that even
if the ISTCs are training some of these specialists for the future
if the training programme for a hospital department is undermined
by them, that must mean they lose accreditation as a training
hospital, which may have other implications for workforces in
the future.
Mr Ricketts: That is the next
thing that needs to follow. The department is now in the process
of clarifying exactly what the training requirements are. Stage
2, once we have reached agreement on that—we have only just
sent it to the colleges—is to ensure that locally deans
and others in terms of the commissioning arrangements ensure that
when they are looking at training accreditation and what they
are commissioning they look across the health economy so that
you get any independent sector provision included in the training
network, if that is appropriate. You then move away from the debate
where there is perceived to be a threat to the training accreditation
of an NHS hospital. You are looking to get accreditation across
the whole of the economy. That is one of the issues we have been
in discussion on in Southampton, for example, where there is an
ISTC. How do we ensure that accreditation is maintained? That
will mean ultimately some training being undertaken in the ISTC.
In terms of supervision and so on, it needs to be integrated into
how training is done across the patch. I recognise that we are
going to need to do some work, both locally and nationally, to
make sure that all the local players, the trusts, the Deans and
so on understand the proposed new arrangements. We will also need
to work with the colleges more to unpick exactly how this should
work. The fact that you are moving work—it is analogous
to moving it into an NHS treatment centre—into another building
from another organisation should not put a threat on accreditation
for that health economy.
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