Examination of Witnesses (Questions 180
- 199)
THURSDAY 16 MARCH 2006
DR THOMAS
MANN, MR
MIKE PARISH,
MR MARK
ADAMS, MR
PETER MARTIN
AND MR
ALAN PILGRIM
Q180 Mike Penning: You do not know
and we do not know.
Dr Mann: There is some information.
The tariff price is a weighted average, but there is available
data about the full range of prices charged across the NHS. That
is available. We have certainly looked at it. That shows a 20-fold
variation in the prices within the NHS for certain procedures.
If you look at that range of prices, you will find that all the
contracts fall well to the middle range of that. Where prices
for our contracts are perhaps above that, those differences can
easily be accounted for by the additional investment of building
new facilities and bringing in additional doctors. We could show
that. I do not know whether you would consider that evidence to
be objective and robust enough. We can give it to you but would
you find that satisfactory?
Q181 Mike Penning: To be fair, the
question I asked you was to do with whether we would release information
from the Department of Health as well as the information that
you supply to the Committee being very useful. It is about trying
to get the Department of Health to tell the public and this Committee
what is going on. On that basis, would you be happy for the full
business case that the Department has used in assessing the ISTC
bids to be put in the public domain? What are your objections
to that?
Dr Mann: Is that the Department's
business case or our business case?
Q182 Mike Penning: Both the full
business cases that were put forward on the bids: would you have
any problems about those being put into the public domain?
Mr Parish: Clearly not the Department's
business case; it is not our business to object to that. If you
were suggesting that we publish our own cost assumptions and pricing
assumptions, that would be commercially sensitive, yes.
Q183 Mike Penning: The Department's
would not be?
Mr Parish: One would expect the
Department to justify and explain that.
Q184 Mike Penning: They cannot use
the excuse by saying, "We cannot release this because it
would be sensitive"?
Mr Parish: It depends what it
is you are suggesting they would release. If they were releasing
their business case in terms of why this investment, this programme
makes good sense for the NHS—
Q185 Mike Penning: It is all very
secretive, is it not?
Dr Smith: Could I just add one
comment to narrow the definition of value for money, and this
is a very narrow definition? If you compare spot purchases from
the private sector in previous years with spot purchases from
the private sector now in the G sub-contract that we do or the
ISTC contract, there is demonstrably more value for money; it
is about half the price.
Q186 Mike Penning: What we are trying
to look at is hard evidence.
Dr Smith: This is hard evidence,
the price we would have charged for spot business from the NHS
a year or two ago.
Mike Penning: That is not my question,
to be fair.
Q187 Mr Burstow: If Mike does not
mind, I want to pick up on this one step further. The business
case of the Department is part of what we are interested in knowing.
There is a possibility that there is some support for us having
access to that. I also want to pick up on what Mr Parish was saying,
however, about the business cases that you submitted to the Department
as part of the bidding process and whether or not there is anything
within those that you could exclude in order to release as much
as possible of the business cases that you submitted so that we
can actually have the open market that Mr Adams was talking about.
My understanding of market theory is that a perfect market is
one where there is full availability of information. We do not
seem to have a perfect market here because an awful lot of the
information is either buried in the Department and the officials
do not seem to know what it is or it is within your businesses.
I would want to know what you feel you are able to share, without
of course breaching commercial confidentiality in a strictly narrow
sense rather than in any other sense. Perhaps, Mr Parish, you
could tell us what you think you could release to us.
Mr Parish: Certainly, what is
publicly available already is the price we are paid and the commitment
in terms of case volume that we take on. There are two aspects
to that. One is how we get there in terms of the prices we submit
and the second is how it is evaluated by the Department. I think
the evaluation by the Department is for you to discuss with the
Department. In terms of how we get there, there is quite a bit
of intellectual capital and property and competitive confidentiality
in how we get there. Frankly, I do not think any market that I
know would freely make available its cost assumptions and its
solution methodology because these chaps sitting next to me would
take it apart and benefit from it, I am sure, and we would from
them.
Q188 Dr Naysmith: There was a bit
of confusion earlier and I take this chance to clear it up. I
think Mr Parish's responses to Dr Taylor rather implied that KPIs
(key performance indicators) and clinical outcomes were the same
thing. In fact my information is that there are 26 KPIs and only
eight of them are actually clinical. How do you square that with
what you were saying to Dr Taylor?
Mr Parish: Rather than risk adding
to the confusion, why do we not send to the Committee the KPIs
that we submit. I believe that the vast majority of those are
clinical outcomes in nature. Let us clarify that in writing.
Q189 Dr Naysmith: Our understanding,
and our advisers agree, is that there are 26 KPIs and only eight
refer to clinical outcomes. When the Department of Health was
introducing and starting off ISTCs, I understand that they said,
although I was not here, in evidence last week that one of their
main reasons for doing it was to stimulate innovation and changes
in the way that the National Health Service works and they were
looking at the practices in the NHS to try to challenge them.
I wonder—and I am doing what the Chair said you should not
do—if you all think there are any examples from your contracts
where this has happened but, because you have been operating a
service, it has been a challenge to the National Health Service
practices and you have changed some of them, possibly locally?
Mr Parish: There is a tendency
to look for rocket science when one says "innovation".
Generally, I think it is applied good management practice. For
example, and I would claim no intellectual capital on this, in
terms of our one-stop shop methodology (where patients come to
see us once and all the specialists that need to see them do so
and all the tests that need to be taken are done there and then
rather than the patient coming back to and fro on several different
occasions) that is an example of very good practice that is very
much appreciated by patients. It results in faster and better
treatment because we then have a very short time for them to come
in for surgery, a matter of weeks, which means that the data that
is collected on their condition when they come in on that one
occasion is unlikely to change in a matter of weeks, whereas if
you are on a waiting list for several months, it does and therefore
you get this horrible cycle of patients that keep returning and
operations being deferred. Something like that is what I would
put forward as an example of good practice. The use of the patient's
own blood being recycled to them during surgery is a fairly recently
development. It is not something we invented but we apply that
because we organise ourselves effectively to apply it, and again
it is significantly better for patient clinical outcomes. The
general point here is that it does not have to be rocket science
to be good practice and beneficial.
Q190 Dr Naysmith: Is part of the
reason for that that you are dealing with a relatively small area
of clinical practice, whereas in many situations in the National
Health Service you have a district general hospital or an acute
hospital where there are all sorts of different specialities?
Mr Parish: There are examples
of good practice across the NHS that I admire hugely.
Q191 Dr Naysmith: There are one-stop
shops, for instance for cancer treatment?
Mr Parish: Yes. What we do is
not unique. I am a great admirer of the NHS and in places it works
brilliantly. I think in other places the sheer burden of having
to deal with the full case mix and endeavouring to do it on one
site with one huge-scale solution is very difficult and challenging
for them.
Mr Martin: I would agree with
Mike Parish. We have probably all tried to be innovative in developing
our new centres. Have we produced anything that is unique? I suspect
probably not. We have certainly worked hard at looking at the
actual process, the patient pathway through a centre, and so we
have worked very hard on things like patient education. We have
looked to stagger appointments so that when the patients come
in they are dealt with efficiently. In developing our facility
design, we have looked to do that in a way that ensures there
is a very efficient, productive pathway for the patient. We do
not have anaesthetic rooms in our centres, again to aid efficiency.
None of this is unique to us. All those things are happening no
doubt in parts of the NHS. We have tried to be innovative, but
have we affected the way the NHS behaves? I am not sure I can
answer that. All we are doing is trying to provide the best service
we can.
Q192 Dr Naysmith: The interesting
thing is that there has been best practice in parts of the National
Health Service for ages and ages. The really difficult thing seems
to be spreading it and making sure that it travels from the area
where it needed.
Mr Martin: I think it goes back
to this issue about integration.
Q193 Dr Naysmith: The reason I am
asking this question is that it was part of the rationale for
setting all of this up that you would introduce and innovate and
that some of that would rub off locally. I am wondering if there
are any examples anywhere of that.
Mr Adams: I think the link in
terms of talking about spreading good practice was the point I
was going to make. At Netcare we were asked to meet a challenge
to solve the cataract waiting list, or to be part of the solution.
We fully acknowledge that there are phenomenal parts of the NHS
doing an excellent job in terms of cataract surgery. We were asked,
in these different geographic regions all over England and Wales,
what we could do perhaps to meet the challenge. Effectively, by
creating a mobile solution that would literally spend a week in
Carlisle and then the following week doing surgical procedures
in Cornwall, in an environment that is clinically safe and where
the patient feedback is fantastic, we are carrying out procedures
that can run from 20 to 24 a day for six days a week. I believe
in a traditional surgery doing similar cataract procedures there
would be 12 to 15 procedures a day. To have that mobile solution
that can go and work with PCTs with particular problems has, I
think, been an innovation that has actually worked, and the Department
should be rightly proud.
Mr Parish: In our case, it is
about certainty of that best practice being delivered because
if we do not provide that best practice in the way we set out,
we will not exist. Our goal is to be a long-term player as part
of the NHS. Therefore we live or fall by the implementation of
our best practice.
Dr Mann: A number of examples
of innovative practice have been mentioned, and I agree with all
of them, and many parts of the NHS employ one or more of them.
I think perhaps the greatest innovation is that to survive we
have to employ all or most of them. There is a logistical pressure
on us to try to maximise quality and efficiency because we are
new boys in the game and we absolutely have to demonstrate all
these things in a way that perhaps some parts of the NHS have
not had to. It is not that the NHS does not do it but that, because
we have to do it everywhere and be seen to do it, in itself that
highlights the need and the ability to innovate.
Q194 Charlotte Atkins: Could you
all indicate which of you are intending to bid for Phase 2 contracts?
You all are. How do you see the new Phase 2 contracts developing—in
the same way as the Phase 1 or do you think there will be different
features?
Mr Adams: If I could start from
Netcare's perspective, I think that there is a degree of soft
landing in the Department's support to get the first wave of ISTCs
off the ground. You will be familiar with the minimum take contracts
and the support for saying that we want to encourage innovation
and to get this thing going. Now that we have all had the opportunity
actually to experience the ability of working in local markets
and building that local PCT/SHA relationship, in the second wave
of ISTCs there will be a bit of a risk transfer away from the
Department of Health and to the provider where we will actually
be looking at the tariff being an indicator, as Mike Parish mentioned.
There will be many cases, I am sure, where the actual bids will
come in beneath tariff. There will not be the guarantee and the
volume of patients, and therefore there will be an assumption
that the only way to make your business model work is fully to
integrate with the local primary care trust and the local GPs,
and to win their confidence and their support. A lot of that will
be based on demonstrating your clinical excellence from the past.
I think that it is maturing into something that will be more integrated
and will be yet further competitive for the Department.
Mr Parish: I welcome the relaxation
of additionality that has appeared in the Phase 2 contracts. I
think that in Phase 2 we will move much more towards what I would
call a mixed economy where our centres are staffed by both UK-trained
and qualified doctors and overseas doctors. I think that will
assist enormously in developing the closer partnership and closer
integration with the NHS.
Q195 Charlotte Atkins: Why do you
want to get rid of additionality?
Mr Martin: Because it is a pain,
to be honest!
Q196 Charlotte Atkins: In what way
is it a pain—for your commercial enterprise or because of
good practice?
Mr Martin: I do not think it is
clinically the best solution. As we have discussed already, I
think it has hindered developing close partnerships locally. It
has hindered integration with the local health economy. I personally
believe that the best overall solution for the Department and
the NHS is by providing clinically robust solutions and high quality
but on a cost-effective basis in this mixed economy where we have
a mix of UK doctors and overseas doctors, and Wave 1 did not allow
us to do that.
Q197 Charlotte Atkins: Overseas doctors
are in the press at the moment because the NHS is being accused
of robbing poor countries of doctors. What is your take on that?
Mr Martin: We have only actually
recruited doctors from one country outside of the UK, which is
Hungary, and that is part of the EU. There is free movement of
people within the EU, and so this actually has not arisen in terms
of our recruitment.
Mr Parish: Even if additionality
was not required, we would still look to bring doctors in internationally
because, frankly, the cost-base of UK doctors is not competitive;
it is too high. That is evidenced in some of the pricing solutions
we have been developing for the second wave. I do not think there
has been anything like sufficient impact yet to drive to a different
market. That is my first point. My second point would be that
a key criterion for us going forward in terms of assessing the
market is whether patients will be allowed to express their choice
and go to where they choose. If patients are able to exercise
their choice, I am sure that both in terms of cost and attractiveness
to patients, and obviously that includes clinical outcomes significantly,
we would we very competitive.
Q198 Charlotte Atkins: Choice seems
to be the name of the game at the moment but obviously price is
also important. Do you expect your procedures to be comparable
with the NHS tariff? We heard Mr Penning earlier on talking about
value for money. Do you expect your tariff to be comparable?
Mr Parish: On a like for like
basis I am very confident that our costs will be very comparable
and competitive.
Q199 Charlotte Atkins: You also say
that the reason you want overseas doctors is because they are
cheaper. Is that correct?
Mr Parish: They are cheaper than
the private practice in the UK but not cheaper than NHS rates
for consultants.
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