Examination of Witnesses (Questions 300
- 319)
THURSDAY 16 MARCH 2006
PROFESSOR JOHN
APPLEBY, MR
JAMES JOHNSON,
DR PAUL
MILLER, DR
SALLY RUANE
AND MR
DANIEL EAYRES
Q300 Chairman: Has anybody ever done
a study about where they are and where the waiting lists were?
I represent a seat in South Yorkshire that has high waiting lists
for orthopaedic surgery, and the ISTC has done thousands of operations,
not just from South Yorkshire but from a wider area—in orthopaedics.
There was an issue of geographically putting these in, as opposed
to putting them in and seeing how it affects national things.
Has anything like that been done to anybody's knowledge?
Dr Ruane: I have not seen any
study of that, but I note that some time ago—and the Department
of Health representatives made a reference to this last week—SHAs
and PCTs carried out an analysis in their own locale of capacity
gaps and where they needed extra capacity. That would, I should
have thought, reflect waiting lists. It may be possible to obtain
some of that information from there, but of course that does not
mean that that is up-to-date now.
Q301 Chairman: If that treatment
centre has done the thousands of operations that it has, is it
not likely that that has helped to reduce the waiting lists in
the area that it covers?
Dr Ruane: I think there is some
anecdotal evidence that patients have particularly welcomed rapid
access to independent sector treatment centres—partly because
they have tended to be underutilised, and so patients have been
able to get in faster, perhaps. But I have not seen that quantified
and I have not seen that patterned geographically.
Q302 Dr Taylor: If the same money
had been put into the NHS, would we have seen any more improvements?
Professor Appleby: Possibly. Part
of the whole research question around this issue is that we do
not know. We can have a guess at that, but, as I say, possibly.
Q303 Dr Taylor: What do any of you
think of the financial planning of the programme? What financial
planning was there?
Dr Ruane: It seems to me that,
in a number of respects, the policy has not reflected joined-up
thinking, and I would have thought financial management would
be one area where this would be the case. I think it is partly
because the issue of waiting lists is clearly only one issue that
went into influencing the implementation of this policy, and,
again, I think the representatives from the Department indicated
this last week that other factors kicked in, including the desire
to open up to diverse providers and so on, so you tended to have
treatment centres plonked down in different places. But certainly
I think PCTs have had an important aspect of financial flexibility
and the management of their finances taken away from them, because
they have been tied into contracts with ISTCs that they have not
always wanted, and I think something that comes across very strongly
from the evidence that has been submitted, as well as from other
sources, is that there is a strong degree of imposition about
this policy. It has come from the centre and it has been imposed
from the centre. Not all PCTs have wanted it. Although, again,
I have not seen a total set of figures at all, you do get glimpses
that PCTs in different parts of the countries have lost up to
what tends to be in the realm of several hundred thousand pounds,
through activity which they have had to pay for but which is then
not taken up by patients, either because of referral patterns,
patient choice, or for whatever reason—perhaps there was
not a need in that particular area. I think the information from
Dennis McDonald to this Committee is quite interesting, because
he sets out activity rates in the North East by PCT, and you can
see very, very different variable take-up amongst the PCTs, with
several hundred procedures in some PCTs down to a couple/a few
dozen in other PCTs. Perhaps that is because there were different
morbidity profiles, a different need in those PCTs, but they have
certainly lost out economically. I think the Department has stepped
in with money, has it not? Am I right on that? I understand that
there is a £100 million fund. I do not know if I am getting
things mixed up here, but I think the Department of Health has
accepted that it will take that financial burden now.[1]
But that is still resources lost to the NHS.
Mr Johnson: Could I widen this
slightly. The BMA is not in any way opposed to either treatment
centres or the multi-provider NHS, so I am not trying to make
points about this, but our biggest criticism is that, in setting
up a multi-provider NHS (effectively, a market where different
firms are competing with the State to provide services), a regulatory
framework—the rules of the game, if you like—was not
written, and we are playing Monopoly and making the rules up as
we go along. That is unsatisfactory. We would have five areas
where we think we need a written set of rules before you can play
the game—and you have heard all of them this morning. The
first one is an integrated service. If you are going to have different
providers providing different bits of care, they must talk to
each other. If you are going to go home from hospital and be looked
after at home, the people at home have to know what operation
you have had. We do not have an integrated, seamless service and
there is not a set of rules for it. You must have—and we
have talked at length about this—comprehensive audit of
clinical outcomes (not these non-clinical ones) and the NHS ones
to compare them with. If you do not have that, people will say,
"Treatment in treatment centres is rubbish" and you
cannot refute it and they cannot back it up. That is unsatisfactory.
You need to have a regime for what happens when a hospital fails.
It might not even be just that the orthopaedics goes out of the
hospital into a treatment centre; you might so destabilise the
situation that all the specialist services that the private sector
does not want to provide (intensive care, maternity, A&E)
are going to close down because there is no more money any more.
We do not have an exit strategy and the Department is quite frank
in saying we do not have an exit strategy, and we need that. We
need to be able to train medical staff—we have talked extensively
this morning and you have about training in treatment centres.
Finally, we must ultimately, after these people have entered the
market, have a level playing field. They think it is stacked against
them, we think it is stacked against the NHS. It has to be transparent
and a level playing field. When you have a set of rules for those
five issues, you have a regulatory framework and you can play
at markets. I have this summarised on a bit of paper, which I
would be happy to submit as supplementary evidence. To develop
these as you go along seems to us to be totally wrong.
Professor Appleby: If I may just
go back to your first question about the financial planning of
the programme. From the Department of Health point of view, one
of the aims, the vision, it seems to me, is market creation: it
is to fit in with the more pluralistic provider supply side and
a desire, frankly, to put pressure on, and, in a sense, destabilise
the NHS—not completely, of course, but to ginger up the
market, if you like, with the independent sector. I guess that
to entice them into this potential market, compromises were made
on both sides, in terms of finances and the nature of the contract
that was on the table, and that was accepted by the private sector
and the Department. We heard earlier on about who is bearing the
risk. It seems to me that is a really important question. It is
a bit like concerns about PFI, do we have the bearing of the risk
right in terms of the rewards that are being offered. That is
where some of the quibbles, or not quibbles but big questions,
about value for money and so on arise. It seems to me, in a sense,
that both sides made some compromises there. The NHS offered what
was, in effect, competition for the market, not competition in
the market, so a five-year contract more or less guaranteed work.
Okay, there was risk borne by the private sector in terms of their
costs, but presumably they came to the opinion they were worth
bearing, given the rewards and so on. I think that there was a
negotiation and splitting of the risks and so on relative to the
costs and the rewards that went on. Whether that was worth it
depends on our view or my view or your view about whether it is
worth achieving the objectives, which is plurality of supplies
and so on. That is the tricky thing about, say, doing some research
into this to try to evaluate whether the ISTC programme is meeting
that particular objective. We have not got there yet, to start
with, so it is difficult to evaluate.
Q304 Dr Taylor: That is very helpful.
Dr Miller: I would like to come
in on your question on planning too. My understanding is that
when the survey of the Strategic Health Authority was carried
out sometime ago for the shortfall, the initial answer they came
back with was: Half a million procedures. They were told to go
and look more carefully and came back with a second answer, which
was: A quarter of a million procedures. Their third iteration
apparently came up with 170,000 procedures' shortfall. I think
that illustrates that the degree of planning involved in this
is beyond the ability of the NHS to do very well. What else? I
think it would be wrong to think that the objective of this programme
is just about bringing down waiting times. It was clearly stated
that one of the objectives of this was, indeed, to create a sustainable
competitive market in the provision of services. I think that
is fairly obvious from the way some of it has gone. Some of the
other bits of planning that did not go too well would influence
the additionality, which was not a terribly well-thought-out answer
to some of the problems that have been discussed regarding Wave
1, such that, in fact, it has been changed and relaxed considerably
for Wave 2 and is abolished completely for the Independent Sector
Extended Choice Network currently being tendered for. On poor
planning, the other example would be the Oxford eye capacity debacle,
where it was only after some senior NHS managers had resigned
from the service that they felt able to talk about the bullying
and the pressure they had been put under to accept capacity that
they had always thought they did not need. My understanding is
that that spare capacity from Oxford is currently being hawked
around the country to see if anyone will buy this surplus capacity.
I also want to refer to the evidence on page EV165 about the North
Tyneside ISTC. The evidence refers to the six PCTs being charged
£200,000 each for this treatment centre and I would like
to put some local knowledge on to that. It is not surprising that
North Tyneside have 434 of the 1,047 patients treated there. It
is in their patch. It is also perhaps completely unsurprising
that Sunderland has only sent 63, despite paying the same £200,000.
Sunderland City Hospital has a three star trust. It is one, I
gather of only seven in the country that has been consistently
three-star in the star ratings. It does not, as I understand it,
have a particular problem with waiting times. Lastly, Gateshead
has only sent 14 patients there, despite spending the same £200,000.
Why? Gateshead also has a reputation for good quality services,
good management and—what else?—it has its own NHS
treatment centre, so why would it be sending along the coast to
an ISTC? I want to make that point to talk about what I would
see as the poor planning of these services.
Dr Taylor: Thank you for pointing that
out. That is helpful.
Q305 Dr Stoate: I have got a very
simple question in a way for the BMA. One of the objectives the
Department has come up with is that the ISTC programme has been
designed to stimulate innovation and improve working practices.
Is there any evidence that is the case and, if so, have you got
any examples?
Mr Johnson: No. Paul has been
talking about whether Gateshead or wherever send people but ultimately
with patient choice we will be talking about where the patients
want to go and not where Gateshead PCT wants to send them and,
therefore, what will matter will be whether the units are supplying
what matters to patients. Probably one of the things the patient
can judge least is how well the operation went because they have
nothing to compare it with, they have not had three before. They
do know if the doctor was nice to them and the nurse was polite,
whether they were kept waiting or not, whether they could park
their car and get a decent cup of coffee, and all of these things
are going to be what matters to the patients. If a hospital can
provide these things, which in medicine we have probably regarded
as rather on the fringe of what mattered before, good medical
care being everything, they will attract patients. I have no doubt
at all that these treatment centres have got the message that
these fringe activities, if you like, good parking and so on,
are going to be very, very important in staying afloat. This is
the sort of innovation, not wonderful clinical innovation, different
ways of doing things that I think we will see in the first instance.
They will provide a service that is very attractive to patients
and patients will say to each other, "You want to go there,
they don't keep you waiting, it is really good, et cetera".
Q306 Dr Stoate: I am slightly concerned
about this because I do not think those are fringe activities.
I think that treating patients in a way that makes them feel comfortable
and relaxed, to have someone who takes the time to come and talk
to them, someone who sits them down and gives them a cup of tea,
asks after their partner, "Can I get your partner a cup of
tea?", all of these—
Mr Johnson: I was trying to put
fringe in inverted commas.
Q307 Dr Stoate: Sure, but the NHS
traditionally has been spectacularly poor at that.
Mr Johnson: Exactly so.
Q308 Dr Stoate: And in terms of what
patients value those things come pretty high up on the list. My
own view is that if the NHS is driven to provide these so-called
"fringe activities" in order to compete that can only
be a good thing.
Mr Johnson: I agree.
Dr Stoate: Thank you very much.
Q309 Mr Campbell: I have got a question
on value for money. I think I know what answer I will get from
the panel, but I am still going to ask it anyway. Are we getting
value for money and how can it be measured? It really cannot be
after what you have just said.
Professor Appleby: I think it
can be measured, we just need to get the right data. We also need
to ask ourselves what it is that we want to measure the value
of: is it the cost per operation done; is it the cost in terms
of creating some sort of expanded market or some sort of contestable
market; is it the cost of reducing waiting times and so on? We
need to pin that down and relate it back to what the objectives
of this whole programme were, or are, or are emerging to be, and
we need to be clear about that.
Q310 Mr Campbell: We have got some
data. Mr Miller gave us some little hints of centres not being
used, so what has happened to the money? The NHS has lost that
money if it is not being used.
Professor Appleby: I do not want
to say what the Department would say but I suppose there is a
transition going on at the moment so, as I said earlier, there
has been some compromise in terms of the length of the contract,
the nature of the contract, what is being paid for, what is being
provided, and so on. The evidence, such as it is that I have seen,
suggests that the independent sector is providing operations which
are at a higher average cost than the NHS. At first sight it does
not look worthwhile in some sense. I suppose the argument could
be, and certainly the ISTC people here earlier said, that over
time they will get the costs down, in terms of costs per patient
it will become cheaper than the NHS possibly and there will be
value for money. We are in a bit of a gamble here as to whether
that will happen or not.
Q311 Mr Campbell: Can you see in
the foreseeable future that they can compete with the Health Service
because if they cannot they are not going to be worth it, are
they, at the end of the day?
Professor Appleby: In part it
depends on something that James raised which was the rules of
the game and the rules of engagement as to how the NHS market,
and there is one, is going to develop in future and the extent
to which we have market regulation and the nature of that. Will
NHS Foundation Trusts be able to compete for these treatment centres,
for example? Is there going to be competition for the market or
is there competition in the market so that private centres can
set up and if they take patients and patients want to go there,
fair enough, if they do not they bear that risk? At the moment
we are looking at a very regulated market, if you like.
Q312 Mr Campbell: So what you are
saying is that if the contracts come along to be had then the
Health Service or a local hospital can compete for them.
Professor Appleby: As I understand
it, the contracts for Wave 1 and Wave 2 are simply within the
private sector, as it were. The Department of Health do not invite
bids from the existing NHS.
Q313 Mr Campbell: But that could
be opened up?
Professor Appleby: Maybe that
could, yes.
Q314 Mr Campbell: That is a good
point, we will have to remember that.
Dr Miller: Could I address that
question? There have been a number of reports of contracts for
Wave 1 ISTCs where the workload contracted for has not been carried
out and they still get paid because that is the nature of the
contract. That has been reasonably well documented in a number
of places. I wrote to the Department of Health specifically about
how the contracts were structured and the response I got back,
to be fair, was perhaps predictable, understandable and believable,
dare I say. It was pointed out that this is a five year contract
and you would perhaps not expect the business model to take off
from day one and the expectation is that whilst they have not
carried out 20% of the five year contract in year one there is
an expectation that it will take off and be delivered in total
over the five years. I think it is important to take that into
account. The whole issue of value for money is more complicated
still than that. Some of these contracts are at NHS tariff plus
a few per cent, some are at less than NHS tariff, but what has
not been mentioned today, as far as I am aware, is that some of
them also have tie-ins. At the end of the five year contract there
is a residual value agreed for their buildings and their equipment
for which they will be paid at the end of the five years if the
contract is not renewed, as I understand it. The whole question
of value for money is a lot more complicated than just whether
they do it at tariff plus 5% or tariff minus 10%, there is a lot
more to it than that.
Q315 Mr Campbell: IT centres are
getting paid whether they do the procedures or not.
Professor Appleby: Yes, they are.
Q316 Mr Campbell: There is set money
and that is it. If they do not do them they still get the set
money. That does not happen in the Health Service, does it?
Dr Miller: Yes, they are, but
I am saying the answer I got when I raised that was that the expectation
is they will catch up over the five years and that we will have
to wait and see.
Professor Appleby: As far as I
am aware that is a longer period than the NHS is being given in
terms of the phasing in of the so-called payment by results. I
would argue that I do not understand why the ISTCs cannot be part
of that same phasing in. I heard some of the excuses, I suppose,
earlier on you cannot compare ISTC costs with NHS costs because,
I do not know, the independent sector pays VAT and so on, there
is this and that, pension issues and so on. Of course there are
lots of variations within the NHS and different hospitals have
different rates of efficiency and so on, so there are always quibbles
about whether you can compare one hospital with another, but I
would have thought on balance they have got to take the rough
with the smooth on that one. One of the reasons the private sector
give for why they want to enter the market is they can be innovative,
at least perhaps on the cost side, that they have new ways of
doing things, they employ Hungarian doctors and not UK doctors
because there is an issue about private pay rates, for example.
I think it should be able to compare the private sector and the
NHS and make some judgment about value for money.
Mr Campbell: It will be interesting to
see what profits they make.
Q317 Mr Amess: Dr Ruane, you made
it very clear in your written evidence to the Committee that you
are not very keen on these independent treatment centres. I would
not call any of your evidence libellous but if you do want to
libel someone it will certainly enliven our proceedings! You spoke
about Canada and America specifically and said that you were aware
of schemes with public-private partnerships that were not working
out at all. I wonder if you could briefly give us some examples.
Dr Ruane: I made a reference to
Canadian and American research not because I was claiming or suggesting
that the American healthcare market is analogous to ours, because
it is not, but because that research has been mentioned a couple
of times in very interesting Health Service journal articles and
because there has been the suggestion in Canada in recent years
that for-profit companies set up hospitals within their health
economy, which is not identical to ours, and I thought it would
be interesting to have a look at some of the evidence that has
been collected. I was thinking particularly of the research by
Devereaux and colleagues. Devereaux is based in McMasters in Canada
and has worked with a team of colleagues in Canada and America.
What they have done is to provide a systematic review and what
they call a meta-analysis of pre-existing studies comparing for-profit
and not for-profit and in some cases public hospitals. These have
been compared around mortality rates. I thought it was worth looking
at this material because I think it is methodologically quite
sophisticated and it is methodologically quite transparent, so
you can see whether you think they have done enough to make sure
that their results are not biased. They have gone through all
sorts of hoops to try to control confounding variables. They have
evaluated studies blind, in other words not knowing what the outcome
of the studies were, and they have pooled data around 26,000 hospitals
and something like 38 million patients in the United States. What
they found was that on mortality rates, for example, there is
a 2% higher adjusted mortality rate in for-profit hospitals than
not for-profit hospitals. They have also done work around comparing
payments for care and found that for-profit hospitals take higher
payments for care than not for-profit hospitals. There has been
research by Vaillancourt Rosenau & Linder around cost-effectiveness,
access and quality using a different methodology comparing a large
number of studies and, again, the studies came out overwhelmingly
in favour of the not for-profit. I am not suggesting we can just
transfer that to here because that is not what we are working
with, but what that raised for me was there is evidence there
that has been collected with some care and with some degree of
methodological sophistication but what is the evidence base here
for our policy. I am not sure what the evidence base is for this
particular policy. There have not been pilots so far as I know,
there has not even been a great deal of public discussion. I suppose
what I was trying to flag up was I am not sure what the evidence
base is and maybe we need to develop a stronger evidence base
for this policy.
Q318 Mr Amess: You said, disappointingly,
absolutely nothing that is libellous.
Dr Ruane: I am sorry. I will try
harder next time.
Professor Appleby: I was not going
to offer anything libellous but maybe a little counterbalance
to that. The economics literature around, in a sense, `does it
matter who owns the means of healthcare production'? is, to say
the least, mixed. It depends what you look at. If you are looking
at the costs of for-profit or private sector hospitals compared
with public hospitals, probably `yes' is the answer but, again,
it depends what you are looking at within that. In terms of access
and health outcomes, the literature I have seen is reasonably
mixed, to be honest. I wonder whether, in fact, who owns the means
of healthcare production is the right question. You have to know
what the financial incentives are in a particular healthcare system,
how the contracts are set up, the nature of the contracts and
so on. In a sense, it seems to me those are more important issues
than the ownership issue.
Mr Johnson: The other issue that
makes it very difficult to compare with what we have just heard
about the North American system is that an arbitrary decision
has been made that the price is fixed, which is a very strange
situation for any real market and, therefore, we compete on things
other than price. Given that the price is fixed a lot of what
we have heard about North America does not apply because the price
is not fixed in North America and for-profit hospitals will be
more expensive than not for-profit hospitals, and so on, and HMOs
take different views in America about which hospitals they will
pay for and which they will not. It is very difficult to draw
analogies between those two systems. My personal view is that
sustaining this policy of a fixed price is going to be extraordinarily
difficult. If you have purchasers who are very strapped for cash
three years down the line and an organisation, private or public,
comes and says to them, "Look, we will do these for you below
tariff because we think we can still make a profit", I find
it very, very strange that the state would be able to say, "No,
that is not allowed". There will be just some sort of cashback
deal or something like that.
Q319 Chairman: Do ISTCs destabilise
the local health economy?
Mr Johnson: Potentially they can.
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