Evidence submitted by the Hospital Management
Trust (ISTC 30)
The Hospital Management Trust (HMT) is a registered
charity established 20 years ago to retain and develop not-for-profit
hospitals and nursing homes in UK and we have a particular remit
for seeking to be a bridging link between the NHS and overtly
private sector of medicine.
HMT has three hospitals—Claremont Hospital
Sheffield, St Hugh's Hospital Grimsby and Santa Maria Hospital
Swansea—and also manages five nursing care homes and undertakes
a significant amount of consultancy, including working with representative
medical organisations (Federation of Independent Practitioner
Organisations [FIPO] and London Consultants Association [LCA]).
Because of the nature of its foundation, HMT
has had considerable interest in Government policy on the establishment
of ISTCs and the declared intention of the Government to work
more closely with the independent sector in Britain. Sadly, however,
HMT and the charitable hospitals in general have been largely
ignored by the NHS centrally and it has been extremely difficult
to have meaningful dialogue because of the emphasis on contracting
with non-British companies and the existing major hospital groups.
However, there has been significant co-operation
and development with the NHS locally in Sheffield and Grimsby.
In Sheffield, the Claremont Hospital has a substantial contract
(awarded under OJEC rules) with the Foundation Hospital Trust
and has also been accepted as a joint bidder with the Sheffield
NHS Teaching Hospitals Trust for the Phase 2 Elective Care Services
Procurement. In Grimsby, discussions are well advanced with the
North Lincolnshire & Goole NHS Trust for HMT to invest in
the establishment of wards in both the Grimsby and Scunthorpe
NHS Hospitals for the treatment of patients referred under practice-based
commissioning as well as private patients.
HMT therefore has a substantial interest in—and
knowledge of—the need for involvement with the NHS and the
implications of the establishment of ISTCs.
Our comments are confined to those bullet point
questions in the Press Notice which are relevant to HMT's knowledge
and experience.
1. Are ISTCs providing value for money?
Whilst it is possible that the creation of ISTCs
has stimulated competition amongst established commercial private
hospitals in Britain to bring down prices closer to NHS tariff
levels, it seems exceedingly difficult to demonstrate value for
money.
It is a matter of recorded fact (available to
the Committee via Hansard and DoH but not always available to
the public) that contracts awarded to ISTC developers have been
at procedure cost prices substantially in excess of NHS tariff
rates and often in excess of 15% and sometimes in excess of 20%
over tariff. Additionally, the guaranteed value of contracts irrespective
of the number of patients treated has led to significant sums
of money being claimed by and paid to ISTC providers (press and
PQ evidence) leading to a significant unit cost per procedure
inevitably resulting from high prices paid for low volumes delivered.
At the same time, hospitals such as those run by HMT have been
delivering treatment for similar diagnostic procedures for the
NHS at NHS tariff prices and within acknowledgeably high clinical
governance standards.
It is therefore evident that, so far at least,
ISTCs cannot be regarded as having delivered good value for money.
It is also noteworthy that the residual value
calculations which may apply at the end of the initial five-year
contractual agreements may well provide for significantly profitable
returns to the ISTC companies in the event that the contracts
are not renewed.
2. Does the operation of ISTCs have an adverse
effect on NHS services in their areas?
It is our view from the areas in which HMT operates
that there has been a detrimental effect on the local NHS. The
requirement of centrally funded ISTCs for PCTs effectively to
direct patients to them has meant a loss of revenue to the NHS
and also a loss of patient workload which has had adverse impact
on the number of cases available for ensuring adequate training
of junior doctors. Whilst it may be true that the outward referrals
have helped to reduce waiting lists, the requirement for referrals
has not taken account of the local relationships between the NHS
and the independent sector for the very same patients who have
been treated in the local independent hospital by NHS surgeons
in their non-contracted time and still within tariff pricing.
It has also impacted adversely on patients who have been required
to travel distances for treatment greater than in many cases they
have wished to do.
In effect it is not infrequent for patients
intended to be treated in an ISTC to be paid for twice because,
in fact, the treatment has to be funded by a PCT from its own
budget in order to avoid waiting list breach times where the ISTC
has failed to deliver.
3. What implications does commercial confidentiality
have for access to information and public accountability with
regard to ISTCs?
It is a matter of considerable concern to organisations
like HMT that it is impossible to gain accurate information on
patient volume, cost of treatment or quality of outcome resulting
from patient treatment in ISTCs. It seems entirely wrong that
grounds of commercial confidentiality are used to cover up legitimate
public interest when hundreds of millions of pounds of taxpayers'
money are being expended. It has never been possible to establish
the true costs of treatment in the NHS and, indeed, that is still
the case largely because of poor quality NHS accounting. However,
there needs to be a framework built of comparative costing and
value for money between treatment in NHS hospitals, ISTCs and
established independent hospitals if any meaningful judgement
of value for money is to be formed. Individual hospitals do not
need to be publicly named but it must be in the public interest
for anonymous data to be used both in aggregate and possibly at
more detailed local levels.
4. What changes should the Government make
to its policy towards ISTCs in the light of experience to date?
We understand that less than 20 ISTCs have so
far been opened despite the fact that 33 were meant to be in operation
by April 2005. On this evidence, Government policy can hardly
be said to be fulfilled. It is the case that the creation of ISTCs
and the introduction of competition have had a significant effect
on the way that both private hospitals and the NHS have reacted
to pricing and to treatment protocols. It could therefore be said
that Government policy has had its effect and that there are now
other ways of ensuring competition without the need for further
specific development of ISTCs.
It is highly probable that there is sufficient
capacity between the existing NHS and the private hospitals and
developed ISTCs in Britain for future demand to be met given the
trends towards decreasing length of stay in hospitals and the
ever-growing satisfactory development of day surgery and treatment
in a primary care setting.
5. What factors have been and should be taken
into account when deciding the location of ISTCs?
Critical to the assessment of the need for deciding
the location and size of any more ISTCs is a detailed analysis
of the existing capacity and potential workload which can be delivered
through existing resources in both the public and private sectors.
In our experience, it is highly likely that in the majority of
instances sufficient capacity already exists and the introduction
of a tariff framework and regulation of quality have the capability
of being able to meet public expectation within available financial
resources post the NHS expenditure boom ending in 2008.
We hope that the Committee will find these comments
useful.
J B Randle
Executive Director, The Hospital Management Trust
13 February 2006
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