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CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 934-iv House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE HEALTH COMMITTEE
Independent Sector Treatment Centres
Wednesday 26 April 2006 RT HON PATRICIA HEWITT MP, SIR IAN CARRUTHERS OBE MR HUGH TAYLOR CB and DR BILL KIRKUP Evidence heard in Public Questions 528 - 616
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Health Committee on Wednesday 26 April 2006 Members present Mr Kevin Barron, in the Chair Mr David Amess Charlotte Atkins Jim Dowd Sandra Gidley Anne Milton Dr Doug Naysmith Mike Penning Dr Howard Stoate Dr Richard Taylor ________________ Witnesses: Rt Hon Patricia Hewitt, a Member of the House, Secretary of State for Health, Sir Ian Carruthers OBE, Acting Chief Executive of the NHS. Mr Hugh Taylor CB, Acting Permanent Secretary, and Dr Bill Kirkup, Acting Deputy Chief Medical Officer, gave evidence. Q528 Chairman: Good morning, Secretary of State. Could I just, for the sake of the record, ask if you could introduce yourselves and what role you are playing? Ms Hewitt: Of course, Chairman. Let me introduce Mr Taylor, who is Acting Permanent Secretary of the Department of Health, Sir Ian Carruthers, the Acting Chief Executive of the NHS and Dr Bill Kirkup, who is the Deputy Chief Medical Officer. I am Patricia Hewitt, the Secretary of State for Health. Q529 Chairman: Thanks very much indeed for coming along to help us with this inquiry. I suppose this is a question to all of you, really: one of our main tasks in this inquiry is to discover whether the ISTC programme provides value for money. I wonder if you could explain why, as you have said in your supplementary memorandum (which I believe that you are about to publish today), it is you are unwilling to make available the details of the value for money methodology the Department of Health used in assessing ISTC bids? Ms Hewitt: I will come to Sir Ian in a moment on that specific point, but if I can just make a general point about value for money, the ISTC programme has enabled us to do four things that I believe give us value for money: first of all, they have delivered additional capacity which the NHS, at the time, said it could not do within the timescale needed to get the waiting times down, as we had promised. Secondly, the ISTC procurement produced a sharp fall in pricing within the independent sector in which, historically, Britain has had the highest prices in the world, and that of course meant a very sharp reduction in the spot prices that traditionally the NHS had paid in order to reduce waiting lists. Thirdly, it has brought additional innovation and a consistent application of best practice, and, fourthly, it has provided an element - modest but an element - of competition for under-performing parts of the NHS, therefore helping us in our constant quest to drive up productivity and get value for money across the entire NHS budget. On the specific point of the methodology, Sir Ian, do you want to come in? Sir Ian Carruthers: On the methodology used in the work on procurements we were adopting a very similar approach. It was actually based on running an open and competitive procurement, selecting the best value offered and rejecting any schemes that failed to significantly deliver better than the prevailing spot purchases. So through those processes and that methodology, in a contestable way, we are content that we have got good value for money from the process. Q530 Chairman: But us not being able to see the detail of the methodology hinders us a little bit in terms of our role that we play here, and that is to have this oversight role in terms of how things are assessed. Also, of course, we have got the Public Accounts Committee. How can we expect to make a proper assessment, both of these Committees, of the probity of the decision to spend public money on ISTCs if we are denied the methodology of how this is being done? We understand that the business cases and the 2004 review of the value for money methodology are still in confidence. Is this necessary? Ms Hewitt: Chairman, I am very happy to take this issue away and look at it again, but having looked at this, in a sense, afresh as a new Health Secretary, I am absolutely satisfied that the procurement we did was carried out absolutely rigorously in line not only with national but also, of course, with European standards. As Sir Ian has said, it was absolutely open, the criteria for selection was clear and I do not really think there is any criticism of that general procurement process to be made. As both my own officials and, indeed, some of the independent sector providers, I think, said to the Committee when they gave evidence, there are aspects of the procurement that are commercial confidential and which we undertook at the time not to publish; not to share either with the public or, indeed, with other providers - either providers who won contracts or those who failed to win contracts. It seems to me that is inherent in any process of competitive tendering whether it is by the Department of Health or any other part of government. If in some way we are being more restrictive in what we are giving to this Select Committee compared with other departments engaged in other commercial procurements then, of course, I will have a look at whether that is something we may change. Q531 Chairman: Could I ask you particularly about the 2004 review that was done? We do often take evidence in confidence that only we will see and which will not be published in any way, so could I ask you to look at that because we may be able to learn things from the review and, indeed, the department may learn things from that review as well. Ms Hewitt: I will certainly look at the 2004 review, Chairman. I think perhaps what would be helpful is if through your Clerk you could indicate a little bit more of the specifics that are you looking for and if, again perhaps through your Clerk, there could be some indication of what other Select Committees have been able to obtain in terms of information about other procurements (?). However, I would just make the point that in looking at this I am obviously going to have to honour commitments that were given as part of the procurement to guarantee commercial confidentiality to companies that in good faith took part in that procurement. Q532 Chairman: I think this Committee would accept that; it is a question of learning lessons from the whole process. Another area in relation to the issue of value for money is you say that the methodology had to be designed from scratch as there was an "absence of an accepted public sector comparator for providing these clinical services". Why was it not possible to use NHS treatment centre programmes as a comparator? Ms Hewitt: There were very few of those at the time we embarked on this, I think I am right in saying. Sir Ian Carruthers: That is correct. Q533 Chairman: But there were some. Ms Hewitt: We are talking about a period before my time and I am afraid I have not got all that detail with me. Q534 Chairman: I realise that. It is possibly not directly a question to you, Secretary of State, but there were some. We would just like to know why it was not the case that they were used. Sir Ian Carruthers: In essence, NHS treatment centres were very often part of individual hospitals and their costing structures actually were very similar to the NHS main hospital provision. So I think that very often they were additions to the facilities that ran in an ordinary way. I think we can look at that but the reality is that that will be consumed in most of the costs of normal hospital provision because I think treatment centres were quite often in many instances just extensions of the local hospital. Q535 Chairman: Are you looking at them differently now? We were actually in one last week. It may be on the same site as a hospital and adjoined to the building but it is run differently from the hospital. Ms Hewitt: I think, if I may say so, that reflects part of the change that is happening within the NHS. One of the problems that arose in the old, if you like, more monolithic NHS, is that actually there was not great transparency about costs and the NHS did not, in the old days, have a very good understanding of the costs of doing different kinds of procedures in different kinds of places. That is changing and, of course, one of the main reasons it is changing is because with patient choice and money following the patients, the introduction of foundation trusts and the expectation that each hospital will take responsibility for its own success and for responding to patients' needs, so it becomes necessary to underpin the operation of the NHS with proper transparency on costs and a real commitment to driving through better value for money in order to ensure that we are giving all patients the best possible care and releasing resources for all the other things that we still need to do. So I think although we are still not where we need to be in terms of every part of the NHS really understanding costs and value for money, we are significantly further ahead this year than we were four or five years ago. Chairman: We may want to ask you if that is influencing the potential of what is happening in the Phase 2 round. Q536 Dr Taylor: Secretary of State, I think we understand that your memory cannot be as long as some of ours. At the time that the independent sector treatment centre programme was instituted there were at least five NHS treatment centres in the organisation NHS Elect which was set up by one of your predecessors to foster the development of national health treatment centres separate from acute hospitals specifically to sort out the separation of elective and emergency work. These at the time were working at, from memory, something like merely 50% of capacity and had a vast amount of spare capacity that could have been taken up. The crucial question is why ever was money not put up and made available for these NHS centres and the expansion of this programme rather than the sudden switch to the independent sector? Ms Hewitt: My colleagues may well be able to give more detail on what was happening five years ago, but otherwise I will see whether I can supplement this. Q537 Dr Taylor: If I can be very rude, you said right at the beginning that additional capacity was not available in the NHS and you said that the NHS said it could not do the extra work. I wonder actually if the NHS was ever asked if it could do the extra work. Ms Hewitt: On that latter point, my understanding of the first wave of ISTCs was that the Department went out to each area of the NHS and asked what additional capacity was needed in order to achieve the waiting time targets and whether that capacity could, in fact, be developed rapidly enough within the NHS. The answer was, in some cases, no, it could not be - not least because of workforce constraints. This was, of course, at a point when we had started expanding the number of doctors and nurses being trained but we had not yet got them through the system. So we needed very rapidly to bring new capacity into the NHS, and my predecessors, I think quite rightly, made the decision to do that, first of all, by expanding capacity within the NHS itself, secondly to expand capacity through the ISTC programme. Of course, in July 2000 in the NHS plan, where we said that we would develop a new generation of separate diagnostic and treatment centres, we said we would do that in partnership with the private sector as well as on the free-standing basis. Of course, the third element of increasing the capacity was that through patient choice, initially in six months. We mobilised spare capacity that was sitting around in the private sector of the kind that was made visible to patients when they were told, as they so often were: "Well, of course, if you have it done on the NHS you will have to wait 12, 15 or 18 months [whatever it was] but if you would like to go private we can do it for you next week". We said, quite rightly: "If they can do it next week they can do it on the NHS". However, it was by centrally procuring this, in particular through the ISTC programme, that we challenged the exceptionally high prices of the private sector in the United Kingdom, got those prices down, brought the prices down for the spot purchasing (thus increasing value for money), brought in new providers to the independent sector, challenging the incumbents (uncomfortably for them, perhaps) within the UK private sector and introduced a new element of dynamism into the NHS but, more broadly, into the health care system. So I do think it is very important in all of this that we think in terms of a dynamic and not a static model. We recognise that by committing ourselves as we did, and we started out again in June 2002, to greater plurality and diversity in the delivery of elective surgery services we introduced into the old monolithic NHS a significant element of competition and dynamism. It came from the ISTCs, it came from choice at six months and it came from the creation of foundation trusts, and it is that system of what John Kay would call disciplined pluralism that will actually give us the big prize which is much higher productivity across the NHS as a whole. Forgive me for a long answer but I think it is important to have the full picture. Dr Taylor: I think we will come back to dynamism later. Q538 Mike Penning: Briefly, Secretary of State, if I can bring you back to when you were referring to commercially sensitive information that would be revealed if you were to reveal the methodology that was used, I am sure you are very busy but, hopefully, your officers and officials have managed to look at the evidence given to this Committee previously. The independent providers, giving evidence to this Committee recently, when I asked them the question did they have a problem if the methodology was revealed, said no. So they are happy and you are not. Why? Ms Hewitt: I, of course, had a look at that exchange and the transcript of the previous evidence. They drew a very clear distinction between information that they would be happy to have released and the commercially confidential information which they would not be at all happy to release. Q539 Mike Penning: That is not what they said to the Committee. Ms Hewitt: The procurement rules that we operate under, which are both national and European, impose certain confidentiality requirements. The commercial agreements with the bidders themselves impose confidentiality requirements, which we are not going to break and they certainly do not want us to break, and then obviously there is a confidentiality requirement that simply relates to individual patient records, which I think is not a matter between us. I have said, obviously, Mr Penning, in response to a request from the Committee, that I will look again at whether there is additional information that we can release that does not infringe any of those constraints. Q540 Dr Naysmith: Good morning, Secretary of State. The questions I am going to ask are partly, really, historical and it is interesting that since the last time we were going in detail into this subject on this Committee there has been a total change of personnel sitting at the top table - and it is nice to see Sir Ian Carruthers who comes from my part of the world there, too. Welcome, Sir Ian. The reason I introduced it in that way is because the first question I am going to ask you is a historical question. Since none of you were really involved in it would you agree that there has been a lack of transparency in the value for money methodology previously? That is really what we are all circling around. Ms Hewitt: First of all, I know you had an extensive session with Ken Anderson and Bob Ricketts who have been involved in this programme from the outset, and I believe that Ken Anderson and his team have brought exceptionally high quality and tough commercial negotiating skills to the Department of Health, which I think have benefited the Department and benefited patients, both through the ISTC contract but, also, through the pharmaceutical contract negotiation. What we were doing with Phase 1 of the ISTCs was new, so of course we have all been learning through that - and I am sure we will come on to other things like training where we have also learnt to change policy ---- Q541 Dr Naysmith: You are not really answering my question: whether you think that in the early days things were perhaps kept too secret and not really revealed to people who might have had an interest in what was going on. Ms Hewitt: I do not actually think that that was the case. I have not seen anything to suggest that we were hiding information that should have been made public. I am very impressed by the scrupulous adherence to absolutely best practice procurement and confidentiality where that is required. Part of the purpose of the ISTCs was to bring in new providers and if there had been any question of looseness around commercially sensitive data we would never have got them in. Q542 Dr Naysmith: One of your criteria for assuring value for money in is "selecting the best value offer received". Under what circumstances could that not be a necessary criterion? Does it actually mean anything? In any procurement you are going to have that. Ms Hewitt: It most certainly does. I was not involved in the Wave 1 procurement but I have been involved in other departments in major procurements and public/private partnership deals, one of which, for instance, was an enormous outsourcing agreement for National Savings. One of the high level criteria was best value from the different bids received. Underneath that was a huge amount of detail about what were the criteria that then enabled you to judge best value. Q543 Dr Naysmith: Again, in the same submission, one of your criteria seems to have been rejecting any scheme "which was not significantly better" than prevailing spot purchase rates. Spot purchase rates almost by definition are always much higher, or tend to be higher, so is it an appropriate comparator? Ms Hewitt: It was not being used as the benchmark, it was being explicitly excluded, and I think it is very important when you do procurements that you make these things explicit, and that is what that criteria was doing. Q544 Dr Naysmith: Sir Ian obviously wants to come in, but it is not offering the benefits of scale, or economies of scale, which you would really hope to be getting if you make that comparison. Is it? Ms Hewitt: On economies of scale, the first wave - and indeed the second wave is still fairly small scale - I agree you would expect to get significant differences on spot prices ---- Q545 Dr Naysmith: If you get spot rates, then you do not get as much as you can get (?). That is what I am talking about. Ms Hewitt: Spot pricing is massively inefficient. So, in a sense, what the criteria were doing was saying because spot pricing is massively inefficient anything that is near the spot price is not good value for money. That may be common sense but I think it is extremely important that that was put out there at the outset and the private sector will ------ Q546 Dr Naysmith: So the important thing is it is significantly better? Ms Hewitt: I believe so, yes. Sir Ian Carruthers: I think it is important, as Dr Naysmith has mentioned. I was not in this role but I can give you an account from how it looked from the NHS. Q547 Dr Naysmith: So could I, actually, from the Bristol experience. Sir Ian Carruthers: I do not think there was a lack of transparency but what there was was a process of evolution. Where we started from was, in actual fact, that there was a lot of extra capacity needed. We quite often had to utilise the private sector in varying local circumstances and quite often there were spot purchases which actually are more expensive, as a general feature. What then happened - and this comes back to Dr Taylor's question - is NHS Elect was established but NHS Elect was only in a defined number of areas. What then occurred is many people could not or would not travel quite the distances so that it was limited. Part of the use was about how those organisations engaged with the NHS and how referrals were made. In parallel to that, to set this in context, we then began, in the NHS, a separate development which is the NHS treatment centre. In fact, if you look at some parts of the country they are much more weighted to NHS treatment centres than they are independent sector treatment centres. Quite often the cost basis for treatment centres was based on a hospital base. So what we had was an issue around value for money where we still had spot purchases because there was antipathy to using some of this, and we had an evolving situation where as facilities grew and as people were more willing to exercise choice and move, there became a greater need, really, to tackle the value for money issue. I think it is for that reason we then moved away from localised procurement to more nationalised procurement. It is about, really, getting value for money for the NHS. I think we did that through utilising things like the G-sup and other methodologies which were about better value for money for the NHS. The ISTC problem is slightly different because we were creating completely new capability and the importance of the new capability was that we quite often had new situations - and I can speak of a place which is just over the border in Shepton Mallet, where I know you have taken evidence from - and there is no doubt that the NHS, even in an area with very low waiting times, could not have got to the levels that some of them have. So the real issue was that you need to see this as an evolution, and the aim was to get value for money for the NHS. That has overall been achieved because, actually, the pricing structures of the private sector during this period of national procurement have equalised in a significant way and, overall, we are now moving to a position where we are using our own capacity plus, if I can, use ISTCs as NHS branded capacity much more effectively. I think the spot purchase has been eradicated and so on. One of the questions, if I may comment, has been around commercial-in-confidence and the methodology. I think the real issue is what is commercially confident? I think the Secretary of State has indicated that we will look at that, but I think we need to distinguish the detail because it was in most instances just a straight procurement exercise which had to balance the price, the comparator with the NHS and, of course, the other important factor was about creating more diversity of provision that would give more local access. In fact, the national procurements with their local centre are overcoming some of the difficulties faced in NHS Elect, because people were more willing to be referred ten miles from home than they were much bigger distances. Q548 Dr Naysmith: Thank you for that. I know, obviously, Secretary of State, you will indicate who you want to answer the question, but there has been a lot of talk about spot purchasing rates. You have presumably been measuring those and you say they are coming down as a result of the activities that you have been involved in. Is there any way you can give us an indication of how much these spot purchase rates have come down and how useful that has been, if it has been? Ms Hewitt: The premium on spot purchasing when we started on the ISTC programme was about 40%. The average premium on the ISTCs is about 11% - and I was just checking that that was indeed included in the supplementary memorandum we have given you. There is no real need now for the NHS to use spot purchasing at all. There has been a transformation in the structure of the independent sector health care market in the United Kingdom as a result of what we are doing. Q549 Dr Naysmith: Did I hear you to say you were not using spot purchasing at all? There is no need for the NHS ---- Ms Hewitt: There will, no doubt, be the odd occasion when somebody has got to do it but there is no real reason why spot purchasing should be featuring in any significant way within the NHS at the moment. What we have got is not just the ISTCs, we have also got the G-sup (the supplementary provision). In my own city, for instance, Leicester, where there is a Nuffield hospital, through not the ISTC programme but through the supplementary contract the local NHS uses the Nuffield hospital for orthopaedic patients who are in danger of breaching the six month maximum time. They work in a very sensible, collaborative way; patients are very happy and certainly the consultant I met at the Nuffield is using his overtime hours in the Nuffield with the agreement, obviously, of the NHS trust, and it is an arrangement that works extremely satisfactorily. It has got waiting times down to a maximum of six months, and for most people, of course, much less; patient satisfaction is very high and as far as I know, in that particular health community, there is not any spot purchasing. What we will do is check what figures we have on current levels of spot purchasing ---- Q550 Dr Naysmith: I have got one last question in this area and it has already been touched on. It is this question about the value for money methodology. It has been reviewed in 2004 and I know the response you have given is that some of it is confidential, but can you give us any idea of the sorts of things you are looking for in these changes, because you have been talking about an evolutionary process and things changing as we get experience of what was going on. What is it that you want to get in future that you have not got in the VfM methodology that we are using up until now? Ms Hewitt: The outcome we want, obviously, is high and consistent standards of clinical and non-clinical quality of care for patients in the NHS and independent sector providers. We want to get all our providers as close to or below the NHS tariff prices. So a level playing field here, both in terms of quality and in terms of cost. That is the goal. We will get their gradually. Sir Ian Carruthers: Can I just add to that? I think also there are other issues we will be looking to as part of this learning curve. We want future ISTCs to be much more engaged in training ---- Dr Naysmith: I think we are going to come on to talk about that later. What I was just going to say is that I hope all this is being monitored and recorded so that we can actually see the difference in two years' time. Thank you very much, Secretary of State. Q551 Anne Milton: Good morning, Secretary of State. I promise to be very brief. Thank you for coming, particularly as, clearly, you have a very bad cold. Ms Hewitt: I am waiting for the pharmaceutical companies and a brilliant R&D programme to produce a pill for the common cold! Q552 Anne Milton: You will be well looked after here; we have doctors and nurses and pharmacists! Can I just pick up on something you said about spot purchases? You said that spot purchase rates were massively inefficient. The advantage of spot purchase is you get what you pay for. So if you do not get an operation you do not pay them. Some of the ISTCs are operating at a fraction of capacity and yet they still get paid. So they get paid even if they do not do anything. It is slightly curious to me that, particularly spot rates having come down, you still feel happy with the ISTCs being paid for, possibly, only working at 50% or maybe 40% capacity. Ms Hewitt: Obviously, we would like to see the ISTCs working at a higher rate of capacity, and by continuing to open up patient choice so that patients by the end of 2008 will be able to go to any hospital or treatment centre anywhere in England that provides the necessary operation we will actually have a more effective use of capacity right across the entire NHS - traditional NHS providers and independent sector providers as well. In the meantime, where we have got particular cases of low utilisation, we are making that additional capacity available to other commissioners within the NHS who might wish to use it for their patients. But I do not think we can have it both ways, because it was the ISTC programme that drove down the spot prices, we cannot say: "Oh good, because the spot prices are low we will abandon the ISCT programme". It was the one that drove the other. Q553 Anne Milton: If patients start using the ISTC so they are working at full capacity and they are no longer working at 40% capacity, then some of those patients might also be coming out of the NHS. So you are going to have hospitals, particularly with payment by results, that are not performing the operations and they are going to be done in the ISTC scheme. It is a question about over-capacity. Ms Hewitt: This really goes to the heart of our whole approach to the reforms. We are moving away from a monolithic NHS where, really, the system is designed far more from a provider point of view than from a patient point of view; where patient choice is limited (or, in some cases, non-existent) to a system where patients will have far more choice, in the context of electives (which is obviously what we are talking about), and they will have completely free choice by the end of 2008 of any provider in England that can deliver to the quality that we want and within the time. On top of that, each of the hospitals, each of the providers and each of our NHS hospitals will be expected to take responsibility for understanding the needs of their patients; making sure they are responding to those in the best possible way, addressing causes of patient dissatisfaction if those exist, and where capacity needs to be adjusted either because patients are saying they prefer one thing and not another or because new medical practice makes it possible to do things in better ways, then one of the challenges we face is the NHS becoming more nimble in responding to those changes in capacity which, as I say, are driven very often by medical technology as well as by growing patient choice. Anne Milton: Thank you very much. Q554 Mike Penning: This massive effect that ISTCs have had on the NHS. The policy, as I understand it, was that ISTCs were brought in to increase the capacity to deal with waiting lists, and yet your officials have indicated to us that they are effectively very marginal. I wonder if you can confirm the figures that there have only been 60,000 procedures by ISTCs and of the NHS procedures 6 million. My mathematics is surely not as good as yours, Secretary of State, but that does not seem to be such a massive effect. Is that correct? Why is this contribution so significant if so few people have been operated on in ISTCs? A short answer, please, because we have had lots of long ones. Ms Hewitt: Indeed, but let me just respond to the question. I do not think I actually used the word "massive". The ISTC programme is a small pebble in a very large pool. You are absolutely right, if you combine the diagnostics and the electives, we are talking about 250,000 patients so far who have benefited - that is diagnostics as well as electives - and as you rightly say 6 million elective operations a year. So it is a very small proportion. However, even a small pebble in a very large pool can create a lot of ripples. If you like, that is what I am describing: the additional capacity which made an important - not the majority difference - difference, for instance, in getting cataract waiting times down; the fall in spot prices that we have been talking about and the additional innovation, for instance, in mobile diagnostic centres, which in the case of MRI scans helped bring those waiting times down really quite dramatically. Q555 Mike Penning: Can we see then just how small this pebble is and whether or not there is an interpretation that is trying to make this pebble even slightly bigger than it perhaps is? What significant part of the 60,000 or the 250,000 you were referring to does the BUPA treatment centre at Redwood, in those figures, contribute? Ms Hewitt: I am not sure. About 35,000 elective patients treated so far. Q556 Mike Penning: The Committee has a figure of 38,000 so we are pretty close, but that is not within the ISTC programme. Why were those figures used to boost the way that the ISTCs have been working where they were there as contracts with BUPA before the ISTCs started? Surely, they should not be inside those figures. Ms Hewitt: I am not sure I follow your question. Q557 Mike Penning: You are saying that a certain amount of work has been done by the ISTCs because of the excellent work they have done, yet you are using figures from a contract which is not inside the ISTC programme. It is pretty simple, really. Ms Hewitt: There are a number of different ways in which we use the independent sector. You are quite right that there is an ISTC programme, specifically Wave 1 and now Wave 2, there is also the joint venture represented by BUPA Redwood (there may well be other joint ventures in future) and there is the G-sup contract. I noticed, as I was going through the transcript of earlier evidence sessions, that actually both the questions and the responses dealt with a variety of uses of the independent sector and not purely the ISTCs. Q558 Mike Penning: That is not the question I asked you, Secretary of State. I am asking you why the figures are within the ISTC programme (in other words, how successful the ISTCs have been) when the BUPA Redwood centre is nothing to do with ISTCs; the contract was there before. Why are those figures inside those successful figures? Sir Ian Carruthers: The BUPA arrangement was established before the national procurement, but it is viewed as a prototype ISTC and, actually, it is therefore different. It was one of the initial things; almost a pilot to establish how we went forward. I think you have got to see it in that context, so to leave the figures out would give a slightly distorted picture because it is not, if you like, a totally private sector organisation as some of the other groups would be - the Nuffield, and so on. Q559 Mike Penning: I think it is distorting the figures by saying they are inside an ISCT programme when they are clearly not. Ms Hewitt: We can give you both sets of figures. On the total Wave 1 activity, excluding Redwood and excluding the supplementary procurement, we are looking at about 855,000 procedures over five years, and around 11% average premium is calculated on Wave 1 ISTCs, again without Redwood and the supplementary catalogue. Q560 Mike Penning: We have already heard, earlier on, that the use of the ISTCs is at something around 40% or 50%. Surely, then, the argument that they were so desperately needed and the NHS could not cope without them is, perhaps, flawed. Ms Hewitt: These judgments about capacity were made at the time by the local NHS, and I think it is fair to say that capacity planning is quite a difficult thing to do. I think it is also true to say that once we had announced patient choice at six months and we had announced the first wave of the ISTC programme, actually the NHS responded, in some cases, by changing the way that hospitals worked and got those waiting times down. I would be very happy to give the Committee a copy of the slide[1] which I was showing Cabinet colleagues last week which shows very clearly that between March 2000 and September 2002 the number of patients waiting more than six months barely changed at all, despite the fact there was more money going into the system. When we announced choice at six months and the beginning of the ISTC programme, those waiting times absolutely plummeted, and it comes back to the point about the dynamic effect of even quite a small number of new providers changing practice, improving the use of resources and therefore improving productivity. Q561 Mike Penning: I do not want to dwell because there are lots of other Members that would like to ask questions and the answers are very long. Can I ask you, Secretary of State, how many NHS facilities you are happy to see closed - that have been closed or will continue to close - for the ISTCs to go forward? In some hospitals you are going to demolish hospitals and build ISTC centres. How many of these hospitals are you happy to see closed? Ms Hewitt: I do not regard that as, if I may say so, a right measure. Q562 Mike Penning: It is a question though, is it not? I have asked a question on behalf of the Committee and I would like you to answer it. Ms Hewitt: My answer is that what we are doing is building new NHS hospitals, including of course the proposed PFI in Bedfordshire and Hertfordshire. We are also commissioning ISTCs - a small number and a very small proportion of the total budget - but in many cases because the local NHS believes that that is a better way of delivering faster and better patient care ---- Q563 Mike Penning: You are not willing to answer the question? Ms Hewitt: My criterion for success is simply: are we giving patients the best possible care with the best possible value for money? Q564 Mike Penning: So the answer to the very simple question of how many NHS departments and hospitals you are happy to see closed so that the ISTC project can go forward is that you are not going to answer the question? Ms Hewitt: It is not a question of closing NHS facilities in order that ---- Q565 Mike Penning: It is a question from this Committee to you, Secretary of State. Ms Hewitt: It is not a question that I am ---- Q566 Mike Penning: ---- willing to answer? Ms Hewitt: ---- willing to answer in that form because that is not how the system works. When patients have free choice of where they have their elective operations (which I would have hoped, Mr Penning, is a goal that you would support) it will be the patients who decide which facilities flourish and which facilities are to change. Mike Penning: There is no choice if you close hospitals, Secretary of State. It is simple. Chairman: Secretary of State, I want to move on to Charlotte but can I just say that the thing you shared with the Cabinet last week we would be more than happy if you shared it with the Committee. If there is anything in terms of numbers of patient alongside that it would be very useful to us. Q567 Charlotte Atkins: Good morning. In the statements you have kindly provided to us it says that ISTCS have played a major role in increasing capacity to NHS patients but it also says that you have to get this into perspective, that ISTCs have only treated 3% of those NHS patients having routine elective surgery. That appears, on the face of it, to be somewhat contradictory. Are you saying that the dynamic you were talking about closes that particular gap? Ms Hewitt: Yes, I think the effect of the ISTC, in terms of capacity, has been two-fold: there has been the direct contribution (modest but significant) and there has been the indirect contribution that together with choice (this greater plurality of providers) has encouraged other parts of the NHS to make more effective use of their own capacity. Q568 Charlotte Atkins: So, basically, then, it is not the ISTCs that have been responsible per se for the reduction in waiting lists and waiting times, it is, in fact, the NHS providers who should actually get their just desserts, in the sense that they are the ones who have actually reduced waiting times down to less than six months. Ms Hewitt: It is actually both. I take the example of cataracts, which I know is controversial with some of our NHS colleagues, and if you look at that there is no doubt at all that the majority of cataract operations are done, and always have been, within the NHS. I have no doubt that will continue to be the case. If you look at the number of additional operations that had to be done to get those waiting times down to a maximum of just three months, around a third, I think, of those additional operations were done by the ISTCs - not the majority but, nonetheless a significant contribution. On top of that you have this really exciting example of innovation which was the mobile surgical units going around to those parts of the country that have the greatest waiting lists and really helping to get them down. So a significant contribution. I have never said that the ISTCs were purely responsible for the really extraordinary fall in cataract waiting times (we have hit the three-month target four years earlier than we said we would) but they have made an important contribution and both should be recognised. The other example I would give you is MRI scanning. That was really very important because under the contract that we had with Alliance Medical about 113,000 NHS patients directly got faster scans - that is by February of this year - as a result of that service. Again, what Alliance did was to bring in a mobile operation which saw a very, very dramatic fall in waits for MRI scans in some parts of the country, from the order of six months or more to the order of six, eight or ten weeks - that sort of area. So very big reductions there in waiting times for some patients in some areas, and as we move towards the 18 week target at the end of 2008 we need both a massive expansion in diagnostics in the NHS but we will also need a significant contribution from the independent sector just to hit that contract. Q569 Charlotte Atkins: If NHS facilities were given the same resources why would they not be capable of doing exactly the same thing in terms of bringing down waiting times to the 18 week target? Is there any particular reason, given now that you have introduced this new dynamic? Ms Hewitt: This really goes to the whole question of innovation and best practice and how you get a dynamic system that incentivises both innovation and best practice. I think most people would agree that the NHS is superb in places at innovation and creating best practice, and on almost any aspect of patient care you care to name you will find best practice somewhere in the NHS; it is there, particularly, but not only, of course, in our brilliant teaching hospitals. However, what the system, taken as a whole, has been very poor at doing is incentivising best practice - not as the occasional result of superb clinicians and entrepreneurs and so on but as the norm. By putting more diversity and more competition into the NHS as a whole we are incentivising best practice and innovation throughout the entire service. This is really important, because what we are finding with the ISTCs is that, partly because they are set up on Greenfield sites but also because they come from a different culture, they are institutionalising as best practice a whole series of things about how you treat patients. For instance, the idea that every patient is seen for a proper assessment before they are admitted; that every patient is telephoned before they are admitted to make sure they still need the surgery, the date is convenient and all of that. I can send you a very detailed note because I am not going to give you a long answer - I could go on for ages on this - but a whole series of aspects of best practice, each of which taken on its own represents common sense but which are not the norm throughout the NHS. I know this can be difficult for NHS colleagues and all of us who love the NHS to admit, but I will give you just one example that I picked up the other day: two orthopaedic surgeons working side-by-side in the same hospital. One of them has his secretary ring every patient the previous week to check that they know they are coming in, they know what the procedure involves, they know what they have to do to prepare and they know what will follow after the operation. Not surprisingly, most of his patients turn up for the operation. The next orthopaedic surgeon, working in exactly the same hospital, does not do that. His secretary looks at the list on the Friday, starts 'phoning them and says: "Pack your bag; you are coming in on Monday". Now, which consultant has the better rates of attendance at the surgery? It is blindingly obvious. But, actually, there should not be that kind of variation; best practice says you know what the best way is and you do it like that for everybody. It is that kind of attention to detail and building in best practice to the design of the building, the design of the processes as well as the clinical quality that the ISTCs actually exemplify. Parts of the NHS equally exemplify it, but to get it generalised across the NHS as a whole, which is what we have to do to get best value for money across the NHS, we need diversity, we need choice and we need an element of challenge and competition. Q570 Charlotte Atkins: Given how much we are now paying NHS consultants, I would have hoped that that increase in productivity would have been, effectively, part of their contract. It seems to me that if we are paying them more they should be delivering more and, perhaps, they are not always doing that. Ms Hewitt: I think consultants are often let down by the systems within which they work. A very senior consultant surgeon whom I was talking to just last week said that when he arrives at his hospital for, let us say, a Friday session, there are occasions when there are too many patients and too few beds, there are occasions when there are too few patients because they have not been checked in advance and they have not turned up, so there are occasions when he is overworked and there are occasions when he is sitting around doing nothing. That is because the system within that hospital is inefficient and there is not the collaboration between the managers, the nursing and the clinical staff required to deliver the best possible use of your most expensive resource, which undoubtedly is the consultant - he or she is your most skilled resource. Q571 Charlotte Atkins: You have just given us a perfect example yourself of two surgeons who behave totally differently. It seems to me that the NHS should be ensuring not that we necessarily incentivise surgeons to do that but that we require it of them. I want to go on to an issue because I know that we are short of time ---- Ms Hewitt: You can require, but actually incentivising best practice is quite a good way of getting it. Q572 Charlotte Atkins: Absolutely, but it should just be part of the normal process; they should not expect more money to do what we would expect them to do in a normal situation. We visited, as a Committee, the Woodland NHS Treatment Centre in Dartford. That facility, which is obviously an NHS facility, is delivering excellent results next door to the hospital delivering fantastic elective care. It seems to me, certainly, having seen that, that I do not see why the rest of the NHS treatment centres should not be delivering the same as ISTCs. To all intents and purposes it was operating just the same as an ISTC and why should we not expect those treatment centres to multiply within the NHS? Why do we have to rely on the private sector to provide them? Ms Hewitt: I think we need both. Sir Ian Carruthers: If I can just come in there, we are in danger of saying one is good and one is bad. The fact is we are not saying that; we are actually saying that NHS hospitals - just to give you some context - in some places do fantastically well but, as you would expect across a big range of organisations, there is variability. Exactly the same can be said of NHS treatment centres: there are some that function very well; there are some that are less productive than others. I think what we really need to look at is what can be achieved in terms of the integrated impact of treatment centres and NHS hospitals in proving their effectiveness and efficiency, and indeed ISTCs. Actually, it is the integrated part and the impact of that which is really important. If I could just refer back to a comment which has been made to illustrate this, ISTCs have made an impact on reducing waiting lists but, overwhelmingly (and the cataract is a great example of where they have made that impact) we should be saying very well done to NHS hospitals, because actually over time they have done that. The real question is how do we move to the next phase on 18 weeks? What will we need? There is little doubt that, as the Secretary of State has said - and I can give some local examples of this - when you introduce an ISTC you are not working from the same practices that have grown up in some of the other organisations over many years. We need to look at two things, two impacts. One is the impact in terms of capacity, ie, doing more operations, and they do that, but the most important impact is the impact they often have on the local NHS which is about how they improve their practice, and the Secretary of State has mentioned some of those. Also we should not forget the impact it has on local clinicians because quite often they will go and adjust their practice and I am sure that there are examples where lengths of stay and other things have occurred as a result of that injection. I think that it is really important that we see this as part of an integrated development of more provision where each can play its part, but actually we need all components to make a success if success is better outcome, more up-to-date practice, capacity to reduce waits and the driver for value for money because I am sure we will not drive value for money without some of these processes. I would not like to say where, but I think if we asked for the same quantum, and in fact I could ask for the same quantum, of treatment that we are getting from some ISTCs from the normal planning processes of hospitals, the costs would be greater because of the way it is done. I think we have got to see this in the round rather than saying that one is good and one is bad. The fact is that it is the interaction of both that is going to transform the healthcare system and that is why it is crucial to reform. Q573 Charlotte Atkins: But the Woodland NHS Centre seems to be achieving the same as ISTCs without the benefits of a take or pay contract. That is the point, that they are driving those improvements without the advantages that you seem to be piling on to the private sector. Now, the Secretary of State has said that they could create a dynamic. Is, therefore, this support for the private sector driven by ideology rather than by looking at what places like Woodland actually produce and would actually create? Ms Hewitt: Well, as I said a few moments ago, there are superb examples of best practice and innovation on every aspect of care you care to name within the NHS itself and there are indeed some excellent treatment centres, but the point Sir Ian has just made is a very important one, that it is actually much easier not just to innovate, but to embed every aspect of best practice in a total system if you are starting on a greenfield site and you do not have established ways of working or an established culture of , "This is how we've always done it". I think that is probably one of the main reasons why in 2002 in the very early stages of this the NHS Modernisation Agency reported that the good practices that they identified at the time in the NHS treatment centres were not widespread, nor did any treatment centre embody more than a few of them, whereas actually a lot of the gains are to be found if you have every aspect of best practice in every aspect of care and you try and get the whole lot together. Now, by no means are all the independent sector treatment centres doing the best on absolutely everything, but the advantage of a new provider on a greenfield site is that you can design the whole thing from scratch and you can then leap ahead not of best practice, but of most existing practice and show people what can be done. That is a very powerful dynamic for change, so our commitment to greater diversity of provision, which is foundation trusts as well as the independent sector, is not driven by ideology, it is driven by the experience of virtually every sector not just in our country, but across the world, that actually you need an element of diversity and pluralism in order to get an entire system operating on the basis of best practice, best clinical outcomes and best value for money. Q574 Charlotte Atkins: Ultimately then why are we not giving NHS treatment centres exactly the same advantages as the ISTCs in terms of the take or pay contracts? Ultimately our objective is to improve the NHS, improve its productivity and improve its dynamism, so why are we not doing that with the NHS treatment centres that we have ongoing at the moment? Ms Hewitt: Well, we do not have contracts with NHS hospitals, except for foundation trust hospitals which are now in a rather different category because they are freestanding and responsible for their own futures and taking the risk associated with it. The reason we had to have take or pay contracts for Wave 1 was because the judgment was made at the time that we simply would not have been able to get new providers into the system if we had not been willing to share that or to take that degree of risk away from them. The Wave 2 contracts are likely to be done on a rather different basis, but of course that is something we are exploring at the moment in the procurement process. Q575 Jim Dowd: The ISTC and the treatment centre programme really cannot be anything more than a temporary, and I was going to say "expedient", but I do not think that is the right word, a temporary device because we have received evidence that at the outset when there was a great differential in waiting times between going to a treatment centre and going to a closer local unit, there was a much higher take-up rate. As the effect of the existence of the treatment centre drove down improved practices locally and drove down the waiting times and the differential became much narrower, the use of the treatment centres dropped off quite sharply. Surely how are you going to sustain it as an incentivising component of the organisation if the work and demand, as the rest of the organisation improves, takes away much of the work it has got to do? Ms Hewitt: Well, I do not look at this from the point of view of the providers. I do not stay awake at night worrying about whether this centre or that centre is going to have enough patients. What I worry about is the patients and I think increasingly what will drive the system is not our contracts or our targets or our top-down performance managements systems, it will be patient choice and stronger commissioning both by primary care practices and the primary care trusts. That is what will drive the system and patients themselves will decide where they want to have their hip replacement or their other elective operation done. Q576 Jim Dowd: The point I was making is that the more effective it becomes, the more expensive at the margin it also becomes and, therefore, unsustainable over the long term to provide a permanent pressure, a permanent incentive, if you like, on the NHS sector not just to improve its performance to get rid of it, but actually to sustain it over time. Ms Hewitt: I think what we will see is a growing impact from foundation trusts and of course we will over time have significantly more foundation trusts, so we will have NHS hospitals themselves with far more freedom to innovate and respond to what patients need and improve their services in order to attract those patients and that is going to be a new element of dynamism in the system. However, the NHS has always used the private sector and we should not pretend otherwise, and I believe that the independent sector for diagnostics and electives as well as other aspects of care will be a permanent part of the NHS family. Sir Ian Carruthers: I just wanted to add to that because there is an assumption behind the question in fact that we have this one list of patients waiting on a common threshold and, therefore, somehow when we get through them all with the capacity it will become poor value for money. The plain truth is that if you compare our healthcare with other areas of Europe and the world, they all operate at different thresholds for accessing care. In fact if you look at the cataract example, it was very common in this country and it may be the case where if you had a treatment required in two eyes, the priority was to give you treatment in one and then wait for the second. Now, the threshold for that will change and I think if you look at how people get access to hip surgery, we have tended to have a situation where people in this country have waited longer than in other countries. I think that what we have got to realise is that the dynamic in this is that, as practice moves, public expectation will grow and interventions will become sooner to improve the quality of life so that in fact we are not dealing with a static population because what this enables us to do as we move on and, if you like, clear off the backlog, which was implicit in that question, so will the referral thresholds and the treatment thresholds be adjusted to fit the capacity. We should not just think that every referral is made on the same basis because there is a whole set of factors. I actually believe that, as you move on, you are absolutely right, where waiting times are very low, people feel less need for choice unless it is for other reasons, but the plain fact is that actually access to care and the quality of life we are able to give people by early intervention will improve. That is why I come back to the point that it is an integrated issue which is about how we use the totality for the best benefit of the population. The other feature of course is that most of the ISTCs are on four- and five-year contracts, so it does build in that adjustment in a way that we would not have if we were expending the capital stock of the NHS, so I think it is important to take into account those two because, for me, there is something that says, "When do we have a problem?", and it is actually when there is no one waiting and we have got idle facilities. The difficulty that we have to handle in the intermediate term has been there since NHS Select and all the other things that have been successful which is how we marry the demand, and this has to be done through choice and the incentive system, to the capability that we have got, and I think that is the key. Q577 Dr Stoate: I certainly understand your frustration that best practice is not always delivered in the NHS, whereas of course it can be, but it does not always happen. I also understand your view that ISTCs, particularly on greenfield sites, might be able to drive best practice and might be able to deliver that, but can you actually give any examples or think of where this really is happening? In other words, it is nice in theory, this idea that ISTCs might drive best practice, but do you actually have any evidence that it is? Ms Hewitt: I am very happy to send you a more detailed note[2] because it really would take too long to go through it, but it comes back to the point I was making earlier, that if you are starting on a greenfield site and if success or failure on the contract you have entered into absolutely depends upon reaching your clinical quality standards, but doing that with best value, you are going to organise things in a way that absolutely maximises efficient use of time. Q578 Dr Stoate: I entirely appreciate that. Ms Hewitt: The result of that is, for instance, that the best, it is not all of them, but the best ISTCs are doing six to seven arthroscopies a day compared with three or four typically in the NHS and that is because they have gone through the process in grinding detail and something, for instance, like going through the consent process for the operation, they do all that in advance at the outpatient appointment instead of doing it when the patient comes in at the beginning. Now, I am sure that happens in some places in the NHS, but what I am saying is that with the ISTCs, they are routinising best practice. Q579 Dr Stoate: But the question is: are they giving the necessary kick up the backside to those parts of the NHS that are not doing best practice to make sure that they do? That is my question. Are the other parts of the NHS that are not currently delivering best practice looking on and actually being given this necessary kick? Ms Hewitt: We have sought for many years to spread best practice more effectively in the NHS. That was why the Modernisation Agency was set up and now the NHS Institute. It is why over many years we have trained well over 100,000 staff in all the techniques, if you like, of modernisation and service transformation, but there is no doubt at all that if you build these incentives into the system, you get results, well, I think you get them on a different scale. Now, I would offer you the two pieces of evidence. One is the graph that we will send you about the waiting times that were pretty static and then came down when we made some structural changes and injected some dynamism into the system. The other is anecdotal and is simply to do with the number of hospital chief executives who have said, and it is a bit unpopular to say it, or it was when they were able to say, for instance, to some of their consultants, "Well, if we don't get our waiting times down, patients will go somewhere else after six months or there'll be an ISTC down the road", and actually they got the change in practice that they wanted. Now, that probably makes it sound too adversarial and I suspect it is not as adversarial as that, but there is evidence of that happening and of course as the reforms we are making take effect, and we can see it happening at the moment, many of those hospitals that have got deficits have got deficits because they have not been institutionalising best practice and they are now having to do so. Q580 Mr Amess: Secretary of State, I rejoice with you that this is the best year ever for the National Health Service since its inception, but there are a number of points about these independent treatment centres and the rationale behind them that frankly have concerned me. To summarise everything, you have just said we have got 100,000 staff being trained in part of the modernisation service, but overall the reason for these independent treatment centres is that there has been a failure of National Health Service management. Now, you, Secretary of State, have realised, and you have been very honest about it, that there has been a failure in your Department because we have got before us this morning the Acting Chief Executive of the NHS, the Acting Permanent Secretary and the Acting Deputy Chief Medical Officer, so everyone seems to be acting for all sorts of reasons, so at least, Secretary of State, you have put your own house in order. I am very, very concerned about your overall rationale behind these centres, that you seem to be saying there is a failure of management. Now, is it the fault of the doctors and nurses? Given that this is the best year ever of the National Health Service, who is actually to blame for the failure of management because I understand that you are going to try and incentivise the NHS to do better, but who is to blame? Ms Hewitt: First of all, I am not saying, and I do not believe, that there has been a failure of management on the scale that you are talking about and, secondly, I think trying to rush around the place saying who is to blame is a complete waste of time. This is about everybody taking responsibility for transforming the system. What I was talking about earlier, and what we are doing, is moving the NHS from a monolithic system to a new kind of system and the NHS has operated in one kind of way for nearly 60 years. It was set up in the way that they set up organisations after the Second World War because that was at the time the best practice in organisational structure. You had command and control organisations, you had public services that were monolithic, that were, if you like, a provider monopoly and because the NHS at the time was a transformation for patients, it was the most enormous step forward for people, but we are nearly 60 years later. Patient expectations have changed, they are rising very fast, the demands on the NHS are rising very fast, particularly because of demographics, and medical technology and practice is changing faster than I think most of us ever imagined possible. Now we know, and we can see this in public service reform all around the world, that we will achieve the next stage of improvements in public services by giving people greater choice, by having greater plurality and diversity of providers, by giving those providers more freedom and more incentive to respond to what people need and to adopt best practice and to innovate and underpinning that of course with money following the patient and so on. Those are the reforms that we are making, but that does not mean that the old NHS was a failure of management; it was nothing of the kind. It was, as Nye Bevan said, the most civilised thing in the world and the changes that we are making are absolutely designed to safeguard the founding principle of the NHS, that care should be given to people on the basis of their clinical need, not their ability to pay, that it should be funded by all of us through our taxation contributions and that it should be free at the point of need. By changing the NHS in the way we are, by meeting rising expectations, by improving care and improving value for money, I believe we will safeguard that founding principle and those founding values. Q581 Mr Amess: The only thing I would say, Secretary of State, and I accept that everything you have said is what you genuinely believe and what you are determined to achieve, but I have sat on this Health Select Committee and listened to Frank Dobson, Alan Milburn and your predecessor John Reid. Do you accept, given that the general public and the staff of the National Health Service have a certain view of we politicians, and I have heard everything you have said about the organisation for 60 years, but for the actual women and men who work in the NHS, it is pretty tough for them given that it seems that there have been different messages given by your three predecessors? I am sure if we had the time to go over the transcripts of the various hearings, your predecessors have said slightly different things. I think it is just jolly, jolly tough on the NHS now for all the staff just to sit back and accept what you have said without raising any sort of concern at all. Ms Hewitt: Well, I think the decisive moment was the publication of the NHS Plan in 2000. That was the beginning of a ten-year programme of investment, improvement and reform in the NHS to move from the old NHS to the new NHS. Now, obviously I have not had your experience of the Select Committee, but I have read a number of evidence sessions with both Alan Milburn and John Reid and I believe that what I am saying and doing is absolutely consistent with what Alan Milburn set out in that 2000 NHS Improvement Plan and what John Reid said to this Committee, I think, in December 2004 about the importance of patient choice and the importance of seeing the NHS from the patient point of view rather than simply the provider point of view. Now, our staff in the NHS do a superb job and I am proud of the fact that we have so many more of them, and we published earlier this week the workforce survey figures, with 34,000 more staff just in the last 12 months and I am proud of the fact that we are paying them far better than ever before. The public service values which are at the core of their commitment to the NHS will remain at the heart of the new NHS. Other things will change, and I know that is difficult because change is always difficult for all of us and there are a lot of changes going on and we just need to keep redoubling our efforts really to engage the staff in that, as we did in Agenda for Change and as we will now do in implementing Agenda for Change which will help to give us the flexibilities and the dynamism within the NHS that we have been talking about. Mr Amess: I will leave it there, Chairman. Chairman: Could I thank you both for that bit of respite, but could we now get back to the ISTCs! Q582 Dr Taylor: First, I am afraid I have got to try and lay to rest the myth once and for all about cataract operations because we have been told absolutely clearly on this Committee before that waiting times for cataract operations were coming down very fast before the independent sector came in to work. We have also been told that in a given year the independent sector provided between 17,000 and 20,000 cataract operations, whereas the NHS did 400,000. People sitting before us, high-ranking officials, have said that the effect on cataract operations has only been marginal, so I do think that we should get that absolutely stated. Secondly, I am delighted Sir Ian talked about integration. When we went to Redwood and when we went to Darent Valley, although one is run by the private sector and one is run by the NHS, the theme that made success was that in both of them the services were being provided by NHS staff, the consultants were working on Redwood as a part of their NHS job plan and integration worked. When you have competition between independent sector treatment centres located near NHS centres where they are not in any way integrated, then there is the wrong sort of competition between the two places and the system does not work. Now, coming back to the script, you have mentioned dynamism and you have mentioned innovation and you have acknowledged that innovation does exist within the NHS. You have mentioned mobile cataracts and mobile MRI scans as innovation in the private sector. I feel that, with money given to the NHS, that could have been done just the same. Could you give us any other examples of innovation which is absolutely unique to the ISTC programme? Ms Hewitt: No. I think the mobile centres, yes, it would have been lovely if they had been done by the NHS, but they were not, they were done by the independent sector. They are terrific and I hope we will see a lot more mobile centres in the future whether they are independent sector or NHS because they are going to help us get better services, particularly in rural areas. I think the other aspect of innovation is the one I was talking about earlier which is bringing together a very large number of different aspects of best practice in very detailed aspects of clinical management and combining them all within a single building and a single process. I know from my own experience at the Department of Trade and Industry that although that is not a headline-grabbing innovation, it is actually through that kind of integration and adoption of best practice that the really consistent improvements in productivity often get made. Q583 Dr Taylor: Yes, thank you. I am absolutely convinced the same innovations and more could have been introduced, particularly, as with MRI scans, the private sector programme was introduced at a time when some NHS MRI scanners were idle because the PCTs did not have the money to pay for those extra sessions, so if the money had been channelled to PCTs to buy them for the NHS sector wherever possible, would that not have been preferable? Ms Hewitt: Well, this business of scanners and the use of equipment is a very interesting one because, as this Committee knows, there is equipment, very expensive capital equipment, that is seriously under-utilised. Now, we are putting enormous sums of money into the NHS and we are encouraging hospitals, particularly through Agenda for Change, to use their staff in much more flexible ways. I have seen examples, for instance, in Huntingdon of superb practice in the NHS where radiologists are now doing what only they need to do, radiographers are taking on more of their work and then assistant radiographers and radiography assistants are being trained up to do more of the work and, through that kind of changing role, they are making far better use of the equipment, they have slashed the reporting times from anything up to 24 days to less than 24 hours, so that is happening. However, it is not happening everywhere and last year we had some shocking cases, headline cases, of patients, and one patient in particular I remember who was told by the NHS, "You will have to wait six or 12 months for an MRI scan", and then scribbled on the letter she was sent was, "If you want to go private, ring this number". Now, that is unacceptable and, as a result of that, last November we introduced choice for scans at six months, MRI and CT scans, and from April, from this month, we have introduced choice at five months for all scans. Now, we have not yet got the detailed monitoring data and we will obviously have to see what impact it has, but for a very small number of hospitals, and this is not yet statistically significant, we have seen a massive reduction in waiting times since we introduced choice of scan at six months. Since that is exactly what happened when we introduced choice of operations, starting with heart operations at six months, I would not be surprised if the effect we have seen in a few hospitals actually was replicated in other places. You need structural changes to get best practice as well as exhortation and education. Q584 Chairman: We did have a couple of questions on local autonomy, but I think, in view of the time, Secretary of State, we will skip over them and move on to the issue of Phase 2 of the ISTC programme which is certainly more relevant to our inquiry, I think. What stage is Phase 2 at now, how many bids has the Department received and when will the contracts be agreed? Ms Hewitt: We have for tranche one now had the expressions of interest in, we have issued the invitations to negotiate and we are now working our way through that process. Q585 Chairman: Do you know how many ISTCs you have commissioned? Ms Hewitt: Yes, on the electives there are 12 schemes which are in tranche one and tranche two. The Invitations to Negotiate (ITNs) have gone out. We have had responses on five schemes and bidders are assembling their responses on the remaining seven, so we are currently evaluating the bids for - shall I give you the detail? Anyway, we are evaluating the bids for five schemes and we are waiting for the responses on the remaining seven. Q586 Chairman: Are there discussions taking place with the local and wider health communities about these or have there been in the recent past? Ms Hewitt: There has been on each of them before the invitations. Q587 Chairman: I understand that is taking place. Will take or pay contracts be a feature of Phase 2? We have heard this thing about ISTCs developed without this financial safety net, but can they do that given the strong hostility towards that part of the system as far as the NHS professionals are concerned? What is your view on that? Ms Hewitt: Well, as I said earlier, take or pay contracts were needed to bring the new providers into Wave 1. I would expect them to be a much less significant feature of Wave 2, but it is too early to say whether we will need them at all. Q588 Chairman: We have heard this issue about tapered take or pay. Is that something that you are looking at? Ms Hewitt: Yes, that is one of the possibilities we are looking at. Q589 Chairman: Does that relate to the amount of referrals that you get from the rest of the health community? We have had anecdotal evidence and we have discussed with the health professionals about in some instances the reluctance of the wider health communities to send or to refer people to the current ISTCs. Ms Hewitt: As we move to a system of patient choice, it will be the patient who decides where they actually go. The real issue here, I think, is risk. Do we ask new providers or independent sector providers to invest in facilities and simply do that on the basis that if they get the patients, they get paid and if they do not get the patients, they do not? Now, that will mean transferring the entire risk to those providers and that is likely to cost more than if we share some of that risk. Obviously with the take or pay contracts, really we carry the whole of the risk and that is why you can look at variations between all of the risk being held by the Department, all of the risk being held by the contractor or the risk actually being shared, so we have asked providers to bid on the basis of tapering guarantees for contracts because we think that will be much more appropriate in Wave 2 than these 100% take or pay contracts that were in Phase 1. What we want to get to is by the end of the initial guaranteed contract period all independent sector providers should be providing services obviously of NHS quality, but also at the equivalent of NHS tariff with patients having free choice and a level playing field. Q590 Anne Milton: Can I ask you about training. I do not know what your plans are for Phase 2, but will the inclusion of training provision affect the rates which ISTCs can offer? Ms Hewitt: Yes, we are intending to include training requirements in Phase 2 and I think that was one of the very important lessons, if you like, learned from Phase 1. It really was not possible to build training in from the outset. They were starting to do it in some of the Wave 1 centres, but training not only for doctors, but also for nurses and allied health professionals will be part of Wave 2, but what we are asking the bidders to do is to look at the impact of providing training on their own levels of productivity, if you like, and then costs and, therefore, to give us prices. Q591 Anne Milton: Will all the Phase 2 ISTCs have training potential? Ms Hewitt: That is our intention, yes. We are going to require ISTCs in Wave 2 to provide training across the full range of clinical services. They will have to provide it across clinical services and we may also ask them to provide training in clinical management skills, the kind of thing we were talking about earlier in relation to best practice. Q592 Anne Milton: Would you at the same time allow Phase 1 ISTCs to provide training because there is some concern that they are not doing so? Ms Hewitt: Yes, indeed there is and we have already been working with the providers and with the Royal Colleges and the deaneries to get training into some of the Phase 1 providers. Q593 Anne Milton: Some or all? Ms Hewitt: At the moment it is some, but there are discussions going on on this with in fact most of them. Q594 Anne Milton: Will anybody training within an ISTC be trained by an NHS consultant or a recognised trainer? Ms Hewitt: An NHS trainer. Q595 Anne Milton: So all of them will be trained by NHS consultants or recognised trainers? Ms Hewitt: There will be a recognised NHS trainer delivering the training to clinicians in Wave 2. Q596 Chairman: The issue of additionality as far as Phase 2 is concerned, I would like to believe that that is now going to be relaxed, the additionality of workforce which in the vast majority of Phase 1 we understand that the majority of the workforce, certainly the surgeons, most of them came from outside this country actually. Ms Hewitt: Yes. Q597 Chairman: That is going to be relaxed, so there are a number of questions, but I would just like your wider view on it, and could I also couple with it the issue of BUPA Redwood that we saw where there was actually this joint venture where NHS staff and BUPA staff were working alongside one another in a treatment centre, no matter how it is described elsewhere. Is that the type of thing you see for the future, particularly of Phase 2, in view of the relaxation of additionality if that is going to go ahead? Ms Hewitt: I will turn to Ian in a moment on that point, but on additionality, I think it was absolutely right to have very strict additionality rules for Wave 1 because we were desperately short of staff at that point and the priority was to build that extra capacity as quickly as possible, so we had a 'no poaching from the NHS' rule because, otherwise, we could have ended up simply moving staff from the NHS to the independent sector with no overall gain to patients, hence the additionality rules. Last year the Royal College of Surgeons, in particular, and others talked to me and said, "Look, this is becoming too restrictive and it is hampering the kind of integration of services", which both Sir Ian and Dr Taylor were rightly talking about, so we looked again at additionality and of course we looked at it in the light of the fact that we have now got so many more staff than we have ever had before and the new training places for doctors and nurses are now delivering more graduates than ever before, so we were able to relax the additionality criteria. I think the Royal College of Surgeons and possibly the Royal College of Radiologists would like us to go a little bit further and I think there is still a balance to be struck here. For the shortage occupations, and there is a worldwide shortage of radiologists, if we relax the additionality requirements there, there is still a real danger and all we do is shift or all we do is allow the independent sector to poach very scarce staff from NHS providers and that does not add to the capacity which is what we are trying to do. Q598 Chairman: Are we likely to see this sort of BUPA Redwood joint venture? Ms Hewitt: There is no reason why there should not be more joint ventures in the future. Q599 Chairman: In a sense, if you wanted to, you could effectively stipulate that as part of Phase 2 or some parts of Phase 2, could you not? Ms Hewitt: It is an issue that we are keeping under review. A lot of foundation trusts, I think, are interested in developing joint ventures, but there is also an issue which I mentioned before about diversity and an element of competition and challenge. We are not trying to create a private market here, but we do want an element and, therefore, we do not simply want foundation trusts and the independent sector taking over everything together. Sir Ian Carruthers: This has to be seen in the overall development of the NHS and the reform programme. Effectively what we want is diversity of provision and what we want is provision that is actually integrated where arrangements can be the most appropriate at the local level, so there is no reason why that would be precluded. Indeed, in many hospitals now and ISTCs, they have arrangements where not quite the same thing occurs, but through the secondment scheme and other things, people do work in the different centres. I go back to the point that we made earlier, that we need to see this as an integrated whole and how the various components can improve the NHS, and I think that is the stance that needs to be pursued. Q600 Anne Milton: Sir Ian, you said earlier in the session that BUPA Redwood was always a pilot for the ISTCs. Sir Ian Carruthers: I think BUPA Redwood was the first of its type and we did a lot of learning there. Q601 Anne Milton: But you used the word "pilot" and I am curious as to why ---- Sir Ian Carruthers: I do not think you should attach too much significance to the use of the word "pilot". It was actually something that occurred and was developed and in many ways the ISTCs have taken the learning from that as they have developed. Q602 Anne Milton: I am surprised, therefore, that you did not develop that idea and recreate it because we were terribly impressed when we saw it. The thing is that it had in place safeguards against the issues which have been raised about training, et cetera, so, as you have accepted it as a pilot, I am amazed you dismissed this model. Sir Ian Carruthers: I was not here at the time, but I will give you my view of why the approach taken is probably the appropriate one. I think we have got to remember that ISTCs are, on the one hand, creating capability and, on the other hand, trying to break the monopoly so that consumers can actually have choice. I think, and this goes back to the point Dr Taylor made, sometimes you have to go through this difficult phase of creating the infrastructure before you can then reintegrate because if you start from the point of integrating, you quite often end up with replicas of the same organisations, and that is part of the argument about treatment centres as well. Once you have got an infrastructure in place, you can reposition how you do some of that for the common good. Q603 Anne Milton: I would suggest that although you have said that it was the introduction of the ISTCs, ie, the introduction of the marketplace, the introduction of competition, the fact that it was the only way, in your words, that you could kick-start the NHS into operating at the sort of levels you wanted to see, I would suggest that the separation between elective and non-elective work was the crucial factor and, therefore, not necessarily down to the ISTCs, and I would urge you not to come to the wrong conclusions in the second wave. That separation, I think, is the thing which has driven a lot of the innovation, not the presence of the ISTCs and, therefore, I would suggest that the ISTCs were never necessary and what was necessary was to separate elective and non-elective work. Ms Hewitt: I completely agree that the separation of elective from emergency is central to improving the quality of care for patients and is a very important feature of these changes. I do not agree that the ISCT programme was unnecessary and I think that the Modernisation Agency Report that I referred to earlier confirms my view that a bit more diversity, a bit more competition and patient choice were very important drivers of these changes. Q604 Sandra Gidley: I would like to pick up on the patient choice aspect because it seems to me that patients at the moment cannot compare like with like because different data is collected in the ISTC sector compared to the NHS and it is even difficult to compare rates of adverse incidents. What is going to be done to address this problem? Why is there this reluctance to ensure that there is a level playing field and an equality of information to patients? Ms Hewitt: I completely agree that we need a level playing field and we need equivalent information across all providers so that patients can make an informed choice, but also of course so that clinicians, the providers themselves and the regulators can make sure that we keep improving standards. That is why the Chief Medical Officer has now asked the Health Care Commission to conduct an audit of the ISTC programme. The Health Care Commission will formulate the terms of reference for that. The process will be completed by the end of the year, although the Health Care Commission has undertaken to give us an interim report, and that is part of what we need to do to make sure that we are getting equivalent data on the same issues right across NHS hospitals and independent sector treatment centres. At the moment we are in the position where in some cases there is more detailed information coming from the independent sector treatment centres because of their contracts. In other cases we are getting more information from NHS hospitals. Therefore, as you rightly say, the patients are not given equivalent information. Q605 Sandra Gidley: Will the audit include comparisons with the NHS independent treatment centres? They are another part of the equation and it would be useful to be able to compare directly. Ms Hewitt: I believe they will. The Health Care Commission is looking at the detailed terms of reference but I am confident that I can say yes. Q606 Sandra Gidley: Is this not an admission that the system was set up wrongly in the first place that we cannot directly compare and patients trying to find out for example satisfaction rates - and that seems strange to me because you have a 97% satisfaction rate and a 3.4% complaint rate and I do not think the two are quite compatible somehow - cannot compare. Ms Hewitt: We do of course do patient surveys. The ISTCs do them and the NHS does them. Satisfaction in the NHS is 91% and for ISTCs I believe that the average is about 94%. What we want to make sure is that we have got comparability of information and as much transparency as possible for patients and others across all of the NHS family. I do not think it is about saying it was all done wrong in the first place. What we did was a very important piece of innovation in the way that the NHS works. It has had some very beneficial effects. There have been some problems. We have talked about training. We are now talking about clinical and broader audit and we are learning lessons and making further change. I think that is the way you go on improving things. Q607 Sandra Gidley: You talk about comparability but we had some evidence in this Committee that, in effect, the independent sector treatment centres are cherry-picking, they are doing the easy operations, and when we introduce payment by results, on which there are some concerns particularly in the tertiary hospitals who do the more complicated procedures, is that not going to skew the equation even further? Ms Hewitt: I do not accept for one moment this idea of cherry-picking. It is of the essence of separating emergencies from elective treatments that a treatment centre, whoever is running it, will do a narrower mix of operations. That is its great virtue. ISTCs do not pick which patients come to them. The patients are referred to them and in future patients will choose whether they go there. Q608 Sandra Gidley: You disagree then with Mr Kelly from the Royal College of Ophthalmologists who added that the inevitable cherry-picking of relatively simple elective procedures by ISTCs would have a very damaging effect on local NHS services once payment by results is introduced? Ms Hewitt: No, I do not agree with that. Sir Ian Carruthers: It is important to recognise that ISTCs do not decide what specialties they house themselves. These are determined after discussions with the local NHS and they are in fact specified so that any discussions that have come, the specialties included, have usually emanated from difficulties in the local NHS. So I think if anything we can reflect on that within the NHS but that is not the fault of the ISTCs. We ask them to do a given amount of work and a given range of specialties. In many contracts as well there is the opportunity, over time with suitable notice, to change the range of operations and the types of specialties so that they can be flexible to local circumstances. I know the one I have been involved in is. The notion that they determine the patients is quite inaccurate. Ms Hewitt: Can I just add that I think this issue of patient information is terribly important. We are building up ways of giving patients much more information about clinical quality in the NHS hospitals as well as in the ISTCs. You no doubt have seen, it has just been launched today, the website that has been launched by the Royal Society of Cardiologists, working with the Department of Health and the Health Care Commission, which gives detailed information on clinical outcomes, adjusted for case mix for individual cardiac surgeons. Generally at the moment we have only got clinical quality information for an entire hospital, and of course what the patient needs is information on clinical outcomes for a particular team and specialty or even a particular consultant, which is what the cardiologists are now providing. So we are making real advances in terms of making that sort of information transparent and we will do it not just across the ISTCs but right across the NHS family. Q609 Sandra Gidley: A final question, it was not really answered earlier but from a slightly different angle. As we are moving more work to the ISTCs, you would not answer the question on hospitals closing, but I would hope that some analysis has been done to quantify the effect on the NHS providers and on the workforce. Has any such analysis taken place and how many NHS jobs would you expect to be lost as a result? Sir Ian Carruthers: Firstly, yes, analysis has taken place and part of the putting together of the detail and capacity that will be required against which applicant ISTC providers will be judged will include an assessment of what the transfer of work might be from some hospitals, what the transfer of the workforce might be from some hospitals. Obviously the aim is not to lose jobs; the aim is about getting this integrated balance. If I can give an example of Southampton which has one of the biggest ISTCs, that has been a key component of that local discussion. There has been an arrangement about what the hospital thinks it needs to change because many surgeons are very happy to see ISTCs develop. What they want is a more integrated approach. Ms Hewitt: Can I just reinforce the point that in all of this discussion about ISTCs, which are a very small proportion of the total investment we are making in the NHS, we have to have this discussion in the context of more patients being treated, more operations being done, far more diagnostics being done (because we do not get to 18 weeks without it) so more staff, more patients, more treatment, more diagnostics than ever before. Some of these accusations that the ISTCs are going to cripple the NHS imply that there is some small and dwindling number of patients to be treated, whereas actually we are growing the whole system here and ISTCs are just one aspect of that growth. The other point that I would make is that on a few occasions I have heard the chief executive of an NHS hospital say that some part of his hospital is going to be put out of business by an ISTC that does not yet exist in some cases and in some cases by an ISTC for which we have not yet decided whether we are going to go out to tender. We are only a few years away from the end of 2008 when patients will choose where they have this kind of operation. What I would hope is that the chief executive who is currently saying one department is going to be put out of business instead would say, "How are we going to make ourselves a foundation trust? What do we need to do to improve the quality of care? What do we need to do to improve patient satisfaction? What do we need to do to improve best value for money and make sure that if an ISTC comes along we will be better and the patients will come to us instead of to them?" instead of saying, "This is terrible and we are going to lose our patients." There is no reason why they should at all. Sir Ian Carruthers: If I could add to that because I think it goes back to some of the points before. If you see this as totally competitive then you end up with a wrong conclusion. If I can give a local example. Let us take a large teaching hospital, generally they are brilliant at the leading edge work that they do. However, they may not be able to undertake the routine DGH-type services in elective provision. What this is a chance to do is to rebalance this to enable the local population by using an integrated approach to get the access to the DGH services that they need, quick access to GPs, quick access for all the more routine conditions whilst the institution itself repositions itself to do what it does best. I think contestability is an important notion because it drives change, but what we have to achieve is a level of complementarity because at the end of the day we want the Health Service to meet all its needs in every locality, therefore that is why it is not a choice of either/or; it is about how we make it all work together. Some ISTCs are good news for local hospitals because it will enable them to address some problems that they would not ordinarily address in some cases. Chairman: It might be quite useful if we could have some of that analysis that has been done about the potential effect on the wider health community by ISTCs, or all of that if it is feasible. I would greatly appreciate that. It is a voice that we do hear even from foundation hospitals, as you are aware. I want to move on very quickly now to Charlotte. Q610 Charlotte Atkins: Have you got any evidence to support the claim that the quality of care in ISTCs is higher than in the NHS? Ms Hewitt: There have been various studies done on the MRI scans. The clinical guardian has just completed an audit which shows that the quality there is directly comparable in the independent sector with the NHS. The clinical audit which we have just asked the Health Care Commission to do will answer the broader question very fully but we do need to remember that in every health care system untoward incidents happen in around 10%, sometimes more, of all cases. I think it is a frustrating feature of medical practice. Everyone tries to get it as low as possible but I doubt it can be completely obliterated. Q611 Charlotte Atkins: So you are saying they are broadly comparable and one is not better than the other? Ms Hewitt: Yes. Q612 Chairman: On the issue of contestability of patient choice in the idea of having informed patient choice are we are going to have both the NHS and independent providers monitored in exactly the same way so that we are able to say that is a choice that I want to take? Will we get to that, do you think? Ms Hewitt: Yes, we already have the Health Care Commission inspecting all providers, everyone as part of the NHS family, and to have informed patient choice we need better information and the same information across the whole NHS family. Q613 Chairman: And will that be a feature of Phase 2? Ms Hewitt: We are developing the information requirements for the whole of the NHS as I indicated earlier but, yes, we will building in more information requirements where we need them. Chairman: I will hand over briefly to Anne. Q614 Anne Milton: Just briefly on the basis that you feel these have been a success, we are not attacking, we are voicing the concerns that have been voiced to us and it is our job to do so. Cherry-picking - they do choose patients, rightly so, on clinical grounds. They do not operate on people whom they think it would be unsafe to operate on. So they do choose who they operate on, as I say, rightly so. Just going back to the success of ISTCs, do you think there are any limits? Why not A&E, why not oncology? Ms Hewitt: We use the independent sector where they can do a good job for NHS patients. I have not seen any suggestion or evidence that the independent sector could provide the quality of A&E care that the NHS provides. I do not think any of them do it at the moment. Q615 Anne Milton: You are not bringing in the ISTCs on the basis of quality; you did it on waiting times. Maybe where waiting times are very long or in areas where there are long waits for radiotherapy would you see the independent sector coming in there? Ms Hewitt: You look at what patients need but actually emergency care, obstetrics and gynaecology, these are areas where I do not think we would want to make use of the independent sector and they are not asking to be made use of. Sir Ian Carruthers: Could I just add - and I will deal with that question and I will come back to the first one - and at the present time if you look at it worldwide, the way that other countries practise you could make a case for saying there is an awful lot more that could be done in free-standing elective standards. At the present time we are where we are. Of course, you can never say never. Looking at the types of services that you have said, to my knowledge is not currently part of the programme. However, we should never say never because obviously techniques and things are going to move on. In other parts of the world they would do other things and some of the providers have asked about that and the answer has been no we want to stick to the specification which is really about the sorts of things that are in there. Q616 Chairman: Could I thank you all very much indeed for this morning's session. I wonder whether we will be taking any more evidence either on paper or directly from you but hopefully in the next few months we are going to be looking at making our report on this issue of independent sector treatment centres. Ms Hewitt: Chairman, thank you, and we look forward very much indeed to the report and responding to it and learning lessons from your conclusions. [1] Ev x [2] Ev x |