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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 934-v House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE HEALTH COMMITTEE
INDEPENDENT SECTOR TREATMENT CENTRES
Wednesday 28 June 2006 MR KEN ANDERSON, MR BLEDDYN REES and MR GEOFF SERLE Evidence heard in Public Questions 617 - 692
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Health Committee on Wednesday 28 June 2006 Members present Mr Kevin Barron, in the Chair Mr David Amess Charlotte Atkins Jim Dowd Dr Doug Naysmith Mike Penning Dr Richard Taylor ________________ Witnesses: Mr Ken Anderson, Commercial Director, Mr Bleddyn Rees, General Counsel and Mr Geoff Serle, ISTC Programme Lead, Department of Health, gave evidence Q617 Chairman: Could I thank you, once again, for coming along to give evidence to this inquiry. Perhaps I could start by asking you if you can tell us how many phase 2 schemes the ISTC programme will include. At what stage of development is each of the schemes at the moment? Mr Anderson: The easiest ones to describe are the ones that came out in phase 1. I think the Secretary of State stated there were 12. I cannot give you a precise number of schemes that will be completed at the end of the process. We sit down and we talk to each health economy and we come up with a value-for-money quotient. If they do not stack up, we never take them to ITN. The ones that we can definitively tell you are in the pipeline right now which are being processed through a procurement phasing are 12. We are continuing to work on other schemes with health economies, but that tends to change, depending on whether or not the health economy decides within the context of a value-for-money envelope if they stack up and it meets affordability constraints within that locality. Q618 Chairman: You said there are 12. The Secretary of State told us in a written submission that phase 2 will now consist of 17 schemes. In a written answer by Ivan Lewis he stated that phase 2 would be made up of 12 schemes - which you have just repeated to us -for elective procedures and seven regional diagnostic schemes. Are we talking of 19 and not 12 here? Mr Anderson: The Secretary of State's answer was correct. We have 12 that have IT and we have a further five that we are discussing, which were the five she told you about. They are not at ITN state. We are expecting responses back on those five. We have, underneath, a diagnostics' procurement: a further seven schemes that are out there, have been identified, have been quantified and are part of an ITN process. I guess you get the 19 plus five. I think the discrepancy is that we do not count a specific scheme as one until we have an ITN identified next to it. We go out with an indicative number of schemes, based on the local delivery plans that have come back from the National Health Service and based on their preliminary sets of means, and then next to that we map across what we feel the private sector component would look like and then we have to match a lot of affordability constraints to those. If they do not stack up then I think the issues that you are starting to touch upon were the ones that were reported in HSJ that have been withdrawn. We do not take them to market and therefore they are not real in our mind until those have gone to ITN and we have private sector entities out spending money on the bid process. Until that time, it is an internal issue between ourselves at the Department and the local health economy. Q619 Chairman: The Health Service Journal saying that seven were not going to go is about right at this stage. It is 12 plus five, so it is about right. Mr Anderson: That is correct, but they were not included in the number that the Secretary of State answered in question 585 in the official transcript. Those were seven schemes that we had not taken out to the market place. They were seven schemes about which we were in discussions internally with other health economies and so they were not a part of the package that the Secretary of State described to you in May. Chairman: I think we may want to go into some further detail about some of those schemes. Q620 Mike Penning: What lessons did the Department learn from phase 1 of the ISTC programme? How have these been applied in phase 2? Mr Anderson: We learned and we are applying them now. It is actually reference to the schemes we have looked at and decided not to go forward with. We need to firm up local delivery plans with the local health economies before we go out and start talking to private sector partners. We are now in the process of having detailed discussions with the folks on the ground. We are applying, I think, the lessons learned very well indeed around that process. The result of that were the seven schemes that you saw listed in the Health Service Journal. Q621 Mike Penning: The Secretary of State referred to the seven schemes being cancelled but the strategic health authorities affected in their own area have been told to provide more independent sector services to NHS patients. Can you explain how that is going to work if the ISTCs have been cancelled? Mr Anderson: I think it is an unfortunate misnomer, quite frankly. When we say cancelled, we say cancelled in their present form. Q622 Mike Penning: The word "cancelled" means it is not going to happen: you have started and you have stopped. Mr Anderson: In their present form. I guess it would be applied to the present form, so we go back to the health economy and then we continue the conversation around what their needs are. But they have gone out and they have identified a gap or a necessity for extra throughput within that economy that would be provided by the private sector, and so, once you get down to nuts and bolts and you start talking about case mixes and the number of patients, and very honestly how maybe some of that will impact other local providers economically, then, until you can delve into the detail, it is very hard to get a true picture in that economy. The LDPs are a very macro look at what a health economy needs over the next given year, so, when you sit down and you start having discussions with the health economy, the package may not stack up in the same way that it was originally envisaged. We had the same issues, if you want to call it that - and I think it is a good discussion to have with the local economy - around how they stacked up, and we cancelled schemes in wave 1 which came back to health economy but in a different guise with a different case mix. Maybe, instead of being a stand-alone scheme, it then became something that we did on a JV basis with another National Health Service trust, or maybe it was a completely different package, where it was attached to a more community-based provision package. Until you can sit down and describe specifically what the private sector components are in their capabilities and have a detailed discussion, we cannot take it forward around the constraints of value for money - which we are going to talk about after this. Q623 Mike Penning: I think I will stop you at that point because I think you have used so much jargon I do not believe you have answered the question in the first place. We will come back to that. Mr Anderson: Okay. Q624 Dr Naysmith: The Secretary of State also wrote in his submission "we remain committed to investing £550 million on the procurement in the independent sector: this includes £50 million from the first wave of ISTCs." Is this £550 million per annum over a five-year programme, which represents a total of £2.75 billion? Mr Anderson: Yes, that is £550 million annually. Q625 Dr Naysmith: If so, can you explain how this relates to PEQ (public expenditure questionnaire) from 2005, which suggests expenditure of up to £5.8 billion over phases 1 and 2 of the ISTC programme. Mr Anderson: I am sorry, I do not have that in front of me. I could go back and look at that. I am not familiar with that figure. Q626 Dr Naysmith: Which one are you not familiar with, the £2.75 billion or the £5.8 billion? Mr Anderson: I think I would recognise £5.8 billion as a total between the phase 1 and the phase 2 combined procurements but I would not recognise that figure attached to the phase 2 alone. Q627 Dr Naysmith: Phase 1 of 2. Mr Anderson: That is correct. Q628 Dr Naysmith: £5.8 billion is an accurate estimate, is it? Mr Anderson: I would imagine, roughly, with phase 1 and 2 combined, you would probably get fairly close to that. Q629 Dr Naysmith: We were told that ISTC programmes were "consultative and pragmatic" and that schemes had been cancelled if it was clear that the local NHS had adequate capacity and also that the Government is "committed to investing £550 million on the procurement in the independent sector". How can you be sure that you meet that target and at the same time be committed to a number that is flexible and pragmatic. Mr Anderson: I think the flexible and pragmatic piece is being realised through the fact that we have dialogue with the local health economy and, in some cases, if the health economy has come to the conclusion, based on some of the assumptions they had made in the local delivery plan exercise, that that amount of activity is no longer needed then we talk to other health economies. Across England I do not think there is a lack of need for extra capacity, particularly around some of the elective procedural pieces that we are doing. Q630 Dr Naysmith: Will new ISTCs go ahead in any areas where it is clearly demonstrated there is no need for additional capacity? Is that what you are saying - although we have this figure of £550 million - if the demonstration is that ISTCs are not needed? Mr Anderson: If they demonstrate not a need for ISTCs, then that is a conversation they will have to have with ministers. As far as I know, we are not forcing ISTCs down anybody's throat, to add extra capacity in an area where they say specifically and categorically they do not need it. Q631 Mike Penning: We had evidence on Thursday's session from the chief executive of West Herts Hospital Trust, who clearly said to this Committee that they do not want the ISTC. It will have a major effect on them. They will physically have to knock down a hospital which is perfectly okay: five theatres working very well. Are you saying that, if that trust does not want that ISTC, they go to the minister and a minister and the minister would listen? Mr Anderson: We have a conversation with the trust initially. We are still having conversations with Hertfordshire as we speak. That scheme was one that started in the phase 1 portion of the schemes, and one of the reasons it has not gone forward to date is because we are still talking to that health economy about their needs. Q632 Mike Penning: That you have not progressed because there is an argument over the need. Mr Anderson: No. I would not characterise it as an argument. I would characterise it as a discussion. The flip side of that is that health economies used the independent sector treatment centre programme as a reconfiguration tool as well. There is capacity in the NHS that we pay for that is not necessarily applicable to today's type of health care. Those are very detailed conversations around an extremely sensitive and extremely involved strategic issue for health economies. It is not something that you can resolve in a matter of days or weeks even and it takes a detailed conversation with the health economy around what does reconfiguration look like and what does 21st century healthcare look like. Q633 Mike Penning: If West Herts Hospital Trust want to reconfigure, and you are aware of the situation ..... Reconfigure, by the way, means knocking down a general hospital because that is what is going to happen Mr Anderson: Not necessarily. I would not accept that. Q634 Mike Penning: The only way that can go ahead is if the ISTC comes in. It is a tool. Mr Anderson: It is not the only way. There are a lot of health economies who are reconfiguring without ISTCs or independent sector involvement. It depends on what tool that health economy needs. Q635 Mike Penning: I am interested in your comment that if they are not happy they go to the Minister - and the Minister says, "It is nothing to do with me," and passes it down the line. Mr Anderson: No, that was not what I meant at all. Mike Penning: That is what happens in real life. Q636 Dr Naysmith: Following on that line, the Minister also said, when we were discussing the decision not to go ahead with seven of the phase 2 schemes, that " in other [areas] it has become clear that the level of capacity required by the local NHS does not justify new ISTC schemes" - which is really what we are discussing now. You ought to be able to provide us with a list of those areas where you have been looking at the possibility of going ahead. Mr Anderson: I think we can give you a note on that. I do not have that detailed information in front of me. Q637 Chairman: Presumably it would not be much different from the seven that are highlighted in the Health Service Journal. Mr Anderson: I think it might reflect the Health Service Journal article. Q638 Chairman: You think it is pretty accurate, do you? Mr Anderson: I think they had reasonable information, and they tend to ... I do not know the complete content of the Health Service Journal. I do know the seven schemes that they were talking about. The article was accurate to the point of the seven schemes that we have decided to look at differently, or to go some place else and try to draw that value out of a different area. Q639 Mike Penning: There are clearly other schemes that you are looking at on top of that seven. Mr Anderson: If there are not in ITN, yes. Q640 Mike Penning: There are more than seven. How many? Mr Anderson: I do not have a number in front of me. Any scheme that has not made it to ITN typically is not in ITN because we are having discussions with the local health economy and we are trying to figure out what the case mix is. Q641 Mike Penning: Could you supply the Committee with a list of the ones that have not made it to the ITN. Mr Anderson: I believe we should be able to do that, yes. Q642 Chairman: It would be very helpful if you could also give us the reasons why. Mr Anderson: Certainly. Q643 Mr Amess: Mr Anderson, as you will recall, when you came before the Committee to give evidence before some of us were a little bit disappointed with what we perceived to be your lack of robustness and you seemed to be a little vague on issues. As you know, the whole purpose of these sessions is to call witnesses and gather information which we determine as evidence to produce a report. You have turned up today with an army of minders behind you. We are now on to, I will tell you, question 7, and you still seem to be vague about things. Anyway, here we go, let us see if we can get an answer. If phase 2 is all about extending patient choice, will the establishment of independent sector treatment centres in areas with no capacity shortage be a problem but NHS bodies with funding issues such as West Hertfordshire or South-West London? Mr Anderson: I will return to the way I answered the question earlier. We have discussions with the local health economy to determine what their needs are. We do not go in and impose a needs package on a local health economy. We have that discussion with them because the data that is needed to come to the conclusion you have just asked me to draw is not held in our offices, it is held in the local health economy, so we are not at that point basically qualified to make decisions about that local health economy of the order of magnitude that you are talking about. So I cannot answer that question. I can tell you that, once we have had discussions and the health economy has come to the conclusion that this is a part of the way they are going to provide treatment to patients, we then go out and we procure an ISTC. Q644 Dr Taylor: Can I take you back the March 6 meeting again, when we talked about additionality and integration particularly, because so many of the people we have been to see felt that integration is really absolutely vital between the NHS and the ISTC. At that time Mr Ricketts told us that additionality was being relaxed for the second wave. In the last three months, has there been any change in that idea? Or are you still relaxing additionality? Mr Anderson: No, additionality will be relaxed for wave 2. Q645 Dr Taylor: Are there any groups of staff for which it is going to be more difficult to relax it? Mr Anderson: I cannot specifically answer that. Q646 Dr Taylor: You told us last time radiology, radiography and some of the specialist nurses. Mr Anderson: I am sorry, I do not have that data in front of me. I can write you a note about it. As far as I am concerned, I think Mr Ricketts gave you that answer. I do not think any of those providers have changed from the standpoint of where it is difficult to start to relax additionality. Q647 Dr Taylor: We have also had some comments from witnesses, and letters, that, when ISTCs were rather foisted on areas that did not need them, additionality was bringing in extra capacity that was not needed. Do you have any comment on that or has that been expressed to you at all? Mr Anderson: There has been press around that. There have been health economies that have expressed concerns around that, but ultimately - and I am honestly not trying to be abrupt on record here - it is up to the local health economy to determine what the needs are for that health economy, and then the ISTC programme was placed in those locales because they stated they wanted that throughput or that capacity to cure ---- Q648 Dr Taylor: We have had letters to the contrary of that, to say that they were forced on them, but that is probably nothing to do with you. Do you think additionality being relaxed will lead to a migration of staff to ISTCs? Or do you think integration will then be so easy that we will see a real coming together of them without detriment to the NHS? Mr Anderson: I think the initial positive that will come from the relaxation on additionality will be a crossover from a training perspective. There is a lot both sides can learn from each other and probably one of the big frustrations that has been expressed to me personally has been the fact that doctors or consultants would like to learn in ISTCs and vice versa. The relaxation in additionality will allow that two-way traffic to start occurring - and I think appropriately so, and then, hopefully, as they become integrated into the health economy - and they are - that will allow an exchange of ideas. The only way I think you get an exchange of ideas is with an exchange of people. Q649 Dr Taylor: You would agree it will reduce the resistance in the NHS to the independent sector treatment centre if they are working as one with shared staff. Mr Anderson: That is correct. Q650 Chairman: What implications does that have on things like pay differentials between the independent sector and the NHS? Have you thought this through? Mr Anderson: First of all, we do not get involved in pay between whoever is involved in the ISTC and the employer. I cannot answer that question. Q651 Chairman: Has your team looked at the issues around people working alongside one another on different pay or, indeed, on different pensions in terms of the second phase? Mr Anderson: I cannot answer that. It may well have been looked at, and I am not aware if it has been, but I could get a note back to you. Q652 Chairman: Do any of your colleagues know. Mr Anderson: It has been looked at. Mike Penning: Your colleagues had better come and sit up here and tell us what is going on. Mr Amess: We are wasting our time, chaps. Mike Penning: If there are people here who know this information, surely we should have it. Mr Amess: What is the point of this? It is farcical. Q653 Chairman: If you feel that you do not know and somebody who is sitting behind you might know, could you ask them to proffer the words. Mr Anderson: If I might ask Bleddyn Rees, our general counsel, and Geoff Serle who takes care of procurement. Mr Rees: Good afternoon. The answer to the pay grade question is that about 18 months ago the Government issued guidance about the two-tier workforce. At that time, there was some extensive correspondence into Department around the application of the two-tier work code to the ISTC programme. The ISTC programme benefits from a specific exemption, which does not apply the two-tier work code to the practice. Strictly speaking, the Department's position is: No, there is no requirement to impose obligations on the private sector to engage any medical workforce on identical terms to the NHS, so Agenda for Change does not apply. The Department is simply testing its value for money on procedures by reference to the procedure prices. We have no visibility of the terms and conditions on which any staff engaged by the IS sector are employed, so we are not able to answer the question as to whether there are two workforces operating and doing the same things with different prices. We do not know. Neither do we know that that is the case either. Q654 Chairman: Richard has just asked about the issue of additionality. If restrictions are lifted, what is the likely effect that that would have on the local health economy in the immediate area of the ISTC? Has any work been done on that? Mr Rees: I am sorry, could you ask me the question again. Q655 Chairman: Correct me if I am wrong on this, because this is something the Committee has only been looking at in recent months, but our understanding is that the additionality rule was tight so that ISTCs would not recruit from within the National Health Service and potentially weaken the National Health Service in terms of its ability to deliver. If we say there is going to be relaxation of the additionality rule for phase 2, then has anybody looked the implications of that on phase 2? That potentially could happen. There could be recruiting from the NHS which, as a consequence, would affect the ability of the NHS to do the work we expect of it. Mr Rees: Yes, there has. The workforce directorate at the Department of Health has analysed the availability of NHS staff. The Secretary of State previously said you have to place things in context. The number of procedures that are being bought by the ISTC programme is a small fraction, therefore, following through, we are only talking about a relatively small proportion of the total workforce who could be recruited. The point to understand is that the relaxation of additionality relates to non-contracted hours. First of all, we are not talking about the recruitment of NHS, full stop; we are only talking about their non-contracted hours, if you like, their overtime hours. Those overtime hours and the use of those overtime hours is controlled by virtue of the consent process involving the NHS employer, so there is a safety procedure to ensure that the use of the staff does not detract from services that are provided in NHS hospitals and facilities. Chairman: Thank you for that indication. Q656 Dr Taylor: You said that the ISTC work is really a small proportion of the total amount that is done. Does that not make that graph on the back of the Department of Health paper extremely misleading, because, with the rapid fall, the only points above are: first ISTC operational, 10 ISTCs operational, 18 ISTCs operational. That gives the impression to somebody who does not know that the total improvements in the waiting times are due to the ISTCs rather than to the increased work the NHS are doing. Mr Rees: I sat in the hearing when the Secretary of State answered that question, when she made the point, I believe, that the ISTC programme was a small proportion of capacity but it was having a significant effect on the NHS services. The contribution overall to the waiting time reductions, whilst in terms of pure numbers might be relatively small, she believed had a more major effect as a change agent. I still believe that to be true. Mr Amess: That graph is misleading. Q657 Dr Taylor: I wonder if the graph has been circulated, because it at least ought to have "NB" on it or a caveat. Mr Rees: I am not familiar with that graph, I have not seen that graph, so it is difficult for me to ---- Dr Taylor: It is a Department of Health graph. We will follow that up. Q658 Mike Penning: Would you accept that in areas where elective surgery units are closed to facilitate an ISTC will have a very large effect on the National Health Service? Secondly, if an ISTC was in phase 1 but has not gone ahead yet, can you confirm, if it does go ahead, that they will not be drawing staff from the NHS? Mr Rees: In effect, the relaxed additionality policy only allows non-contracted hours to be used. The IS providers are not free to recruit those members of staff. That part of the additionality still applies. "No poaching", if you like, simplistically, is still there. That protection is still there. Q659 Mike Penning: If a chief executive of a trust has said his staff will go, under a phase 2 regulation, into the ISTC, that is not correct. Mr Rees: That is not correct. No contract in wave 1 has involved the GP(?) transfer of staff. The deployment of the Retention of Employment secondment model is designed to ensure that no NHS staff GP(?) transfer. Q660 Mike Penning: What will happen to the staff who lose their jobs when a treatment centre comes - which is what will happen in West Herts Hospital Trust, for instance, where three theatres will close at Hemel and five theatres at St Albans. Those staff will have no jobs. Which is why 750 job losses were announced at this Committee last week. Those staff will not be transferred to the ISTC if and when it is built. Mr Anderson: First of all, I do not think we are familiar with those numbers. Secondly, I have not seen an announcement from Hertfordshire, so it would be hard to comment on something. Mike Penning: You have lots of civil servants who would have read what went on in the Committee last week who would know. Mr Amess: You are a good stonewaller, Mr Anderson. Q661 Chairman: If he does not know. Mr Anderson: May I say, Mr Chairman, that this was called quite quickly. This portion of it was handed to us, I think, just last week, and the amount of preparation in between our day job that we could put forward towards this has been minimal. We were told it was around a specific area and issue, so if we are not answering questions to the fullest extent that we can, I apologise. I think the short timeframes have not helped with that. Mike Penning: Was that the same last time, then? Chairman: Let me say that I do understand that very well, and what is happening in West Herts is a moving picture. None of us is going to be able to second-guess what is happening. Q662 Charlotte Atkins: Mr Anderson, are you aware that the first phase of ISTCs was criticised heavily because of the lack of training grant. Mr Anderson: We are very aware of that. Q663 Charlotte Atkins: In phase 2, therefore, will it be a contractual requirement for training to be provided? Mr Anderson: I think it will be on a scheme by scheme basis. Having said that, because of the amount of criticism - and understandably so - in wave 1 - and that was a result of expediency through the procurement process and less about not wanting to do it, and we have learned quite a bit - that goes back to some of the questions that we were asked earlier from a learning standpoint and we have learned quite a bit from that process. I think Mr Rees could answer specifically on a contractual basis how that is being handled. Q664 Charlotte Atkins: It surprises me that you say it is not going to be contractual. Mr Anderson: I would say I did not say that. Mr Rees: Perhaps I could help you in answering the question. In wave 1, in a number of contracts, it is contractual.. There are pilot training programmes designed to ensure that we understand how best to buy training services from ISTC providers. They are signed and they will start training when full service commencement reaches on the particular schemes. Mr Anderson: Specifically, Nottingham - which was one of the last ones that we signed - had £4 million worth of training contractually bound to it. Mr Rees: We have worked with the deans around exactly what training they wish to see in ISTCs. For phase 2, the contract volumes and case mix has been given to the deans to establish what training they would like to purchase in future from ISTCs. I am not sure whether you are familiar but in with the reforms it will be the deans who decide where they commission training from. Bidders on phase 2 schemes are required in the ITNs to submit bid prices with training and without training, and we have given them as much information as we could about the types of training that would be required at the time the ITNs went out. We are now developing a generic training schedule to incorporate in the contracts. Essentially, it will be a form of call-off contract, where the provider will agree contractually to provide the training specified in the schedule. That will be worked in more detail with the local NHS to ensure that it meets their requirements and needs. They will have bid a price for that training. All that will have to happen for training to be undertaken in the ISTC is for the deans to decide that they wish to buy training and to commission it. It will effectively be a call-off arrangement. Q665 Charlotte Atkins: On top of the increased price for operations at the ISTC, there will be an extra levy for training. Mr Rees: No. There will be a training price which is a component of the total price that is signed off on the contract. Q666 Charlotte Atkins: That will be over and above the tariff which was determined for the first phase. Already ISTCs we are paying over the top of the NHS price. Mr Rees: It is not new money. It will be training money allocated from elsewhere in the system. The tariff only has a proportion of contribution to the total training costs. There are specific grants given to trusts that would cover training costs. In the future, it is intended that the deans will have the full training budget, so the price that they pay will be for all training requirements. It is giving effect to the new rule and the reforms that are coming. Q667 Charlotte Atkins: I am a bit confused. You are saying that only some phase 2 ISTCs will be training. Mr Rees: I did not say that. Q668 Charlotte Atkins: Can you answer whether all of them will be doing training. Mr Rees: That depends whether the deans wish to commission it. In theory, if the deans choose to have training in every ISTC, they can have training in every ISTC. It will not be a decision for the providers, it will not be a decision for the commissioners, it will be a decision for the deans. Q669 Charlotte Atkins: I am talking about phase 2. Mr Rees: I am talking about phase 2. Q670 Charlotte Atkins: The British Medical Association have said that they were very concerned that the procedures most suitable for training purposes are being transferred. They are worried about the bread-and-butter training. Given that the ISTCs do the more straightforward operations, it is absolutely crucial, for training our future medics ---- Mr Rees: That is why it is a contractual requirement to provide training if the system wants the training. Q671 Charlotte Atkins: Unison gave evidence in another inquiry a few sessions ago that they were very concerned about the way that training within the NHS was not being ring-fenced and was likely to be the subject of an easy target for sorting out deficits. We have a situation where the NHS may cutting back on training and we have a situation within the ISTCs where it is not going to be a contractual requirement for all ISTCs but it will be determined by commissioners. Mr Rees: Our programme is to put in place ISTCs. We do not control training. The individuals here do not have responsibility for training. We are required to ensure that training can occur in an ISTC if those responsible for training wish it to do so, and that contractual commitment is there. Q672 Charlotte Atkins: If training does take place - and there appears to be a big "if" - how would we ensure that it is of the same standard as training within the NHS? Mr Rees: All I can give you as an answer to that is that the training specification is effectively approved by the deans, so it is to the NHS requirements and standards. The licensing requirements for operating the ISTCs are still there, so all law has to be complied with, and there is consultation with the Royal Colleges occurring around the quality of the training. I believe those are the safeguards that ensure that the training will be of the appropriate standard. Q673 Charlotte Atkins: You mentioned earlier that in the price for operations there is an element of cost for training. Where you have ISTCs that are not commissioned for training, will they still be paid an allowance for training? Mr Rees: No, because they are not paid tariff. It is not a same comparison. Q674 Charlotte Atkins: In phase 1, ISTCs have been paid for work on operations that they have not done. Because they are guaranteed a certain volume of operations, they have been paid for operations that they have not performed. In the same way, it would be logical, therefore, for ISTCs to be paid for training that they do not necessarily do. Or is that a completely separate contract? Mr Rees: I do not understand the question, I am afraid. The debate in training in the NHS is, as far as we are concerned, commercially. Our understanding is that the debate is really about lost productivity. When you are looking at remunerating training in terms of the ISTC programmes, you are looking at a concern that you will have less procedures performed because training is undertaking place. The cost position, we understand, is likely to be claimed for lost productivity from providers. That is why we have pilots to establish whether as a matter of fact there is lost productivity there. There are some commentators who believe there is no lost productivity; there are others who believe it is substantial. Q675 Charlotte Atkins: My concern is that our workforce should be properly trained. If the ISTCs are taking some of the bread-and-butter operations from the NHS, which the BMA consider to be very important in terms of training our future medics, I would have hoped the ISTCs would take their fair share of training. Mr Rees: I do not believe there is any suggestion that they will not. The point is that the contracts have arrangements in phase 2 for the delivery of training provided the deans, as the people who are responsible for training, wish training to be undertaken in that facility. Mr Anderson: It is the same people who have responsibility for ensuring that training takes place in the NHS. Therefore, if there is a disparity it will lay with them and not with the ISTC provider. Q676 Charlotte Atkins: There are concerns from some of the staff organisations that perhaps training is being targeted for cuts. We are concerned about training overall in the NHS, but, particularly, if the ISTCs are going to be expanding their level of commitment in terms of doing operations, then obviously they should also be committed to doing training across the board. Mr Anderson: As providers they are. But Mr Rees is trying to explain that they do not really have control over whether or not they are going to be allowed to do training. The deans are the people who sit down and decide where training will occur. A lot of the independent sector providers would dearly love to do training. Just from my travels in the NHS, quite a few of the NHS consultants would like to do training in the ISTCs. It goes back to Dr Taylor's questions. From the standpoint of, maybe, consultants not wanting to be engaged in it, I do not think there is an issue. I think the issue will lie with the deans and whether or not they allocate training funds, as they do to the NHS, to independent sector treatment centres to do that training. Q677 Chairman: Mr Rees, you mentioned pilots. Do you have any information readily available on these pilots? Mr Rees: Do you mean has the pilot started? No, because the time between the contract being signed and the treatment centre opening can be up to 18 months, and the shortest pilot is six months and the longest is 12 months, it will be some time before we have the results of the pilot - which, to some extent, makes it a little bit harder to do phase 2, which is why we have separate arrangements. Q678 Mr Amess: Mr Serle, Mr Anderson and Mr Rees - I will show no favouritism - who would like to answer this one? The Department told us that the general principles for ensuring value for money included "selecting the best value .... offer received." Are there any circumstances under which that would be a consideration? It seemed to us that it was an absolutely meaningless statement. Mr Anderson: We are constrained and bound ---- Q679 Mr Amess: Mr Serle was nearly going to answer. Mr Anderson: Go ahead, Mr Serle. Mr Serle: Sorry, just to clarify, was your question are there any circumstances in which we would not take the lowest price? Q680 Mr Amess: Yes. Shall I read it again? Mr Serle: If you could, please. Q681 Mr Amess: The Department told us that the general principles for ensuring value for money included "selecting the best value ... offer received." Mr Serle: That is what we do. Q682 Mr Amess: Are there any circumstances in which you would not do that? Mr Serle: No. Q683 Mr Amess: Brilliant. You see, I knew Mr Serle had been brought here for a reason. We got a straight answer. An Australian or New Zealander? Mr Serle: New Zealander. I have been here six years. Q684 Mr Amess: The Department also said that another consideration was whether bids were significantly better than spot purchase rates. Given that spot purchasing is done ad hoc, while the ISTC programme is systematic and relatively high volume, would you not expect all bids to be significantly better than spot purchase rates? Mr Serle: Yes. Mr Amess: We can move on now to the last question. Q685 Charlotte Atkins: We are told that the ISTCs operate at around 11% above the NHS tariff. That seems to be the going rate for phase 1. Do you expect that to be the case for phase 2 as well? Mr Rees: I cannot answer that question right now. We have got bids in place. We are talking to the bidding population and I do not think we have established any fair market rates. Mr Serle: The only thing I would say is that it is early days in terms of phase 2 procurement, so we are only just starting to get bids back now. We certainly do not have anything close to final prices, but I would say that the general feeling from the market is that there is an increasing level of comfort in terms of operating this environment, so that may result in lower prices. It remains to be seen. Q686 Charlotte Atkins: It seems to me that if the NHS increasingly has to compete for patients - and after all that is how they get their money, by the money following the patient. It seems to me that the NHS is getting a pretty bad deal if they have to compete with organisations that, firstly, do the more straightforward operations but, secondly, get paid up to 11% if the price is going to be les in phase 2. Is this fair competition? Mr Serle: It might be best if we deal with that in terms of the detailed value for money discussion that I understand is going to follow on after this, when it will probably easier to give you more clarity around that. Q687 Charlotte Atkins: Do you reckon payment by results is going to make this competition more difficult? You could probably add in there patient choice as well, because when we have been going around we have certainly found that patients are sometimes resistant to going to ISTCs. Mr Anderson: Hypothetically it is extremely difficult for us to answer a question like that. Q688 Mr Amess: Come on, take a risk and answer it! Mr Anderson: First of all, it is anecdotal. It has not happened yet. Q689 Charlotte Atkins: Phase 1 has happened. Mr Rees: I do not think you are comparing apples and apples. You are comparing an apple and a pear. For instance, the NHS costs do not include pension costs. You are making a false comparison and we do not have the data to be able to say to you that you can compare prices in that way. You cannot. At the end of the day, NHS providers benefit from state aid: the building capital is provided at no cost; staff pension costs; the provision of free services from PASA and other areas. There is a multitude of benefits effectively that subsidise tariff prices, so your premise, I am afraid, is incorrect. Q690 Charlotte Atkins: The ISTCs do not provide training, they do the less complicated operations, they do not do the follow through. Mr Rees: The point is, to give value for money for procedures by aggregate volumes and produce competitive prices. Q691 Charlotte Atkins: In phase 2 we are already told that perhaps it will not be 11%. We are trying to get an idea of how much the ISTCs will cost above the NHS tariff. Mr Anderson: We do not know that. Mr Rees: We are speaking to you afterwards in private around some of those things because we believe them to be commercially confidential. It does not make any sense in the public forum to be giving information out which allows bidders to bid lower prices. Q692 Mr Amess: At least you are biting back to my colleague's question. That was good. Conviction. Mr Rees: Thank you very much. Dr Taylor: He has given us one of the most important bits of information that I did not know: the obvious difference between pension costs, which I had not gathered. Chairman: On that positive note, we will close this public session. |