Examination of Witnesses (Questions 80-97)
DEPARTMENT OF
HEALTH, PARTNERSHIPS
FOR HEALTH,
PARTNERSHIPS UK AND
DR KOHLI
17 OCTOBER 2005
Q80 Mr Bacon: So you took the risk
yourselves.
Dr Kohli: You took the risk yourself,
you borrowed the money yourself and the health authority, whichever
that happened to be, would give you an annual rent based on your
cost to build based on a basic base rate, usually 1% above base
rate. You build for £1 million and you get it for 6% and
you would be quite happy with that because you would get it for
20 years or 25 years at the end of which the building is yours.
You are 100% responsible for all hard FM: repairs, maintenance,
the whole caboodle. Relative to that, which could still happen
because they have not banned cost rents, a scheme like this which
for our building cost nearer 20% per annum—I do not know
about others—does seems exceedingly expensive.
Q81 Mr Bacon: 20% instead of 6%.
Dr Kohli: Yes. 6% would be the
base rate you would give and you would give 10% for hard FMs and
you would get 6.6% under normal cost rent rules. That is the concern:
it is stifling other opportunities because more money is being
diverted to pay for these new developments.
Q82 Mr Bacon: You are saying that
there might have been other money available to pay GPs to do cost
rent schemes had it not been diverted in this direction. What
about Mr Stewart's point that in certain areas like where we were
in Newham, it is not necessarily obvious that GPs will pile in
or put their own property or their own house at risk because it
is not a pension in the way that it is in leafy Surrey. Would
you have gone into a cost rent programme in somewhere like Newham?
Dr Kohli: When I was part of the
scheme with five doctors in 1990 the property market was in dire
straits and it was a big financial risk and we were all in negative
equity for many years; infinitely more so than today. It was a
very different climate. Today, with the property market in East
London, which is all I know, having risen so much the affordability
is there. It is where the property has no value that there is
no point and you cannot afford to build new. Today you can in
East London and local practices would. What they cannot do, what
LIFT does give, is the next stage on, which is just beyond the
GP's surgery: co-location, the different providers working together.
That is the new thing which LIFT bought and that is what I got
excited about, as I have written in my statement, and that is
why I was so attracted to it. Like a lot of other GPs I am also
equally struck by the costs and whether we can afford the other
10 buildings we need in Newham to do what we set out to do. If
you read the original LIFT documentation in the strategic development
plans, we were supposed to transform 30% or 40% of our entire
premises stock within three to five years. It could be done but
the affordability is not there.
Q83 Mr Bacon: Mr Coates, on the subject
of an excellent LIFTCo building like the Newham one, I understand
that LIFTCo has basic responsibility for how this building is
built, developed, operated and managed. That is basically right,
is it not?
Mr Coates: Yes.
Q84 Mr Bacon: Is that "except
for IT"?
Mr Coates: As I understand the
original agreement as struck, IT was left for the PCTs to settle
with the GPs.
Q85 Mr Bacon: So if Dr Kohli wants
to send an e-mail on one local area network to the psychologist
next door or to the dentist next door but one, as we saw will
be possible physically, he cannot, he has to write to them because
there is no local IT solution which would work for one building.
It would not require a particularly complicated IT system because
you are talking about how many professionals in the building altogether?
Dr Kohli: Eighty staff.
Q86 Mr Bacon: So we are talking about
a relatively small- to medium-sized business, a very easy thing
to do in terms of off-the-shelf IT and of course with the expertise
that GPs have of developing user-friendly IT for themselves over
the last 20 years it would not have been that difficult, yet you
do not have that at all, do you?
Mr Coates: May I ask Dr Kohli
why it has not been resolved?
Dr Kohli: To be fair we do have
internal e-mail, which is rather different from having a shared
IT system. The point I made earlier was that if we want to refer
to one of the visiting consultants downstairs we do not just make
an internal e-mail referral, you actually have to write back up
to the hospital where the outpatient department happens to be
and to be fair that is not really within LIFT. That has been nationally
procured through an IT system and I suspect that is another debate
altogether.
Q87 Mr Bacon: Are the consultants
you have downstairs just occasional visitors or are they quasi
resident inasmuch as it is the same ones each week?
Dr Kohli: No, the same people
come every week for a clinic a week and not just them but also
GPs with special interests who are community specialists.
Q88 Mr Bacon: So the referrals could
be handled locally.
Dr Kohli: Follow-ups can be made
locally and are made locally. It is the new appointments, because
the system is all run through central operations. Even that is
not the problem. The problem is that you cannot view it and you
still have to write a paper record to the hospital. It is more
like an outreach of the hospital as opposed to being joined up
with community services and that is an evolution which is going
to take some time.
Q89 Mr Bacon: I noticed, like Mr
Trickett, the reference on page 36 to the IADP, the Issue Analysis/Dinner
Party statement, what you call a high level conclusion, "The
local LIFT models appear to be an effective mechanism clearly
demonstrating value for money". Then, in paragraph 2.32,
the sentence "Given the newness of the initiative and the
importance of strategic factors that are not easily quantifiable,
conclusions about the likely longer term value for money of LIFT
are likely to be judgemental". I simply do not know, like
my colleagues, whether this really is value for money or not.
My question to you is: is this value for money, is it not value
for money, or is it too early to say?
Mr Johns: I believe the simple
answer to that question is that it is value for money and every
LIFT deal that is signed has to be agreed by the Valuation Office
and the Valuation Office of course have access to data on all
developments for primary care, GP third party developments and
LIFT and public sector schemes as well. Before they sign up the
value for money of any LIFT scheme they do a comparison with a
third party development. As Dr Kohli has intimated, that is not
a straightforward comparison because LIFT tends to deliver a much
broader, more complex range of services than a simple GP third
party development. Against that background the Valuation Office
do undertake a review and no LIFT business case can be approved
without that Valuation Office approval of value for money. That
is the first step. Because LIFT is innovative we cannot just look
at what the costs of the schemes are: we also have to look at
the value of the services provided and the benefits to patients.
That does take longer to get a full long-term assessment.
Q90 Mr Bacon: Is it not therefore
fair to say—I am not trying to be difficult—and therefore
you cannot yet say whether it is value for money.
Mr Johns: What I can say is that
in comparison with third party developments, the comparison the
Valuation Office have undertaken not that we have undertaken,
they determine that it is value for money. What I am saying is
that we will get a much broader measure of value for money over
the longer term and indeed we are undertaking work now with LIFTCos
to investigate not only the cost of providing the facilities,
but the benefits to patients and the benefits to health outcomes
which ultimately is what drives value for money, not the premises
but the health outcomes that we derive.
Q91 Mr Bacon: Sir John, is it fair
to say that the National Audit Office, from the rather tentative
nature of that sentence in paragraph 2.32, is a little more doubtful
whether it can yet be demonstrated that it is value for money?
It is plainly shiny, it is plainly a high quality environment,
but on the principle of bangs for one's buck can we yet say that
this is value for money?
Sir John Bourn: No, we cannot
say that, as paragraph 2.32 and also recommendation 9 say when
we call for a proper system for evaluating it. All you can talk
about is where you have got to now; you cannot talk about how
it will develop for the future, that is right.
Q92 Mr Bacon: Do you share Mr Trickett's
concern and indeed Dr Kohli's that this could be extremely expensive
and that there might be better value for money ways of doing the
same thing or something similar?
Sir John Bourn: I certainly do,
from what I have said before, because you can see that implicit
in this way of doing things are extra costs. Of course the argument
is that from the extra costs you will get different and better
services. In that sense you are not sure how you are comparing
like with like. Certainly, as we would look at this as the programme
developed, we would be able to say and give a clearer view, particularly
if the witnesses accept the recommendations, as they said they
do, that they need to have a machinery and methodology for evaluating
it.
Q93 Mr Bacon: On page 38, where there
is the reference to the capital value of each project, for example
in the case of East London and City £5.5 million and it refers
to a population of 666,000 people, am I right in thinking that
666,000 people is all the people within that PCT, not all the
people who are covered by this project? That is right, is it not?
Ms Leahy: That is right. The population
in Newham PCT is about half the 666,000 population there and these
schemes cover a small part of the population.
Q94 Mr Bacon: Surely the interesting
number is not 666,000 but the list size covered by the project
in the way that Dr Kohli has done on his extremely helpful chart,[5]
one of the most helpful charts I have seen on this whole project,
where he comes up in a fairly simple but difficult to dispute
way with a calculation of the cost per patient. He says that in
the Manor Park LIFT site there are 14,400. That is your list size
at your facility.
Dr Kohli: In three practices who
are in the site.
Q95 Mr Bacon: Within your site?
Dr Kohli: Yes.
Q96 Mr Bacon: Surely it is the 14,430
patients compared with the £5.5 million which is relevant
not the 666,000 compared with the £5.5 million, is it not?
Ms Leahy: Perhaps we should add
in more information.
Q97 Mr Bacon: Is it possible that
we could get for each of these the number of patients in the lists
covered by those LIFT projects? So for the £10.3 million
for Barnsley, the patients covered under that LIFT project, ditto
for the other six and perhaps you could go a stage further and
do something similar to what Dr Kohli has done there so we can
compare the cost per patient at each of the sites and also the
number of patients who are not covered, in Dr Kohli's case 270,000
or so.
Ms Leahy: We certainly will get
that information and put it to you.[6]
The cost analysis that is there is very much an apples and pears
comparison in that the cost of the LIFT schemes include quite
a lot more than the costs just in the rent which was quoted. A
pure replication of that analysis probably would not be helpful
to the Committee, but I am very happy to see whether I can work
out how to close the gap to try to get comparable information.
Chairman: I am grateful to the Committee
and to you gentlemen for appearing before us. We are a value for
money committee and I am very grateful to Mr Trickett and to Sir
John for promising a supplementary report. It is clear that we
are producing marvellous facilities as far as the general public
is concerned and Dr Kohli has made that clear, but we also have
to investigate much more fully whether we are getting value for
money. Thank you very much.
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