Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80-97)


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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