ISTCs have had a significant effect on the spot purchase price in the private sector and on charges in the private sector more generally.
The emergence of a new raft of ISTC providers able to quote at, or fairly close to, NHS reference costs made it clear that the days of NHS spot purchasing from the incumbents at 30-40 per cent. over reference costs were over, and that they would have to reduce costs and prices if they wished to be involved in a significant way in servicing the NHS market.
For wave 1 schemes, the average cost above the equivalent NHS cost is 11.2 per cent., a figure with which hon. Members present will be familiar. The picture is developing, so I cannot give exact figures today, but we expect costs in wave 2 schemes to be below that, and in some cases significantly so.
My hon. Friend the Member for Pendle asked why that situation should be tolerated, and my hon. Friend the Member for City of York made a similar point. Self-evidently, there is a pretty straightforward comparison in those figures between the spot purchase costs and the costs being paid through the ISTC contract. Two further points are relevant. Additional capacity has been established, on a permanent basis and for the benefit of the NHS and its patients, which the NHS could not have made available as quickly as the ISTC programme did. There needs to be an element of certainty in that funding, which is why the contracts were constructed as they were.
My hon. Friend the Member for Pendle asked how that could be justified. In bringing in that extra capacity, it is important that we accept that the private sector faced additional costs, which other NHS providers would not have faced, by virtue of the conditions imposed on it in the procurement process.
For instance, the additionality clauses, to ensure that the capacity was genuinely new for the NHS, brought overseas recruitment costs and other processes that were more costly than if the capacity had simply been switched from one place in the UK to another. I could give other detailed reasons for those costs; for instance, new buildings had to be established. There were good reasons why the contracts needed to reflect the costs being incurred by the private sector in bringing extra new capacity to the NHS. That is the justification that we would give.
In the long term, we are working towards ensuring that where the capacity goes is not centrally dictated. It will be patients who choose where they wish to be treated, and there will indeed be a level playing field in terms of how providers will be paid for using that capacity. In the current period, the initial stages of those contracts provide support so that the services can become established.
By systemising the process of buying independent sector services through bulk procurement, the ISTC programme has significantly cut the cost of doing business with the independent sector. Our aim is to move towards a level playing field, with all providers operating at NHS tariff or NHS equivalent costs, and being compared solely on quality and access, and that predominantly by patients. That is important as we move towards a free choice environment.
Colleagues have asked about the second phase of procurement. I can report that it is progressing well and that the first providers from phase 2 are now delivering services. The Department has today agreed another phase 2 scheme, to which the hon. Member for Westbury referred, which will provide around 6,000 procedures a year in Cheshire and Merseyside, bringing more choice and accessibility in health services and further reducing waiting times. In total, phase 2 is expected to deliver up to 250,000 elective procedures and up to 1.5 million diagnostic assessments a year, and to create an independent sector extended choice network, contributing significantly towards meeting the 18-week target. The majority of services are expected to commence in 2007-08.
The hon. Gentleman asked about the shape of phase 2 schemes, as did my right hon. Friend the Member for Rother Valley. The estimate is the figure that I have just given. The discussions with the independent sector are progressing and it is impossible to say now what the precise outcome will be. The call from the Committee and others has been for the contracts not to be simply imposed on local health economies and for there to be a process of dialogue and consultation at the local level, to ensure that the contracts are a good fit with capacity requirements. That is indeed the process that is under way in different parts of the country.
Dr. Murrison: Why has the delay been so appallingly bad that the Nuffield group has pulled out of the west midlands mobile surgery scheme? That seems very serious, and it might put off other private sector partners. What is the Ministers justification for the situation?
Let me give the hon. Gentleman some further information. Since Nuffield was appointed as preferred bidder for the west midlands south mobile elective scheme in September 2006, all
parties have worked together to reach a successful conclusion. Despite everyones best efforts, it has not proved possible to finalise contracts. It was Nuffields decision to withdraw its bid formally; it has decided not to pursue the opportunity any longer.
In every case, a contract between two parties is involved. Today, the hon. Gentleman has called on the Government to listen to the health service and the professionals in taking forward what are often complicated procurements. He is right to say that it is also important for me to be mindful of the costs and uncertainty that that can impose on those seeking to provide the services. We seek to get that balance right.
I point the hon. Gentleman to the Cheshire and Merseyside scheme, which was formally approved by the Treasury in recent weeks; other schemes in other parts of the country have also been approved, and we have worked to make that possible. We hear the call to consult and listen, as the hon. Member for Wyre Forest asked me to, but at the same time we want to move forward and, when we can, conclude the contract on the schemes. We are trying to get the balance right.
Many colleagues have talked about integration with the NHS. We continue to work in partnership with the local NHS to provide solutions that reflect and meet local needs. We have made a number of changes to ensure that phase 2 schemes can best be integrated with the local NHS. For example, the relaxation of additionality rules for the phase 2 ISTCs will bring about greater professional integration as clinical staff of whom there is not considered to be a shortage will have the opportunity to work in both local hospitals and ISTCs. That was a key request of the Committee, and I hope that the hon. Member for Southend, West is assured that there has been progress on that.
Furthermore, all NHS employees will be able to work in ISTCs during their non-contracted hours. That will ensure that opportunities are available in ISTCs while skills for other parts of NHS services continue to be conserved. I hope that the hon. Member for Wyre Forest will welcome those moves. I know that he has long questioned the Government on the need for the additionality clauses. I hope he understands why they were important in phase 1 schemes, which were principally about the capacity on the ground to deliver on key targets such as the 18-week target.
It would have been self-defeating if capacity had simply been moved from one part of the British health care system to another. I hope that the hon. Gentleman will welcome the movement that there is now to relax those measures and provide more opportunities for British-based clinicians and staff to work in the ISTC sector.
Dr. Taylor: I certainly welcome that relaxation. However, it still bothers me that the rules are not being relaxed enough for consultant orthopaedic specialists. As we heard from the hon. Member for Westbury (Dr. Murrison), there are likely to be unemployed trained NHS orthopaedic surgeons.
The hon. Gentleman raises an important point, and of course we keep such matters under review. He is right to say that the relaxation does not extend to
shortage professions and specialtiesfor obvious reasons; if it did, we would go back to the wave 1 problems that I described. Orthopaedic surgeons are not on the current phase 2 list of shortage professions, which should address the hon. Gentlemans concern.
The specialties covered by the list include pathology, audiology, cardiology, sleep and respiratory physiology, categories of radiologists and radiography, neurophysiology, cardiac physiology and anaesthetics. The list, which is kept under review, is on the NHS employers website. I am sure that that would interest the hon. Gentleman, whom I also call my hon. Friend. He should be assured that the list is kept under review. Obviously, the changing nature of the UK labour market and the emerging training situation are relevant, and I hope that they will inform further consideration of the issue.
The hon. Member for Westbury asked whether the list was grade-specific or based on geography. The list is based on a sample survey of 25 trusts across the country. However, it is neither geography-specific nor grade-specific, except in the case of nurses; only senior nursing grades are on the shortage lists. As I said, the list is kept under review by the Departments work force team.
I deal now with training, an important issue mentioned by many hon. Members today. We welcomed the Committees support for the approach to training for phase 2 schemes. We recognise that the training of NHS staff within ISTCs is particularly important, and have taken action to ensure that local training of junior doctors is not compromised. In the second phase of ISTCs, all schemes will have activity available to postgraduate deans and higher education institutes for training purposes.
Independent providers will be expected to appoint directors of postgraduate training to work with the postgraduate medical education and training board and local deaneries to oversee training provision within ISTCs across a range of clinical professions.
Whether training takes place in an ISTC facility rather than the NHS will, of course, remain a decision for the postgraduate medical education and training board and deans who are responsible for the commissioning of training. Nevertheless, I hope that the move will be welcomed. NHS training in an ISTC setting will be directed and overseen, as it is now, in NHS settings. The higher education institutions, the royal colleges and the other bodies involved in facilitating and overseeing NHS training will retain their existing roles. In the longer term, it is intended that relationships be developed locally so that professional development occurs seamlessly across the local health economy partners, to the overall benefit of patient care.
Concerns about quality have been raised today, but I assure Members that patient safety is paramount in ISTCs, as in the NHS. I was pleased to note that the Committee commented on the alarmist tone of some of the criticisms of clinical standards in ISTCs. Efforts continue to be made to undermine confidence on that issue, and they are not in the public interest. ISTC providers are contractually obliged to deliver clinically safe, high-quality care along agreed patient care pathways. ISTCs are monitored against 26 key performance indicators to ensure that quality services are delivered, including clinical quality, patient experience and productivity.
All ISTCs are regulated under statute by the Healthcare Commission and are further inspected on an ongoing basis. All surgeons working in ISTCs must be registered on the General Medical Councils specialist register before they perform surgery. As many hon. Members have mentioned, the chief medical officer has asked the Healthcare Commission to review the quality of care provided by ISTCs, and we look forward to receiving its report.
To update Members, I should say that currently we expect to receive the report at the end of June. The delay is due to the fact that the commission wishes to use the most up-to-date data from ISTCs. To be honest, the problems have been with the IT system in drawing down the data required; I assure Members that they have not been due to any delays in information being provided by ISTCs. The report is due soon, and it will make an important contribution and ensure public confidence. The Committee rightly focused public attention on the matter, but I am confident that when the report is published it will further improve public confidence, although I am also sure that there will be issues to address.
In the course of the debate, questions were raised about the evidence on whether ISTCs had improved innovation within the national health service and brought innovative practice to the UK. Let me give a specific example from the ISTC programme. At Shepton Mallet ISTC, the patient can see an orthopaedic surgeon, have diagnostic tests and book an operating slot all in one day, a process that would typically have taken months and at least three appointments in the past. That example has now been copied by Yeovil District Hospital NHS Foundation Trust, where managers say that the ISTC made their clinicians sit up and take notice. As a result, they too have established one-stop out-patient clinics for orthopaedic patients, reorganised the way in which they use their consultants time and slashed waiting lists.
Those new approaches have helped Somerset primary care trust and Yeovil District Hospital NHS Foundation Trust radically to reduce waiting times, so much so that Yeovil is one of the trusts aiming to achieve the 18-week target from GP referral to operation by the end of the year, a year ahead of schedule. The introduction of the ISTC in Shepton Mallet has also driven down prices in the local private provider market. We believe that that is a concrete example of the ISTC programme having the desired effect.
The hon. Member for Westbury raised a view from another side of the local health economy. I refer him to an article that appeared in the Health Service Journal on 29 March, by a consultant called Andy Mullins who concluded a quite robust defence of ISTCs with a telling point:
The overall message is that independent sector involvement in the NHS is not threatening to the existing service unless it refuses to change. If the service responds and learns the efficiency and quality of the services will improveas we as a nation will still be able to afford them in the coming decades.
I want to do justice to some of the other points raised by hon. Members, but I realise that time is running out. First, I want to pick up on the points raised by my hon. Friend the Member for City of York.
I understand his strength of feeling, particularly because of the pressures on his local economy. However, to refer back to the figures for NHS spot purchasing, his local health economy, like every other, is not only expected to meet but will meet the 18-week target by the end of next year. The level of activity commissioned has to be consistent. In the process of scrutinising the local delivery plans for his strategic health authority, the Department is considering that point.
I understand my hon. Friends frustration, but the Department has to get value for money across the country in conducting procurement exercises. That is why individual data that relate to any particular contract are not placed in the public domain. That would limit the Departments ability to get maximum value for money when conducting future procurement exercises.
Andy Burnham: If the figures for any one contract were placed in the public domain, that would limit the Departments ability openly to secure further contracts. It would create a yardstick against which further contract prices would be pitched. It is important to say that that was a wave 1 contract, which was conducted at a time when different considerations applied in terms of getting the service established and recognising the costs of establishing it.
I will reconsider the issue. I understand that it is different for my hon. Friend and I am not seeking to be awkward and pull down the shutters. In a health economy under pressure, where decisions are made about relative priorities, it is important that to help him to do his job as a Member of Parliament we provide as much information as we can. However, I hope that I have explained why the precise figures that he has asked for have not been given.
I want quickly to touch on a couple of points, but also to leave my right hon. Friend the Member for Rother Valley a few minutes to close the debate. My hon. Friend the Member for Staffordshire, Moorlands raised questions about Burton ISTC, which I hope that we can address. She also raised questions about Stoke PCT and the value for money that it secures. In situations where an ISTC might be underutilised, I intend to work closely with the local health economy to ensure that measures are put in place to build up utilisation rates so that the full value of a contract can be realised over its lifetime, even though take-up may be slow at the beginning. We can do that. Evidence from elsewhere in the country supports the view that that is what happens over the lifetime of a contract.
I realise that I have been unable to cover all the well-informed points that were made in the course of the debate, but I want to leave my right hon. Friend the Member for Rother Valley some time. The hon. Member for Southend, West mentioned the information taskforce and work that has been done on indicators to be put before the public. In a few weeks time, the Department will launch its NHS Choices website, which will be a major step forward in providing readily accessible, meaningful information to
the public about clinical performance from different providers. It has been informed by the work done by Sir Bruce Keogh on the taskforce that the hon. Gentleman mentioned. He should reserve judgment, but when he sees that site it will reassure him that progress has been made.
The ISTC programme has changed the nature of the relationship between the NHS and the private sector. No longer is the private sector trading off the back of what might be called the inadequacies of the NHS by telling people that they have no option but to go private. There is a better relationship that works for both parties and we combine efforts for the benefit of NHS patients and the country overall by providing a cost-effective health care system.
The long-term benefits will be felt in all parts of the country. It is true that there is still emerging evidence of the precise contribution to the reduction in waiting lists, but the figures speak for themselves. A significant contribution is being made towards the achievement of the 18-week target. The hon. Member for Westbury tempted me with a reference to my right hon. Friend the Prime Ministers Kings Fund speech. I refer him to the headline of the article in the Health Service Journal, which summarised the speech with the words, It was a difficult journey, but under Blair the NHS was saved.
Perhaps the hon. Gentleman will take that article home, read it over the weekend and let me know what he thinks.
Mr. Barron: With the leave of the House, I want to thank everyone who has taken part in the debate, particularly my hon. Friend the Member for City of York (Hugh Bayley), who has brought further evidence to us about ISTCs. I wish him well with his pursuit of the National Audit Office. I shall watch it carefully as it might be a means of getting information that we sometimes find it difficult to obtain as a Committee.