Examination of Witnesses (Questions 160-179)
MR IVAN
LEWIS MP, MR
NICK CHAPMAN,
PROFESSOR SUE
HILL AND
MS HELEN
MACCARTHY
8 MARCH 2007
Q160 Sandra Gidley: The former witness
behind you is disagreeing with you when you describe the nature
of the contract. So you are saying that this should not happen?
Mr Lewis: Can you explain to me
what you say is happening, because I was not totally clear?
Q161 Sandra Gidley: We were told
that, because some of the facilities provided are in effect quite
specialised, you cannot just knock them up in the corner of Specsavers
or whatever, in effect, the hospital ended up providing some of
the facilities, such as the booths that they do the sound testing
in and obviously the staff were used as reception staff—I
am not clear whether they provided the testing—and that
could not be recouped. There was no charging that could be made
for that.
Mr Lewis: So what you are saying
is the independent sector had the contract but they were using
NHS facilities which they were not paying for?
Q162 Sandra Gidley: Yes.
Ms MacCarthy: The nature of the
national framework, the PASA framework, for PPP that we heard
Jeff Murphy talking about earlier, as he quite rightly described,
is that that is provision outside the hospital environment, so
we can only conclude therefore that the other evidence that you
are hearing must have been something to do with a framework that
they put in place with an independent sector provider that is
not part of that overall national PPP.
Mr Lewis: The point that Sandra
is making—Chairman, forgive me. Just let me be clear about
this—even within the context of the national guidance and
framework and best practice we have identified, could those circumstances
arise and would they necessarily be a problem?
Ms MacCarthy: They should not
arise, because the parameters that we have set into the framework
are very robust in understanding the governance and the structures,
and the reasons why we have put that framework in place is to
support the NHS structure, not to compromise it.
Q163 Sandra Gidley: So this should
be a one-off rather than something that is a problem?
Ms MacCarthy: Yes.
Mr Lewis: A note of caution. If
part of the contract, part of the tender with the independent
sector, is to allow them to use some of the NHS's facilities to
deliver the outcomes—because that is what we all care about;
we want to slash these waiting lists and waiting times—then
frankly, we cannot comment on every single arrangement that is
made at a local level. It may well be that if the NHS commissioner
in that area made the decision that part of the deal with the
private sector to achieve the outcomes—because that is,
in the end, the bottom line, to reduce the waiting lists and waiting
times—was to enable them to use some NHS equipment, how
can I sit here and second-guess whether that was the right thing
for them to do?
Sandra Gidley: Hopefully, we will be
able to have some written clarification on that possibly.
Q164 Chairman: Can I just intervene
on that and say when we did our ISTC inquiry in the first phase,
it was quite clear in those contracts: the additionality rule
took place. Is that the same?
Mr Lewis: In principle, absolutely.
Q165 Sandra Gidley: As you have mentioned
ISTCs, one of our criticisms of that programme was that there
were no value-for-money assessments carried out. How is the value
of private procurement in this sector going to be assessed? We
have heard concerns that it is twice as expensive and perhaps
does not represent good value for money.
Mr Lewis: I have been told that
what our national framework and national best practice in terms
of using the private sector demonstrates is that the cost per
pathway from, as I say, assessment through to fitting should be
around £270. The cost of the actual hearing aid is £70.
We regard that, if you look at only a few years ago the overall
cost of both the process and the hearing aid itself, as a remarkable
slashing in costs for the National Health Service, and part of
this is as a consequence, obviously, of the capacity, the volume,
that we have been able to achieve as a result of the various procurements
that have taken place and the modernisation programme.
Q166 Sandra Gidley: That was clearly
a good piece of procurement but it is not actually the question
I asked. I am asking how we assess the value for money in the
private sector. We have heard evidence that it is costing about
twice as much.
Mr Lewis: I have no evidence for
that.
Q167 Sandra Gidley: It has not been
assessed. That is the problem. We do not know the value for money.
Ms MacCarthy: If the question
is around the current PPP framework, then the example we provided
was exactly that; we have demonstrated value for money because
those costs are coming out of that PPP.
Mr Lewis: They have come down
massively.
Q168 Sandra Gidley: How was that
provided again? Perhaps you can clarify.
Mr Lewis: Sorry, can I just be
clear? You are not disputing the £270 but you are arguing
that that may be more expensive than purely a process that went
from assessment to fitting if it was done in-house by the NHS?
Is that what your argument is?
Q169 Sandra Gidley: Yes. The overall
cost seems more expensive.
Mr Lewis: Do we have benchmark
evidence comparing a process from beginning to end that was pure
NHS vis-a"-vis this £270 per pathway?
Mr Chapman: We do. I do not have
the detail with me.
Mr Lewis: What does it prove in
a big picture way? That it is a lot cheaper or what?
Mr Chapman: The costs are broadly
comparable.
Mr Lewis: We will write to the
Committee on that issue.[3]
Q170 Dr Naysmith: Would it not be much
easier if this were included in the payment by results system,
and then you would be able to compare straightforwardly what it
is costing the National Health Service and what it is costing
the private sector? That would be much the simplest way to deal
with it.
Mr Lewis: I think one of the things
it says in the framework is that that is exactly the direction
of travel we need to go in. The consideration of looking at a
potential tariff for this going forward is something that we are
now committed to doing but that is not where we are now.
Q171 Dr Naysmith: But you are probably
moving in that direction? It would make it much easier for private
companies to do bits of things.
Mr Lewis: Yes.
Q172 Dr Taylor: Minister, David's
congratulations make me think I must be rather dense, because
I really do not have these figures at all straight. I want to
just try and clarify the figures. Lord Warner's announcement was
an additional 300,000 service pathways per year for five years.
The first thing is, how far have we got with that? The information
we have is that funding for that is not going to be ring-fenced.
The first patients are unlikely to be treated until the second
half of 2007. How we going on that first 300,000?
Mr Lewis: I think I have said
throughout this hearing that we are, as we speak, concluding discussions
with the SHAs, individually and cumulatively, on how many pathways
they want us to procure from the independent sector to enable
them to achieve this massive reduction in waiting lists and waiting
times that we have demanded of them this week. So we are willing;
we are sat here, ready to go, but they are saying to us "Hold
on a minute. Before you do that, we need to be absolutely clear
that we are making best use of in-house capacity," and we
know that in many areas there is an argument for saying, frankly,
at the moment they are not making best use of in-house capacity.
Q173 Dr Taylor: So none of those
300,000 have yet been ...
Mr Lewis: I have made that clear
throughout.
Q174 Dr Taylor: Then we have a statement
in the papers we have been given that around another 300,000 extra
are needed, and then we have the 42,000 or whatever it is.
Mr Lewis: That has been already
committed.
Q175 Dr Taylor: Is that 42,000 for
each of these five SHAs or is it 42,000 in total?
Mr Lewis: In total, across five
SHAs, per annum.
Q176 Dr Taylor: We have been told by
RNID that there are something like 4.5 million people who still
need these, so 300,000 for five years, that is 1.5 million; 42,000
for five years, that only comes up to 200,000. We are still terribly
short, are we not?
Mr Lewis: No, because first of
all, within the existing system the PCTs should be commissioning
a far more effective service in terms of audiology than they are
doing at the moment. So this is not just about the additional
pathway capacity being procured from the private sector. It is
also about, frankly, how they are using their existing NHS capacity
and how they are commissioning, the priority they are giving in
terms of their commissioning for audiology. Those are the other
factors that are relevant. The figures that we are talking about
purely the contribution, if you like, the Chairman's added value,
added capacity argument, we will be getting through the independent
sector procurement. There is an awful lot of progress that should
and could be made in terms of in-house provision that is not about
necessarily a contractual relationship with the independent sector.
Q177 Dr Taylor: I am afraid I also
find the evidence you have given to us on the private sector incredibly
confusing. If I can read your first paragraph, "Private sector
provision for assessment and fitting of hearing aid devices and
follow-up does not represent an out-sourcing of NHS audiology
departments." So if you are using the private sector, why
is it not an out-sourcing?
Mr Chapman: The reference there
is because there will be a substantial increase in the output
of both NHS and the independent sector. It is not a switch from
NHS to independent sector; it is adding capacity in both sectors.
Mr Lewis: It is the Chairman's
point really. We are using the private sector here to enhance
our capacity because of the demand that is now evident.
Q178 Dr Taylor: So by use of the
word "out-sourcing", you are assuming that one would
think that one is taking something away from the NHS, which you
are not doing.
Mr Lewis: Yes. You would say you
have an existing range of provision and the only way you can make
that better is to contract out. We are not doing that. We are
using the private sector to build the capacity that we desperately
need to be able to respond to demand.
Q179 Dr Taylor: Further down in that
paper you are talking really about short and medium-term capacity
to meet unmet demand. The evidence we have had in the first session
really suggests that, with the increasing demand, it is not only
going to be short and medium-term capacity that is going to be
short. How do you respond to that? Do you think the use of the
private sector will be needed in a much longer time course?
Mr Lewis: Hopefully, Mr Chapman
will still be here in ten years and will be able to respond to
that. The serious point is, I think there are two things that
are going to happen as a result of this process. One is that certainly
we are going to massively reduce waiting lists and waiting times,
and at the same time we are going to give audiology a higher status
and a higher profile and we are going to ensure much higher quality
and standards and ways of working. Let us assume we achieve that.
Once we have achieved that, it may well be the balance between
what can be done in-house and what needs to be done and the contractual
relationship with the private sector may change. On the other
hand, it may well be, as you say, if you look at demography, demand,
it seems to me, is going to continue to grow. It is probably not
going to flat-line for a considerable period of time. If I were
predicting ahead, I would hope that we would get in-house NHS
provision in a far better shape than it is in now. But I personally,
at this stage, would imagine that we are always going to need
to have the independent sector helping us to cope with the inevitable
demand.
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