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We should also recognise the sudden change in the state of our health. We are healthier and healthier all the time. For the older age group, repairs are often more the key. The move seems to be more towards treatment like the maintenance of an old car. You go in and out of a workshop within a very short period. Likewise, you would not go into a full hospital but into what some people are now calling a patients’ hotel, in which the costs would be like that of a two to three-star hotel—about £70 a night at most, or perhaps £50—because it does not need carpets or curtains. It has oxygen cylinders, and it is linked to what could be called a maintenance factory. These changes are taking place. I have spoken to friends in the health service who have indicated that possibly we have too many of the wrong sorts of beds.
What do we do about it? Certainly, we must look at the new techniques available in the world. The United Kingdom is fairly far advanced in activities that not only save lives but may also save problems. For example, the British urological society has found, in conjunction with the Egyptians and based on ancient mummy technology, the ability to create a bladder from your gut. Doctors and surgeons are being trained so that people will not need the “bag”
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Not far from Hammersmith and Fulham, where I sometimes am in London, is the Chelsea and Westminster Hospital, which is good, and Queen Charlotte’s Hospital. There are problems with Charing Cross Hospital, which is an elderly building and probably needs £100 million spent on it to refurbish it. In the London area, the Ravenscourt Park Hospital, which was the ancient Royal Masonic Hospital, is one of the best hospitals for hips and knees. It has some 200 beds, but only 40 are occupied because it has a shortage of patients. I cannot work out why, when we spend all this money on hospitals and new systems, we do not have the cash flow to permit those hospitals to achieve the objectives that were laid down for them—perhaps many of them were too optimistic. Without that cash flow, we will have a crisis and without the ability to fund the patients who need treatment, we will have a major problem for patients themselves. This problem will not go away. However, if the private and public sectors were to sit together, they could possibly get rid of the PFI concept that I do not like and arrive at something which we might declare to be a really true partnership.
2.57 pm
Baroness Murphy: My Lords, I thank the noble Lord, Lord Rea, for raising this debate. I recognise the force behind his arguments, and his commitment and passion for the NHS, but I hope to demonstrate that it is possible to feel as passionate about the NHS with a diametrically opposed view. First, I must declare my interest in healthcare as chair of council at St George’s, University of London, which trains doctors and healthcare professionals. I will mention training. I am also a board member of Monitor, the NHS foundation trust regulator, which has seen the benefits of giving a degree of independence to NHS providers in terms of improving financial rigour and quality of care.
Like the noble Lord, Lord Rea, I have worked in the NHS all my life as a doctor. I know that the NHS must change: I strongly support the Government’s reform agenda. Indeed, I urge them to get on with it. The NHS would benefit from a far greater diversity and plurality of providers from within the statutory for-profit and not-for-profit independent sectors. Like other noble Lords, I believe in the founding principle that the NHS should be available free at the point of need. It should be largely a comprehensive health insurance system and an expert commissioner of health services. But I do not see why the whole of NHS care should not be independently provided if it remains largely free to those in need. If the NHS concentrated more on being an expert commissioner of healthcare and freed itself from the provider role, it might make better investment decisions in the light of
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Let us face it, huge chunks of healthcare already provided by the independent sector are paid for by the public purse—for example, half of all care in residential nursing homes. Some 30 per cent of the total NHS budget pays the private sector for pharmaceutical supplies, sterile products, much-maligned information technology and so on. Of the 70 per cent of the NHS budget that is spent on pay, well over a third of it pays GPs, most of whom have always been independent contractors and not salaried employees. The NHS has been buying some operations from the private sector for donkey’s years. Mental health service commissioners buy over 60 per cent of secure care from the private sector, and contract out care for some of its most challenging learning disabled patients. The sums spent are close to £1 billion on these last two types of contract alone, so it is a bit late to be squeamish about the private sector’s contribution.
Opinion polls show that the members of the public do not mind whether they are treated in a public or private facility as long as they are treated well. The thing that recently convinced my mother, a lifelong supporter of the NHS, to have her cataract extractions in a Nottingham private hospital instead of the local NHS trust was that her NHS consultant explained exactly how the trust was organising her care at an independent clinic, paying for it and monitoring the outcome. Of course on this occasion there was no competition, but an extremely productive partnership of exactly the kind talked about by the noble Lord, Lord Selsdon.
The main arguments against independent treatment centres relate to training, sometimes quality of care, and cost. Training does have a price and increasingly I hope the NHS will want to contract training placements from the private sector, and it is time that the deaneries organised themselves in this respect. At the moment too little training is done in the independent sector, as well as too little research and development. Not only does that create artificially low costs for some independent sector treatments, but it also makes it difficult to instil in the trainee an open mind to think about the possibilities of how they work and the culture in which they work. Of course, many of these problems will not be an issue when everyone is on a level tariff, but getting to that level tariff is crucial. The price the NHS pays for private work remains an issue. While it may have been necessary to provide sweeteners to get early contracts in, I fervently hope that the currently above-tariff prices are merely transitional and not a permanent feature.
Quality of care is an issue. There is much mudslinging from both sides of the fence, but precious little data. The independent sector often has contractual requirements to provide far more detailed data on outcomes than is currently demanded of any NHS trust or individual consultant. Nevertheless, the regulatory framework is different. So far, despite the protestations of some surgeons who see their lucrative
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So far, as the noble Lord, Lord Rea, said, the contribution of the independent sector to surgical care has been too small to assess the real impact. However, I would dispute with him that the tumbling waiting lists have had nothing to do with introducing independent sector treatment. The plans for these services have had a huge impact on NHS behaviour. They have had to concentrate harder on how they contract for services. NHS managers have found it easier to negotiate cheaper fees with their own consultants for extra work, with payments well below the standard BUPA rate. This is the sort of outcome competition is supposed to produce. It does not surprise me that the British Medical Association does not like a situation where the NHS moves away from being a monopoly provider; it has served its members extremely well—better than anywhere else in Europe. I ought to admit here to being a member of the British Medical Association, but not always a well behaved one, as noble Lords can see.
The reaction of the UK private sector is telling. All four major providers have restructured their businesses. BUPA has sold nine of its hospitals because it believes they cannot adapt to the new NHS market and the effect that it is likely to have on the private one. Like other private providers, it is installing the NHS choose-and-book IT system so that patients can gain access to its beds as Patient Choice arrives. All four UK operators have now provided procedures to the NHS at tariff prices or below. This is convincing evidence that the policy is beginning to bite. All this heralds a much less comfortable time for many NHS institutions and staff. The price for this may well be disruption of established services. How bad that is and how well it is handled may well decide whether the outcome of this policy is judged to be a success or failure.
This is why I believe foundation trust policy is so vital. It allows a measure of independence in decision-making but maintains staff within an employment framework and a pension system which is extremely valuable to them. It gears up providers to be competitive and delivers a mindset to be able to challenge the independent sector at its own game.
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I have some questions for the Minister about the plurality of providers. Do the Government have a view on how broad the notion of providers should be? Are there plans to achieve that position or will the market be left to decide? When do the Government expect to provide a true level playing field on tariffs to ensure that the resentments felt by the NHS about the new providers can be challenged on a fair basis?
3.06 pm
Baroness Turner of Camden: My Lords, I am grateful to my noble friend Lord Rea for introducing the debate today. It comes at a very opportune time, following a week in which there have been demonstrations—including a march on Parliament—by a workforce that is notably non-militant. It is clear that staff in the NHS are deeply concerned about redundancies and future job prospects. They also attribute many of the problems they face to the piecemeal privatisation, as they see it, of the NHS.
They believe that the redundancies are being caused by the requirement that health trusts have immediately to clear deficits which have accumulated over a long period. For this they blame government policy with its commitment to creeping privatisation. They point to the impact of the private finance initiative. As well as guaranteed income streams and excessive annual returns, PFI consortia are allowed to keep 70 per cent of windfall gains made from refinancing debt and 100 per cent from trading their PFI gains on the secondary market. It is alleged that, across all sectors, PFI companies will make £148 billion over the next 25 years. It is surely unacceptable that private industry should be making these profits at a time when NHS staff are facing redundancies because of trust deficits.
Then there are the independent sector treatment centres, to which my noble friend has already referred. These are stand alone private sector clinics specialising in a limited range of simple treatments. They are contracted to carry out procedures at a fixed price, which is paid whether or not the operations are actually carried out. They were supposed to provide extra capacity but they are in fact in competition with the NHS in many areas. I am informed that, on average, they cost 11 per cent more than the NHS for each of their procedures.
Attempts are also apparently being made to outsource to the private sector the commissioning function of the primary care trusts. Private companies would thus gain control over which treatments patients receive and who provides them. The Government apparently now wish to introduce the private sector into running GP practices. The Department of Health has taken control of the procurement of GP services in a number of areas. In these circumstances, it is not surprising that staff feel that their problems and difficulties are attributable to the privatisation which the Government have undertaken.
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The union Unison says that it has never been opposed to reform but believes that what is happening is not in the long-term interests of the NHS or its patients. Staff who have recently undertaken training are now unable to find jobs. As has already been indicated, there have been redundancies and further redundancies are expected. As a Londoner who is also an NHS patient, I find this absolutely astonishing. The hospital where I am a regular patient always seems to me to be absolutely inundated with work. The staff are very good, but look overstretched to me. Yet I understand that there are to be redundancies.
During a recent interview, the Health Secretary said that innovations and improved technology meant that it would not be necessary for people to spend so long in hospital, so fewer beds would be needed. We have heard some reference to that this afternoon. In any event, it is said that people prefer to be cared for at home, rather than in hospital. That is fine, as long as support services are available. However, I fear that very vulnerable people, particularly the elderly, will suffer as a result of such a policy. The appropriate services are simply not there.
I recall only too well my own recent experience. I had a rather difficult operation on my knee which had not gone too well—indeed, it is still not very good, but that is another story. I had been told by the consultant that I would need to spend at least a week in hospital after the operation. To my surprise, the ward manager came to see me a couple of days after the operation and told me that I was going out the next day. I complained that I was in some pain, I could not walk and I lived alone. How was I going to manage, I asked? “Oh”, she said, “haven’t you any relatives?”. “None that lives near”, I said. She eventually said that I could have another day so that I could get in touch with my sister who lived in Wiltshire. My sister and brother-in-law came up from Wiltshire to London to collect me, take me back to Wiltshire and there arranged for me to have follow-on therapy at Melksham Community Hospital. The hospital in London simply did not have room for me; it needed the bed.
I was able to make alternative arrangements, but we have an increasing population of ageing people, many of them women living on their own. Families cannot always help. Support services are very poor in most areas. The notion that they can simply be discharged from hospital very soon after surgery into care services is likely to leave many old people in some difficulty and distress. Or else it means imposing more burdens on families, and carers already save the NHS a great deal of money.
I believe that the concerns of staff in the NHS should be given greater credence. The vision of an NHS largely provided by an assorted set of private care companies does not give a great deal of confidence. Much money has indeed been spent by the Government on the NHS, and for that the Government are obviously to be commended. But while I—and, I am sure, most people—would be happy to see this money spent on ensuring that the
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Again, I thank my noble friend Lord Rea for giving me the opportunity to speak this afternoon on what I think is a growing problem.
3.12 pm
Baroness Barker: My Lords, I, too, thank the noble Lord, Lord Rea, for his very topical subject for debate. It is topical because noble Lords will be aware that in the past two weeks, Patricia Hewitt has appointed Sir Ian Carruthers, who was until recently the acting head of the NHS, as a troubleshooter to quell public rebellion against hospital closures in 50 hotspots.
It is extraordinary that at a time of unprecedented investment in the NHS, there is growing public disquiet about the extent of independent sector involvement in it. I say “extraordinary” because independent sector involvement in the NHS is not new. NHS GP, ophthalmic and pharmacy services have largely been provided by independent contractors since 1948. According to a report by the Healthcare Commission in 2004-05, more than 80 per cent of those who use mental health services in the independent sector are NHS patients, including those in low and medium secure settings. It is not new so why, then, this disquiet?
The first reason is the fear that there will be a huge impact on other parts of the NHS in a way that is unplanned. The noble Baroness, Lady Murphy, came closest to putting her finger on the real question. There is a deep and growing disquiet at the lack of transparency about the terms on which private sector involvement is taking place in the NHS, leading to a situation in which it is impossible to judge in any objective fashion the true impact on activities and costs.
ISTCs are expected to provide more than 500,000 elective procedures. Phase 2 of the ISTC provides £2.75 billion over five years for elective surgery and £1 billion for diagnostics. We do not know what the effect of that will be on the NHS. The Government’s response to the Health Select Committee’s report on ISTCs, Command 6930, is a fascinating document. In a very small, tight, condensed fashion it hits on all the key questions about what the programme is likely to do to the NHS. In response to fears raised by the committee about the capacity of phase 1 ISTCs being built in places where the capacity was not needed—a point touched on by the noble Lord, Lord Selsdon—the Government’s response was:
“Utilisation of ISTCs is high at 84 per cent and we are unable to benchmark this against NHS performance”.
Why not? That is an absolutely crucial piece of management information which any enterprise would be expected to have. It is essential to work out whether something is providing value.
The Health Select Committee also made the point that while ISTCs have increased choice at more locations—and they have provided earlier treatment—there is no information about clinical quality, so patients cannot exercise informed choice.
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In the Health Select Committee report, in paragraph 103 on page 37, the committee addresses the issue of value for money and the NHS equivalent costs of the ISTC programme. The noble Baroness, Lady Turner, mentioned this figure and said that ISTC procedures were deemed to be 11.2 per cent more costly. They are—and they are considerably lower than the cost of spot-purchasing individual procedures privately. But the Government’s defence of the whole ISTC programme and buying in this extra capacity was that it was based on an analysis of projected need conducted by strategic health authorities.
That begs two questions. First, how good was that analysis? As the noble Lord, Lord Selsdon, said, a great deal of money is put into NHS facilities, and there appears to be very little co-ordination between the provision of the service and the demand for it. The second question that arises from the Health Select Committee report is about the block contract arrangements. The noble Lord, Lord Rea, was right in saying that the “take or pay” nature of those contracts led to a distortion of provision. The Government have defended that form of contract, saying that they need to balance risk and cost for these new providers. That is extraordinarily generous of them.
I should declare that in my working life I advise not-for-profit companies that seek to provide services to the NHS—principally, primary care services. We routinely, along with the lawyers who advise us, tell them to watch in all tender and contract negotiations for risk being loaded on to them as providers. That the NHS should choose in this instance to carry the risk itself is fairly unusual. How will that risk-loading on contracts be dealt with in the next phase of contracts? To what extent are the transactional costs for contracts in the private sector factored into the evaluation of the comparison with NHS equivalents?
In the time left to me I shall concentrate on the potential contracting out of PCT commissioning. In June 2006 the Government advertised for firms to, in effect, take on the role of commissioning services in the NHS. It was a very strange decision. There had been no public debate about it. It was not a manifesto commitment. The advert was actually withdrawn. It is not possible to determine exactly what the Government’s intentions were, but their decision implied that they felt a lot of services run by PCTs, including commissioning, were inadequate and would
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