Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 1000 - 1019)



  1000. Trent seems to be getting cases for £500.
  (Mr Milburn) Yes and Andy was telling me in East Surrey, for example, the local health authority (rather than the local trusts) negotiated a deal last year which got NHS patients treated at NHS prices rather than at private sector prices. I think that shows that you can get the deal done and you can get good value for money for the taxpayer as well as getting more treatment located more quickly with patients. Certainly we have got some figures which indicate that, for example, the average cost of a hip replacement on the National Health Service is around £4,100-£4,200. The best prices that we have been getting from the private and independent sector have been £3,500. Knee replacements cost £4,600 in an NHS hospital. The best prices we have been getting in the private sector have been £4,200. So rather than just assuming that always we are going to get ripped off or we are going to get poor value for money for the taxpayer, which I know is not what you are saying but what some of the critics say, it depends upon the negotiations.

  1001. With the problem of alleged lack of capacity and higher prices in the North West and the North East, it is harder to see the problem changing immediately.
  (Mr Milburn) That must be true if there is more of a monopoly position in some parts of the country than others and there is less competition, and that probably means that the NHS is not getting quite as good a deal as it should do. One thing I am absolutely convinced about (and I think we are beginning to see the start of this) is that we have not been optimising our purchasing muscle. As I said at the last Committee, it is not as if relationships between the National Health Service and the private sector have never existed. We all know from our own constituencies that they have existed for very many years but, by and large, the relationships have been ad hoc and sporadic and as far as elective surgery is concerned, by and large, those relationships have only kicked in towards the end of a financial year, around this time of year, January, February and March, when NHS trusts want to hit their waiting lists and waiting times' targets and therefore they buy a bit of extra capacity on a spot purchase basis from the local private sector hospital. That is the worst possible way to get good value for money. The best possible way to get good value for money is by developing a longer term relationship between the local National Health Service and the local private sector. That is what we want to see developing in all parts of the country.


  1002. We have discussed comparative prices, presumably we are talking also about equivalent quality?
  (Mr Milburn) We have got to make sure that is the case. As you know, from April this year the National Care Standards Commission kicks in, and part of its function is precisely to inspect in a way that has not been done as rigorously as it should have been. This Committee has had concerns about various issues—cosmetic surgery or other forms of surgery, the sort of services that are offered in the private sector. That is not to say that there are not standards in the private sector because the best and, by and large, the largest organisations do have high standards that they try to meet, but I do think that it is very, very important that if we are going to have a good relationship between the National Health Service and the private sector, particularly when it comes to issues of surgery and the outcomes that we need and patients need from surgery, there has got to be an independent assurance that the standards are high wherever the patient is treated, whether it be in an NHS hospital or elsewhere.

Dr Taylor

  1003. Secretary of State, I have a serious of points, and the first one is I was very disappointed to see in the written evidences that we had just yesterday from the Department of Health that still too many consultants do not have job plans. Considering job plans came in at least in 1994, that is a real condemnation of management or something. Can I assume that in the new contract a job plan will be mandatory?
  (Mr Milburn) Yes.

  1004. Thank you. That was quick and easy.
  (Mr Milburn) It is quick and easy on paper. As you rightly say, that is supposed to have been the position since 1994. It is important that what we have got to get—and this is what I have been saying to Andrew and his team of negotiators—a new consultant contract that looks good on paper; it has got to work in practice.

  1005. The next thing, you have mentioned the total ban of private practice would be impossible. Compensation would be unaffordable.
  (Mr Milburn) Yes.

  1006. I thought from reading again this same letter that we had yesterday that the seven year ban had perhaps been put on the backburner a bit, and I would have thought that there was yet another way of coping with this.
  (Mr Milburn) Okay. Go on.

  Dr Taylor: I am drifting further to the left rapidly.

  Chairman: Good to hear that, Richard.

Dr Taylor

  1007. One of our Chairman's main problems with consultants in private practice is that there appear to be two different waiting lists. One of the things you can buy in getting your private treatment is a much shorter waiting time. Would it be feasible, have you thought of, and I have not thought through the details, literally a common waiting list for consultants who do NHS and private practice so that it would be strictly by clinical need, whether they were private or NHS? I am only throwing that out as a thought. Had you thought also about resurrecting amenity beds which now we are getting new hospitals with more single rooms would be much more practicable than it was?
  (Mr Milburn) Yes.

  1008. So those are just some general points. If I may pause and then come back to some specific points.
  (Mr Milburn) Yes. Let me think about the proposal rather than just giving you a snap answer, so to speak. I think on the shorter waiting times thing, you see what I think will change all of this is as we get NHS waiting times down. I know that the Chairman says that it does not sound coherent but actually I think if you have a combination of more NHS capacity going in and a better way of working, I think, than the National Health Service do, better relationships with social services, all the things that are going on, firstly, secondly taking advantage of growing private sector capacity and a more mature and sensible relationship than has been the case in the past between the NHS and the private sector and then thirdly being able to harness more of the time, commitment and expertise of NHS consultants to treat NHS patients, then those seem to me to be three of the building blocks that you need in place in order to get waiting times down for the NHS patient. Actually I think that progress is under way there. I know that already many, many trusts, for example, including my own trust in Darlington, I think at present it does not have anybody waiting for 12 months for an operation, now that is not true everywhere. By March next every trust should be in a position where nobody is waiting for 15 months for an operation. Fifteen months is far too long, appallingly long, everybody knows that, but the National Health Service has never achieved a maximum waiting time of 18 months never mind 15 months or, as it will be from the end of March this year, 12 months for people waiting for a heart operation. All still too long but I think the fact that the waiting times are falling is evidence of the fact that both the capacity is kicking in, including the use of private sector capacity, and some of the changes are beginning to kick in too. I will give you a more considered response to the proposal that you have made but I am not going to do it off the top of my head.

  1009. Thank you. Certainly we are watching for the achievements of the promises. If I can just go on to a little bit of detail. Picking up the BUPA centre in Surrey, the diagnostic and treatment centre in Surrey, we would love to know a little bit about the contract, obviously not details, but how is staff pay going to be worked out? What is the sort of scale of operations? Will patients just be taken off NHS lists? Will private patients use this facility at all? Can you just give us some comments about how you see the contract for a private diagnostic and treatment centre going?
  (Mr Milburn) Shall I say at the outset, Richard, that we are in negotiations, first of all.

  1010. Yes, I realise you cannot give us detail.
  (Mr Milburn) I do not want to compromise the negotiations. All I can say for now is the negotiations are going well. I expect the negotiations will be concluded over the course of the next two months and then we will be in a position to move forward. Our objective is this: at the moment the BUPA hospital there effectively treats private patients, privately paid for patients. If we can get a successful negotiation concluded, as I hope we can, then by the end of this year it will be a facility that is turned over 100 per cent to NHS patients. That will expand the capacity available to the National Health Service in that part of the world. I think it will mean that we will be doing around 12,000 procedures a year there, 12,000 operations a year, which should help get waiting times down, get more people treated more quickly. We are in discussion about precisely some of the nitty gritty issues. Essentially there will be two groups of staff who will be employed at the BUPA facility. There are the existing BUPA staff, largely nurses and other clinical and non clinical staff there, and then in addition to that we will have some NHS staff who are currently working in an NHS day surgery unit who will also be working in the BUPA unit. These two staff will be jointly managed.

  1011. Can you say whether they will be paid the same?
  (Mr Milburn) The NHS staff will be paid at NHS rates of pay. The BUPA staff will be paid at BUPA rates of pay, I would guess.

  1012. Next question, still on this specific hospital really. We have had a little bit of talk already about how you negotiate costs.
  (Mr Milburn) Yes.

  1013. One of the problems was alluded to by Mr Auld himself, whom you have quoted already, because he gave us examples within the NHS where a hip replacement could be as much as £10,000 or as little as £800.
  (Mr Milburn) Yes.

  1014. What are you doing to standardise costs throughout the NHS which would seem to be absolutely crucial before you can request the private sector to tender at all really?
  (Mr Milburn) On the upper and lower range of the particular procedure that you described there, I find it impossible to believe that an NHS hospital is carrying out a hip replacement operation for £800, that sounds to me to be bargain basement stuff. That is the sort of poundstretcher hospital, is it not?

  1015. Yes. That is the figure he gave us.
  (Mr Milburn) I know. There are figures which make me slightly concerned. We publish every year the reference costs for different procedures in the NHS and I think there are some problems about, frankly, the way different hospitals are counting different activities and ascribing different costs. We also have an inter-quartile range where the range of costs is much narrower. So for a hip replacement operation, for example, the inter-quartile range in 1999-2000, for a hip replacement, was anywhere between £3,650 and £4,680, a much narrower range of costs which I think, frankly, is probably more believable. How are we trying to get the differentiation in costs narrower which we want to achieve? I think when the Committee sees the next range of reference costs published, and I hope that we will be able to do that before too long because I have been looking at it recently, I think you will see there is improvement in that regard, first of all. How has the improvement come about? In part it has come about simply by making that information available to the National Health Service and allowing my trust to compare with your trust and ask some simple questions about why it is cheaper in Darlington than it is in Kidderminster, they cannot get their costs down, get their costs right and so on. I think the thing that will really drive it, however, is more active commissioning between more active primary care trusts, which will be coming on line, and NHS trusts. If primary care trusts are smart what they will be doing is using the reference cost publication as a bit of a commissioning bible and saying "Well, actually I can get these operations done for my patients more cheaply elsewhere" rather than just sending them necessarily to the local NHS hospital. That will provide some pressure on the NHS hospital to offer good quality, of course, but also to do with issues of affordability and value for money.

  1016. The last on this section. I gather this diagnostic and treatment centre is very close to the relevant NHS hospital. Is it going to attract staff away from the NHS? Is it going to detract from the NHS hospital? Have you any comments on that?
  (Mr Milburn) Do you want to come in? I will get Andy, who has been dealing with it, to comment.
  (Mr McKeon) We do not really envisage that it will detract from the NHS hospital. The BUPA element of the unit is fully staffed up. The day surgery unit of the staff we will transfer is fully staffed. We will also be seeking assurances in the course of the negotiations to see the staff recruited will not be to the detriment of the NHS.

  1017. On the other hand, is it a positive advantage to have the facilities of a full scale hospital very close?
  (Mr McKeon) Some facilities are and some facilities — There can be advantages in having the facilities on the same site, yes.

  1018. Is it on the same site?
  (Mr McKeon) It is on the same site. It has a linking corridor with the main DGH so it is almost an integral part of the hospital.

John Austin

  1019. Can I follow on with two points. In response to the Chairman, the Secretary of State said that the availability of consultants was clearly a capacity issue. Picking up on Dr Taylor's point about nursing and whether there will be a draining of resources, at the moment we are talking about using spare capacity that is in the private sector in order to speed up the process of treatment, yet in evidence at the last session one of the private sector providers said they are quite happy to speculatively build a new hospital, absolutely confident that the NHS will fill it. If that is going to be a pattern, the private sector creating spare capacity, clearly at the end of the day there must be a drain on the resources of, say, nursing staff and making the situation worse in the NHS?
  (Mr Milburn) I think that is why, John, there has to be some planning of resources. If somebody wants to go off and build a private hospital, and they get planning permission and so on and so forth for it, there is nothing I can do about that, that is up to them. The National Health Service can do something about it in terms of giving them a contract. Now the issues are for us what conditionality is applied to the contract that the local NHS holds with the local private sector hospital. One of the conditions that I think we would look to ensure is that if there is additional private sector capacity coming on line in a particular area then that is not to the detriment of local NHS hospital capacity. For example, if we were entering into a contract for a DTC or elective surgery or whatever it is, we may well say that a condition of us contracting, the National Health Service contract, the local NHS doing a contract over a period of years with the local private sector provider and the new one coming in to the market, is they should not poach, they should not recruit from the local hospital and, indeed, perhaps what they want to do is go and recruit from abroad, we recruit from abroad. I think in general terms the idea that there is a huge exodus from the National Health Service in terms of nursing to the private sector is just not borne out by the figures I have seen. The Office of Manpower Economics, as you know, every year as part of the review body process—

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