Select Committee on Health First Report


(a)It remains to be demonstrated that greater use of the capacity of the independent sector poses no direct threat to resources in the public sector. Careful definitions need to be adopted when defining "shortages of capacity" in the NHS and "surplus capacity" in the independent sector. We recommend that the Department should commission an independent assessment of the impact of the purchasing by the NHS of activity from independent providers on staff availability within the NHS (paragraph 17).
(b)We have no objection to the NHS combatting shortages of capacity (in terms, for example, of lack of theatre space or shortages of beds staffed by nurses) by making use in the short-term of the independent sector. Moreover, we acknowledge that waiting lists of themselves entail costs in terms of additional burdens on social care, the welfare system and the health service itself as a consequence of the additional expense of treating more advanced conditions. Above all longer waiting times have a real impact on patients' quality of life. However, we think it imperative that the NHS develops sufficient acute capacity to keep down waiting times. The extensive capital development programme under way needs to be complemented by contractual arrangements which ensure that the NHS has the consultant time and other resources it needs to carry out this higher level of activity. We recommend that the Department, together with trusts, should look at ways of providing further incentives to staff to work for the NHS (paragraph 21).
(c)The current balance of provision between public and independent sectors is clearly under review. So we believe that now would be an appropriate time for the Department of Health to ensure trusts have undertaken a recent cost-benefit analysis of the reclaiming for the NHS of capacity utilized to provide private pay beds in NHS hospitals. This could establish whether there are any trusts which might find it more cost-effective to use this capacity within the NHS instead of buying in operations from independent hospitals (paragraph 23).
(d)We recommend that the Department publishes data on the impact of this measure [consultants working exclusively for the NHS for a period of seven years following their qualification] on NHS capacity to enable planning of the other resources needed to match any additional consultant availability (paragraph 24).
(e)We would like to point out that it is now almost two years since our predecessor Committee published its report into Consultants' Contracts which expressed "astonishment" that job plans, reviewed annually, were not in place for every consultant. Our predecessor Committee's report prompted the then Government to say that it regarded job planning as "a clear and compulsory activity" (paragraph 25).
(f)We believe that the Department should ensure that all consultants have job plans and that this is an essential prerequisite for the appraisal of NHS consultants. Since appraisal and revalidation are being progressively introduced for all registered medical practitioners, there is scope for consideration to be given to the impact of any work done in the independent sector on a consultant's NHS responsibilities. We recommend that this opportunity is taken and that the resulting mechanisms should include provisions (for example, sanctions in relation to pay and conditions) which guard against the potential conflict of interests for consultants working in both the NHS and independent sectors (paragraph 27).
(g)In order to ensure greater accountability, we recommend that details of payments for NHS activity made to consultants working in private settings should be published by Trust boards (paagraph 28).
(h) It would be invidious if the uneven geographical distribution of independent sector provision exacerbated inequalities in waiting lists and times. Therefore we recommend that further money aimed at reducing waiting lists and times should not be earmarked specifically for Concordat activity or restricted to the use of private and voluntary sector provision but should be available for use in whatever way is best suited to local circumstances. This may include the development of local NHS capacity (paragraph 31).
(i)A basic tenet of the National Health Service is that there should be equal access for those with equal need. This principle underpins the Government's policy of national targets for waiting times, for access to cancer treatment and the progressive development of national service frameworks. Strategies for the development of services take account of the drive for equity of provision, though clinicians themselves will rank the priority of individual patients. We judge it to be essential that the use, by the NHS, of clinical capacity within the independent health care sector does not depart from these positions. NHS waiting times should therefore be maintained on a basis that ensures equity of access to health care services contracted from the independent sector irrespective of the locality of the commissioning authority (paragraph 33).
(j)The results of the East Surrey survey of the costs of Concordat activity are encouraging, but given the very wide regional variations in the costs of work carried out under the Concordat, we find it hard to see how the public can be confident it is always getting value for money. Moreover NHS reference costs, which are themselves subject to wide variation, are not yet an appropriate means of judging value for money. We believe that the Audit Commission should urgently review a representative sample of this activity to assess value for money. We also believe that the Department should take urgent steps to improve the methodology underlying NHS reference costs so that they can eventually act as a meaningful benchmark (paragraph 38).
(k)We are also concerned that independent providers may sell activity to the NHS with a view to establishing a dependence on their services which would then put them in a position to increase prices to the NHS in the future. We have received no assurance that if there is to be a longer term relationship with the private sector then contract prices with the NHS will be protected in the longer term. Where spot purchasing is taking place, for example to reduce waiting lists, in general we would expect the prices to be below relevant NHS reference costs as the NHS should be able to use its bargaining power to pay not much more than marginal cost for this activity. We recommend that the Audit Commission is given a right of access to independent sector providers of NHS healthcare, and that "open book accounting" principles should operate in respect of these providers (paragraph 39).
(l)We further recommend that the Government introduces guidelines on the basis of which all NHS trusts will be required to develop explicit, publicly available protocols setting out the principles governing their use of the independent sector (paragraph 40).
(m)We note that the Government plans to make regulations so that the Commission for Health Improvement may exercise the National Care Standards Commission's function of inspection in relation to independent hospitals. We would be very concerned if such arrangements resulted in a diminution of health care skills in the regulation and inspection of nursing and health care services provided to people accommodated in social care settings - including those of care homes in which nursing care is provided (paragraph 43).
(n)Our predecessor Committee's report into the Regulation of Private and other Independent Healthcare drew attention to some of the difficulties caused by separate arrangements for the regulation and accountability of the public and independent sectors. Ever greater degrees of transfer between the two sectors place even greater question marks over the sustainability of separate regimes. In the light of the Government's reply to the Kennedy report and the Secretary of State's argument that CHI and the Care Standards Commission have been developing powers to share their work, we recommend that the Government produces a common regulatory framework as a matter of urgency (paragraph 45).
(o)We believe there is a case for the independent sector taking on more of the burden of training staff and call on the Department to consider imposing a levy on the independent sector towards the training, including first qualification, of some health professionals (paragraph 46).
(p)In the short-term at least, we believe that the treatment of NHS patients abroad is likely to prove a fairly marginal activity. Initial patient reactions seem to be encouraging and the excess capacity in continental Europe offers the possibility of the NHS securing good value for money and reducing waiting lists. Clearly it is essential that patients are assured of the quality of the care they receive. So we believe that the Commission for Health Improvement is the appropriate body to inspect standards in hospitals abroad treating NHS patients. It is also essential that robust mechanisms are put in place to ensure that patient follow-up can successfully take place and that the Department sets out clearly the legal implications of adverse clinical incidents (paragraph 53).
(q)PFI is still being blamed for numerous ills not directly related to it whereas the many benefits ascribed to PFI have yet to be proved. The time has come for a more rational and objective debate, and it is the responsibility of the Government to take the lead in achieving this. In order to achieve this there has to be more transparency, openness and accountability (paragraph 70).
(r)Those on either side of the argument are adamant in their assertions or denials that PFI has an impact on bed numbers. The planning process is designed to ensure that there is no impact: bed levels are set before the funding route for a hospital is determined. Central Manchester NHS Trust thought that PFI might exert an indirect pressure on bed numbers, though the other three trusts we questioned said that there was no connection between PFI and bed numbers. What is not in doubt is the fact that the lack of transparency in the PFI process has been partly responsible for the impression that PFI can be equated with a reduction in the number of beds. What may also be the case is that the PFI has provided a convenient scapegoat to be blamed for poor bed planning, something which we hope the National Beds Inquiry has addressed. From the evidence we have taken we do not believe that PFI necessarily leads to reductions in bed numbers. We recommend that the government reinforces the planning rules for new hospitals by making it clear to trusts that there should not be any pressure to reduce the capacity of hospitals regardless of which funding mechanism is used (paragraph 77).
(s)Valuation of 'risk' is the key determinant of value for money as between the PFI and Public Sector Comparator. Yet risk valuation is as much of an art as a science. It must, however, be clearly understood that saying that risk is difficult to value is not the same as implying that risk is somehow cost-free. It is not in the interest of the taxpayer to transfer as much risk as possible to the private sector since risk attracts cost. What is essential is that an optimal transfer of risk takes place, with the private sector partner taking only the risks it is best equipped to manage. Again, more transparency would be beneficial, so that the partner best able to manage the risk is identified (paragraph 85).
(t)Given the current discount rate was set when rates were higher, a lower rate may now be more appropriate. We recognise that other factors need to be considered in the current review but we would want to be assured that the fact that the calculations to establish the PSC are so complex is not being used as an excuse to manipulate the PSC to produce whatever result is needed. To stop such a view gaining credence we recommend that the National Audit Office should assess the PSC process as a matter of urgency in the light of any revision of Treasury accounting rules. It is essential that the calculations underlying the determination of the PSC are clear, and that the means by which VFM is established are transparent and in the public domain (paragraph 90).
(u)The question of a realistic Public Sector Comparator (PSC) has to be addressed. Comparing the PFI with the PSC may well prove that the PFI is value for money against an artificial comparison, without proving that it is value for money in absolute terms. We recommend that the Department refines the way in which the PSC is constructed. What needs to be carefully assessed is how great the non-VFM benefits are and to what extent they are directly a result of the financing mechanism. We further recommend that the National Audit Office undertakes immediate urgent studies of several major health schemes to establish the economic aspects of VFM: it is the appropriate expert body and is statutorily independent of Government. Given the enormous expenditure consequence of PFI schemes, and their long-term nature, we would ask the NAO and the Department to work to a tighter time table than they would normally follow in drawing up such assessments and to report their preliminary findings to this Committee as well as the Committee of Public Accounts (paragraph 97).
(v)And, as it is the case that some of these [new hospital build] schemes would not attract conventional funding then the NHS should be transparent about this and in these schemes the real comparison to be put to the public should be the comparison between the PFI and the costs and benefits of not proceeding with the PFI project (paragraph 97).
(w)For the NHS to purchase capacity by means of the PFI in a consistent and informed fashion it must provide trusts with a relevant pool of experience upon which they can draw. Trusts are often negotiating PFI contracts for the first time with companies who bring far greater experience to bear. There have been some advances. The Department's central PFI unit has made great strides since the earliest PFI projects and the standardisation of contracts and other documentation has clearly been most beneficial. But we would prefer to see greater sharing of central expertise. We recommend that the Department takes responsibility for ensuring that there is a cadre of people with wide-ranging experience and expertise in dealing with PFI available to each trust negotiating a new PFI project (paragraph 103).
(x)For the debate on PFI to move forward far greater transparency is needed. Lengthy and impenetrable documents do little to inspire confidence in the process. This is an obstacle to objective scrutiny. We recommend that it should be a requirement of the PFI proposal that simplified summary documentation, including a financial summary, should be produced in a standard format and in a form intelligible to lay readers for all stages of the PFI procedure and the PSC (paragraph 108).
(y)PFI documentation should be made more accessible. While there clearly exists a tension between the imperatives of commercial confidentiality on the one hand and openness in the decision making process on the other, we believe that the Government has to give the lead here and insist that, in privately financed but publicly funded projects with such long-term revenue consequences, the balance should be tilted firmly in favour of greater openness (paragraph 109).
(z)It could be argued that PFI has the potential to inhibit long-term flexibility in the light of new technologies and changing patterns of care. The Government must ensure that PFI contracts are sufficiently flexible to be able to respond to changes in demand without major penalties to the NHS. Therefore we recommend that the Department should assess the future structure and requirement for health assets and that all future contracts- whether PFI or conventionally funded - should be examined in this light (paragraph 112).
(aa)There is no dispute that staff transfer [in PFI projects] has proved a highly contentious issue, and there are genuine concerns about the creation of multi-tier workforces working with different pay and conditions. If staff transfers are an inevitable part of the PFI process then greater thought needs to be given to ensuring that NHS and private sector staff have a clear understanding of their roles and duties. We were impressed with the Patient Focus Care model in Durham and believe that the Retention of Employment Model offers the greatest potential for a well integrated workforce. We recommend that the Department redoubles its efforts on the Retention of Employment Model and look forward to seeing the results of the pilot schemes (paragraph 120).
(bb)Closer input into the design process [of PFI projects] by trust staff would be beneficial. We recommend that staff should have a greater input in the design phase, even to the extent of requiring that there should be a full mock up of a ward in advance of building work taking place. We also recommend clinical expertise is actively involved in the PFI team in order that functional and clinically operational relationships are understood and incorporated in the design of the project (paragraph 123).
(cc)Given that PFI is relatively new, that the money tests are often marginal and that those tests have created much uncertainty, we recommend that more capital monies are made available for major conventionally procured schemes so that PFI schemes could then be properly monitored against a significant number of conventionally procured schemes and the lessons from both learnt for the future (paragraph 124).
(dd)LIFT is in its infancy, but we believe it does offer the potential to rejuvenate the current stock of primary care facilities in those areas of greatest need. We welcome, in principle, this initiative. However, we recommend that the Government carefully monitors LIFT to ensure that it is directed so as to ensure provision in areas of highest need and promote greater integration of primary healthcare provision (paragraph 133).
(ee)We accept that the pre-LIFT mechanism would often have involved private sector schemes however, we believe that it would have been prudent to conclude the assessments of the first six schemes before rolling out LIFT nationally. We recommend that the Government undertakes a rapid assessment of the first schemes, both in terms of value for money and service provision, though we recognise the urgent need to refurbish the primary care estate (paragraph 137).
(ff)We recommend that health authorities should be asked to prove that work has been carried out to show that LIFT schemes have been considered in the context of integrated strategic planning of healthcare assets. We recommend that the business planning process for LIFT and acute hospital PFI schemes should be required, at every stage, to take a whole systems approach, that is, to look at the potential for an integrated local approach (paragraph 138).
(gg)All sides to the debate [on pathology services] accept the need for rationalisation and structural reorganization and we are attracted to Professor Lilleyman's suggestion that the new strategic health authorities are the appropriate level at which, or areas within which, new pathology networks can be organized. The evidence we have seen suggests that private sector providers have introduced greater efficiency without compromising clinical standards. This, we believe, is partly due to the fact that clinicians have been closely involved at every stage of the reorganization. We especially commend the model of having NHS consultant pathologists in charge of on-site laboratories where "hot" testing takes place, whilst off site laboratories are left to handle large volumes of cold testing (paragraph 154).
(hh)We would agree with Mr Spiller of MSF and Ms Wannell of West Middlesex University Hospital Trust that a variety of models need to be tested, and it seems to us that many of the benefits being achieved by the private sector companies could be achieved within mainstream NHS provision if sufficient investment were made (paragraph 155).

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