Examination of Witnesses (Questions 1000
WEDNESDAY 9 JANUARY 2002
MP, MR ANDY
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 issuescosmetic
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.
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 getand this
is what I have been saying to Andrew and his team of negotiatorsa
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
Chairman: Good to hear that, Richard.
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
(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
(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
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
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
(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
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