‘Very good value for money’ not good enough for the DH
James Gubb, 7 February 2008
When the DH slashed the second wave of independent sector treatment centres (ISTCs) last year, it reasoned ‘they were unlikely to provide acceptable value for money’. This was based on capacity assessments by the new Director General of the Commercial Directorate, Chan Wheeler.
But now it appears a separate, independent, review concluded exactly the opposite. Nick Timmins, writing in the FT, reveals how the DH actually suppressed the findings of an independent assessment – conducted as part of the ‘gateway’ process – which rated the project’s chance of success as ‘green’, described the planned ISTCs as ‘well-matched to the [NHS’s] requirement’ and described the programme as ‘suitably tailored to regional needs’. Key stakeholders, such as strategic health authorities (SHAs), in fact told the review the deals were ‘appropriate and very welcome’. Strange indeed, then, that most are not going ahead.
Mr Wheeler’s view is that the capacity projections were yesterday’s game; that in the time since the second wave was announced and the present day, NHS-run institutions have upped their game considerably, meaning that the extra capacity considered necessary then is not needed now – hence the cuts. He says the competitive charge they would give the NHS would be real, but this cannot be considered in isolation from the cost to the taxpayer; i.e. they must deliver value for money.
This would be a reasonable argument if it were true. But, for one, the independent review suggests it is not. And Mr Wheeler’s analysis also fails to account for the costs the taxpayer will bear for paying off those party to the contracts terminated, which will runs into millions.
But there are two deeper points. First, let’s have a look at the existing independent providers, offering free care to NHS patients under the first wave of the ISTC programme. Many said at the outset this would fail, that they would fail to interact with the local NHS providers, abuse the contracts and provide poor value for money. This has not happened. True, there are a handful operating at below contract value, but then the vast majority are pretty much on it. Eight, in fact, are above it – one or two significantly so – meaning that more and more patients are choosing to go to them. This is unsurprising. All the indications are that they are providing a higher standard of care, and are more efficient, than most NHS providers.
Second, Mr Wheeler’s reasoning misses the deeper point: that the ISTC programme was far from just about capacity, more about stimulating a supplier market in electives. The fact that a second wave of ISTCs was to be introduced – as well as those ISTCs currently in place – acted as a real spur for the NHS to cut waiting times; it is very likely to be a large part of the reason why this upping of the game Mr Wheeler talks about has happened. So, for one, cutting the contracts sends completely the wrong signals to the NHS; it’s fine, you get to 18 weeks and we’re happy.
But it also sends completely the wrong signals to the independent providers; Mr Wheeler says this is all about creating a ‘vibrant market’ for electives, that the whole dynamic of patient choice will overtake the centrally commissioned approach currently taken to ISTCs, that they will want to establish themselves independently in response to patient demand. The contracts are, in this sense, no longer necessary.
But while this must be the ultimate aim, we should also remember that this market is very fragile; in fact, it’s not really a market at all yet. Very few patients are yet exercising choice, GPs are still very resistant to the idea, and NHS providers still maintain a virtual monopoly. While this stays true, cutting the very contracts that promise to help change this is not a particularly clever idea per se, but even less so if an independent review says they would actually have provided value for money – something the ONS has made patently clear that the NHS and the DH are not particularly good at achieving.