Care UK chief hits out at renewal process as ITC contracts expire

Posted on January 21, 2010. Filed under: ISTC, News stories, Providers | Tags: , , , , |

Health Service Journal | 21 JANUARY 2010 | BY ALISON MOORE

The process for renewing contracts for the first independent treatment centres has been described as a “pig’s ear” by the chief executive of the largest independent provider in that sector.

Ten of the “first wave” contracts are due to expire in the next six months – with the general election expected midway through that period – and the future of many of the centres is uncertain.

At least one, the Kidderminster treatment centre in Worcestershire, is likely to close its doors. The centre will return to NHS use from next month, although the team running it plans to continue doing NHS work at a local independent hospital.

The future of the Greater Manchester surgical centre hangs on whether owner Trafford Healthcare Trust decides to use the site itself or to rent it out.

Many of the others are likely to continue but will offer treatment at tariff through patient choice, rather than through a block contract.

The firms running the centres have been told they have to go through a tender process to rent the buildings from the NHS – leading to uncertainty for staff and patients.

Mike Parish, chief executive of Care UK, which operates two sites coming up for renewal, said this had led to a “pig’s ear of a process”, with firms being offered short term contract extensions at the last minute because primary care trusts still had the contracts out to tender.

At the Barlborough centre in Chesterfield, run by Care UK, staff had to be formally told they were at risk of redundancy – only for managers to hear the next day that its contract had been extended.

“We have gone absolutely to the precipice with Barlborough,” said Mr Parish. “We have now agreed a short term tenancy with the PCT to give them an extra three or six months to sort out the lease.”

Several PCTs are at an early stage in inviting tenders for their sites. Lincolnshire PCT does not expect a new contract to come into force at its Gainsborough site until next year, according to tender documents. Many new leases will be for only three years, so PCTs and centre operators may have to repeat the process in 2013.

Mr Parish said independent centre operators had expected to switch to payment at tariff for any patients they could attract at the end of the original five year contracts, which offered guaranteed payments regardless of the number of patients treated.

But they learnt a few months ago that if their premises were owned by the NHS, as most are, they would have to go through a tendering process in order to continue to use them. Operators will pay market rent for the sites in future.

“The Department of Health, in its wisdom, decided that there would be some sort of procurement process for the leases,” he said. “It does seem odd that we have to go through a tender process to continue operating hospitals that we have operated for the last five years while NHS hospitals don’t.”

Care UK hit the headlines last week after reports its chairman had made a £21,000 donation to shadow health secretary Andrew Lansley’s office.

Health secretary Andy Burnham wrote to Mr Lansley questioning whether it was acceptable for a shadow minister

to “accept private donations from companies that have a vested interest in their policy areas”.

A Conservative spokesman said the donation was “fully within the rules”.

Independent provider Ramsay said it “understands the need” for a tendering process but some contracts may have extensions to allow this to be concluded.

The Department of Health said it announced in July that there would be a competitive tendering process where the NHS had identified a continuing need for services. It added there has been “an ongoing dialogue” between providers, the local NHS and the DH in each area.

Care UK and Ramsay may apply to run centres they do not operate at present, and Netcare – which runs the Greater Manchester centre – says it will consider case-by-case bidding.

NHS Partners Network director David Worskett was critical of the delay in resolving the contracts.

In some cases, operators will be paid at tariff but are being given “activity plans” by PCTs – an indication of the level of work they will be doing, which should help manage cash flow.

In others, PCTs say they now have sufficient capacity in the local healthcare system but they are willing to lease premises if the independent contractors take the risk of attracting sufficient patients.

The centres will also no longer be bound by “additionality” rules, which prevented NHS clinicians working in them and often forced them to recruit clinical staff from abroad.

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NHS spending and the role of the private sector

Posted on December 21, 2009. Filed under: ISTC, Press/News Releases | Tags: |

British Medical Association | Media Centre | 21 December 2009

Note: This paper is intended as background information for the media. It is not intended as a comprehensive BMA policy briefing paper.


Funding for the NHS in England is expected to come under pressure after 2011, and there may be real term reductions in spending on health. The BMA understands the need for efficiency, but believes that the focus should be on cutting the waste resulting from commercial provision of NHS services, rather than on cuts to frontline care.

The following paper lists reports of money wasted as a result of market-driven reforms in the NHS.

Private Finance Initiative (PFI)

Under the Private Finance Initiative, the private sector has been contracted to provide new hospitals and other infrastructure and then lease them back to the state for 25 or 30 years.

A 2007 report from the Association of Chartered Certified Accountants stated ‘Unlike capital charges from non-PFI hospitals, the charges raised against PFI schemes represent revenue paid to private consortia and lost from the NHS. More schemes will eventually ensure that more money leaves the NHS in this way. In 2004, it was estimated that capital charges from PFI schemes were costing the taxpayer £125m per year.’

The 2008 National Audit Office report,Making Changes in Operational PFI Projects stated that ‘An estimated £180 million was paid by public authorities to PFI contactors to undertake [contractual] changes in 2006.

According to a report in the Daily Telegraph, ‘during the spending review period in 2011-2014, PFI repayments will rise to £4.18 billion – an increase of over £1 billion at current levels. The inflexibility of PFI contracts means that it is more likely that hospitals will make cuts to services to meet their PFI repayments’. (Hospital to cut services to pay for £60bn private finance deal Daily Telegraph, 8 August 2009)

– According to the Economist, ‘the Treasury recently established a unit to lend money to PFI projects that were experiencing difficulty in securing funds through the banks. In effect, public money is being used to prop up PFI projects’. (The Economist, print edition, 7 February 2009)

– Research (published June 2009) carried out by Dr Chris Edwards of the University of East Anglia looked at one of the first PFI contracts agreed for Norfolk and Norwich University hospital (NNUH) and concluded that:

– £217 million could be saved if the contract were bought out from the private company that originally financed the deal.

– £2.4 billion could be saved on buying out the contracts of 53 PFI hospitals, assuming the same saving as NNUH (however, each hospital would have to be looked at in detail individually).

– According to a BBC News report, ‘the University Hospitals of Leicester NHS Trust scrapped its PFI scheme due to spiralling costs. £23 million of public money had been wasted on initial preparations’. Hospitals scrap revamp plan, BBC News Online, 20 July 2007

– According to a Times report in 2008, ‘HSBC made almost £100million from managing National Health Service hospitals where contractors charge taxpayers inflated bills for simple tasks, such as £210 to fit an electrical socket. The charges, paid at hospitals run by the bank’s subsidiary infrastructure company, raise questions about lax controls in Labour’s private finance initiative’. Hospitals run by HSBC, Times Online, 8 June 2008

Independent Sector Treatment Centres (ISTCs)

Independent Sector Treatment Centres (ISTCs) are owned and run by the private sector, but contracted to provide NHS treatment. They typically carry out large volumes of supposedly simple surgical procedures such as hip replacements. The BMA is concerned that ISTCs are receiving millions of pounds for work which is not being carried out and still being paid, as their income is guaranteed. This means more money is being paid into the private sector for less work than the NHS was promised.

Information provided by the Department of Health to the Health Select Committee showed that across the first wave of ISTCs the cost of work carried out was 12% more expensive than the same work carried out by the NHS.

According to a report in the Health Service Journal ‘more than three years after opening, the Greater Manchester surgical centre has still delivered only 63 per cent of contracted value’. ISTCs: Where are all the patients? HSJ, 18 Sep, 2008

Research published in the British Medical Journal on 30 April 2009 by academics at the Centre for International Public Health Policy at the University of Edinburgh found that in the first 13 months after the Scottish Regional Treatment Centre (SRTC) began accepting patients it carried out work worth only 18% of its £5.6m annual contract for referrals. They found that:

– there was ‘no evidence’ to support claims that the centre was ‘efficient or good value for money’.

– the contract reporting requirements did not conform to NHS standards.

– Scottish health boards may have overpaid up to £3 million in the first year of the contract

– if the same findings apply in England then as much as £927 million or almost two thirds of the total first wave contracts worth £1.54 billion might have been overpaid to ISTCs.

Management consultants

The BMA believes NHS trusts are spending too much money on management consultants, often to help them with the burdens created by the development of the internal market.

The Royal College of Nursing has estimated that NHS trusts in England spent £350 million in the last financial year on external management consultants.

Figures recently published by the Department of Health in response to a Freedom of Information request, show departmental spending on consultancy projects for DH itself comes to over £125 million for 2008/09. Costs for the three previous years came to:

£132m in 2007- 2008
£205m in 2006- 2007
£133m in 2005 – 2006

2009 report from the Management Consultancies Association estimated spending on management consultancy to the wider NHS for 2008 was £300 million.

A 2009 investigation by Pulse magazine found PCT spending on management consultants has more than tripled in the past two years. It analysed figures from 62 PCTs obtained under the Freedom of Information Act, and found:

– Each PCT is now spending an average of £1.217m on external companies: up from £361,000 since 2006-2007.

– The cost of legal and professional fees has also risen dramatically bringing the total paid to external companies to an average of £1.568m per PCT.

– NHS Tower Hamlets, hailed by ministers as a trailblazing PCT, reported the heaviest use of external consultants. It spent £5.682m on various projects in 2008, an eightfold increase since 2006-2007. Pulse, 20 May 2009

For further details about the BMA’s campaign visit Look after our NHS

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Private provision of NHS services under threat

Posted on December 2, 2009. Filed under: GP-led health centres, ISTC, News stories, Providers | Tags: , , , |

The Guardian | By Owen Bowcott | 2 December 2009

The government has reignited the political debate about private healthcare companies delivering NHS treatment.

Private companies could find they are not the preferred option for delivering NHS treatments. Photograph: Graham Turner

On a spotless hospital ward pensioners displaying fresh bandages were delighted their knees and hips had just been replaced by the NHS. The surgery had been as good as going private, they declared. Which was what, in fact, it was.

Their confusion was understandable. The sign at the door reads North East London NHS treatment centre. The unit may be based in the same complex as the local NHS King George hospital in Ilford, Essex, and free at the point of delivery, but it is an independent sector treatment centre (ISTC) – a commercial venture, with the surgery provided by private company Care UK.

The mix of private and public healthcare providers within the NHS means that it is hard to disentangle one sector from another. Senior consultants at the ISTC have contracts to work in both the adjoining hospital and the treatment centre; other staff are on loan from the NHS. No private patients are treated. Soon, medical students will be training in Care UK’s facilities.

Blairite triumph

The health market has been presented as a triumph of Blairite politics, enabling internal competition to spur on progress towards improved standards, say its supporters. The health secretary, Andy Burnham, this autumn endorsed that settlement, though, in almost the same breath, he inadvertently helped to destabilise it. “With quality at its core … the NHS can finally move beyond the polarising debates of the last decade over private or public sector provision,” he told health thinktank the King’s Fund – before adding: “Where I stand in this debate … is that the NHS is our preferred provider.”

Labour’s pronouncements since then on patients’ rights, and what is known as the “private patient cap” – the percentage of private treatments that hospitals are permitted to carry out – have set political compasses spinning. While the private/public divide has not been a significant battleground between Labour and the Conservatives in recent years, competitive tendering processes and residual ideological suspicions are now reviving the dormant row.

Burnham’s promise that the NHS should be the “preferred provider” has been interpreted by the private sector as a snub, and by health unions as a signal of Brownite support for traditional Labour values.

Few are clear what “preferred provider” means. The Department of Health attempted unsuccessfully last week to explain by asserting that: “Where existing NHS services are delivering a good standard of care for patients, there is no need to look to the market.” It then qualified the position, explaining that: “Where [NHS] primary care trusts are commissioning new services, then we expect them to engage with a range of potential providers before deciding whether to issue an open tender. These decisions will be made locally, and we will not choose to exclude either NHS or private providers on grounds of ideology – quality and what is best for patients must always come first. This could well mean more private provision, not less.”

Mike Parish, chief executive of Care UK, initially dismissed Burnham’s phrase as merely a political “rebalancing act”. Since then he has become more anxious about its impact. “People have taken that original good intention and presented it as something much more substantive,” he says. “Across primary care trusts there are people who are enthusiasts in terms of reform and others who are uncomfortable with any concept of plurality. This [statement] could take things in a direction that was never intended. There’s a risk of a runaway horse. We are already seeing tenders being issued for the redesign of services with the invitation going exclusively to NHS providers only. It not only constrains the options for PCTs and patients, it’s also certainly anti-competitive. I don’t know if it’s even permissible.”

Parish estimates that 6% of all NHS work is currently carried out by private firms including Spire Healthcare and UnitedHealth UK. Care UK runs a further nine ISTCs, urgent care centres in Luton, and healthcare services in Brixton prison. The company is considering bidding for what would be the first privately run NHS district general hospital at Hinchingbrooke in Huntingdon. Parish fears the “preferred provider” publicity will blight his chances. He is proud of the firm’s very high patient satisfaction rates and its clinical record in the NHS of no cases of MRSA infections.

Landmark battle

Care UK has, however, just lost one landmark battle. Awarded the tender to provide a GP-led health centre by Camden PCT in north London, it had to abandon the contract last month when anti-privatisation campaigners won a judgment in the high court that forced the trust to go back and ask the public whether the area actually needs a GP-led health centre.

The government’s decision to review the private patient cap – while instructing Labour peers to vote down a proposal raising the minimum permissible level of private work to at least 1.5% of treatments in all NHS foundation trusts – has also helped to reignite the issue of private sector involvement in the NHS.

Sue Slipman, director of the NHS Foundation Trust Network, says trusts want to raise the cap, not in order to treat private patients but “because they want to go into joint ventures to bring in money to their hospitals and support expansion of NHS provisions”.

Burnham’s announcement that in future patients will be legally entitled to free private care if not treated by the NHS within 18 weeks has added a further twist to the debate. The British Medical Association is concerned that this will lead to more NHS work going to private providers, with destabilising effects on hard-pressed NHS services.

Back at the North East London treatment centre, the relieved patients were not perturbed about the origins of their free NHS surgery. Instead, they were looking forward to going home quickly.

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NHS London suspends private care service

Posted on November 19, 2009. Filed under: ISTC, Journals, News stories |

Health Service Journal | By Clare Lomas | 19 November 2009

Out of hospital services run by the independent company Clinicenta have been suspended by NHS London following concerns over the company’s performance.

The strategic health authority is now conducting an investigation into the services provided by Clinicenta in 20 north London boroughs.

A spokesperson for NHS London said the decision to suspend the services was made following “a number of performance issues and incidents prior to the death of a patient”.

“Our first priority is patient safety and this decision has been taken as a precautionary measure while NHS London conducts a full investigation into the concerns that have been raised,” he said.

All patients currently being treated by Clinicenta are having their care transferred back to an NHS provider, and no new referrals for treatment are being accepted.  

Private health scheme suspended

BBC | 18 November 2009

A scheme which provides private health care on the NHS has been suspended following the death of a patient.

NHS London, the strategic health authority for the capital, has begun an investigation into the fatality and some other incidents.

The out-of-hospital services are run by Clinicenta in 20 boroughs across north London.

The company said it was co-operating fully with the NHS London investigation.

£144m contract

A spokesman for NHS London said: “Our first priority is patient safety and this decision has been taken as a precautionary measure while NHS London conducts a full investigation into the concerns that have been raised.”

About 51 patients currently being treated by Clinicenta are being transferred back into NHS-run clinics and no new referrals for treatment are being accepted.

Clinicenta had been awarded the Independent Sector Treatment Centre (ISTC) contract eight months ago.

As well as the day surgery centres, it includes some services carried out in GP surgeries and patients’ own homes.

A spokesman for the company said: “We are aware that NHS London has concerns and we will co-operate fully with the investigation.”

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Independent sector treatment centres

Posted on October 9, 2009. Filed under: ISTC, Reports/papers | Tags: |

The King’s Fund | Author: Chris Naylor, Sarah Gregory | Published 1 October 2009 | accessed 9 October 2009

Independent sector treatment centres (ISTCs) provide services to NHS patients but are owned and run by organisations outside the NHS. This briefing paper explains why ISTCs were introduced, and how they are funded, staffed and regulated. It assesses their impact so far, including the quality of their services and whether they provide good value for money. Finally, it examines what their future may be now that the contracts ISTC providers hold with the Department of Health are beginning to expire.

2441_ISTC_Briefing-1 Independent Sector Treatment Centre (pdf)

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The NHS is about care, not markets

Posted on September 3, 2009. Filed under: ISTC, News stories | Tags: , |

Guardian | Comment is free | By Allyson Pollock | 3 September 2009

Downsizing the workforce is a business response to loss of profit – but it doesn’t account for the NHS goal of universal healthcare

The core goal of universal healthcare and services planned on the basis of need and not ability to pay is being jettisoned by the turnaround teams and management teams brought in to manage anticipated reductions in NHS budgets. Downsizing the workforce is a traditional response of business to loss of profit where businesses have to pay the costs of operating in a market and earn surpluses for shareholders. Unlike Scotland and Wales, the NHS in England is continuing to pursue market-oriented healthcare in its reform of the NHS. So it should be no surprise that management consultants firm McKinsey have come up with market-oriented solutions to anticipated budgetary shorfalls. They have advised ministers to cut 10% of the NHS workforce in England by 2014, a reduction that will affect services provided primarily to the old and the poor who have among the highest healthcare needs. But strategies to reduce the NHS budget need to pay attention to the role of market structures and how they reduce the ability of the NHS to pool the risks and costs of care across its population.

The diversion of health spending from patient care to paying for a market are not apparently McKinsey’s concern. Take for example the costs of the new market bureaucracy; for more than 40 years administration costs were in the order of 6% of the total budget a year, they doubled overnight to 12% in 1991 with the introduction of the internal market. We have no data today for England, but what we know from the US is that the introduction of for-profit providers increases administrative costs to the order of 30% or more.

So why hasn’t McKinsey advocated making savings along the lines of Scotland and Wales by reintegrating trusts into area-based planning structures and thereby abolishing billing, invoicing, the enormous finance departments, marketing budgets and management consultants, lawyers, commercial contracts? In this way one could project savings of anything from £6-24bn a year for England.

A second set of savings would be the high costs of PFI where the taxpayer, having bailed out the banks, is now paying almost twice as much as it should for some PFI hospitals through high rates of interest and returns to shareholders. The total money raised from private finance so far is £12.27bn but the NHS will pay out £41.4bn for the availability of buildings and a total of £70bn over the life of the contracts. The irony is that the patient and the public are rebuilding the banks’ balance sheets using scarce NHS funds intended for patient care and staff, especially in community-based services.

A third saving could be made by cancelling the contracts for the £5bn ISTCs programme – research in Scotland extrapolated to England has shown as much as £1bn has been wasted by giving money to for-profit ISTCs for work that was not carried out in the first wave.

Then there are all the other contracted out services including the pharmaceutical bill of £14bn. Are these contracted out elements part of the McKinsey scrutiny? It is doubtful since the company travels the world advocating market solutions.

And here we run up against the fundamental problem of retaining marketeers to advise on healthcare. Markets mean reducing the capacity of the NHS to pool the costs of care across the whole service, substituting instead hospitals, clinics and practices that have to pay their way like businesses and, like businesses, can fail. Needs-based planning, once the hallmark of the NHS in England, is being replaced by strategies to deal with artificially created market failure.

Solutions are sought from outside consultants and turnaround teams using unsubstantiated assertions that the NHS is inefficient and can increase productivity. What the selective use of data and evidence mask is the failure to view the system as a whole and to remember that its core goal is universal healthcare, not concocted operating surpluses.

In contrast to Wales and Scotland, England has established hospitals and services as competing trusts or firms operating in a market; competition has replaced the mechanisms which enabled health authorities to monitor and respond and direct resources to the needs of the populations that are being served. But markets create winners and losers – and the unpublished McKinsey report is an attempt at refereeing.

The moral is that if the Department of Health in England commissions private management consultants that derive their profits from markets you will get market solutions. It is the commissioning, not McKinsey’s report itself, that should give offence.

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Bids are invited over Leeds fatal op health centre

Posted on August 18, 2009. Filed under: ISTC, News stories, Press/News Releases | Tags: |

Yorkshire Evening Post | By Katie Baldwin | 18 August 2009

PRIVATE firms and NHS bodies have been invited to bid to run a medical centre which treats thousands of Leeds patients.

The contract to run Eccleshill NHS Treatment Centre, right, where an operation on a Leeds lecturer went fatally wrong in 2007, ends next February.

The facility, near Bradford, is operated by private firm Nations Healthcare and health bosses have now started work to re-award the contract. It could potentially go to the same company, another firm or an NHS provider.

Eccleshill was one of the first independent treatment centres to open under a Government scheme.

Designed to cut waiting lists for routine procedures and diagnostic tests, the centres provide free treatment under the NHS but can be run by private companies.

Eccleshill opened in 2005 and carries out thousands of day case operations on patients from Leeds and Bradford.

A spokeswoman for NHS Bradford and Airedale, which is running the process, said: “The tender process began this month and we intend to appoint a provider in early 2010. The ongoing provision of patient care is paramount and we are currently finalising arrangements to ensure service continuity so that there is no disruption to patients.”

Its contract is the first in the country to come up for renewal and under changes recently announced by the Government, will be on the same terms as other NHS services. The contracts for all Independent Sector Treatment Centres (ISTCs) are due to be reviewed and in future, will be paid under the same arrangements as elsewhere in the NHS.

In 2006 the Eccleshill centre ran into controversy when the YEP revealed it had been paid for operations it had not carried out, after which managers promised to fulfil the contract. 

It was further embroiled in controversy following the death of Dr John Hubley in 2007, who died after suffering “torrential bleeding” during keyhole gallbladder surgery.

At an inquest last November, West Yorkshire deputy coroner Paul Marks decided the 58-year-old’s death was caused by “misadventure aggravated by neglect”.

A spokesman for Circle, which took over Nations Healthcare in July 2007, confirmed the firm was bidding to continue to run Eccleshill.

He said: “We are absolutely committed to the health of the local community and are pouring everything we have into the renewal tender process.”

Nations Healthcare 

Nations Healthcare is part of Europe’s largest healthcare partnership, Circle. We specialise in providing high quality day case procedures, medical treatment, and outpatient consultations to patients in the UK.

Nations Healthcare delivers high quality patient care at our Treatment Centres – based on three fundamental principles:

  • Providing you with a healthcare experience that is comfortable and respectful of your needs and views on how you want to be treated.
  • Giving you fast access to your outpatient appointment, diagnostic test or surgical procedure in a modern, purpose-built facility.
  • Using highly qualified and trained teams of clinical and support staff to ensure that you receive high quality care.

Working with the NHS

Nations Healthcare Treatment Centres are part of the government initiative to provide modern state-of-the-art facilities equipped with the latest technology. We deliver our services on behalf of the NHS, for NHS patients, in several locations.

Click one of our Treatment Centres to learn more about the care you can expect at each of our Treatment Centres.

About us

Nations Healthcare is an independent company dedicated to creating the best ambulatory care and inpatient centres, and developing clinical practice and a clinical environment where an increasing range of procedures can be treated safely and effectively through day treatment. The Nations Healthcare model is developed in line with international best practice standards providing an innovative and proven effective approach to its service delivery.

The company has its origins in a consortium of international world-class, leading edge organisations. Nations Healthcare brings their experience, state of the art capability and innovation together to offer the best treatment to our patients in 21st century facilities.

In the competitive UK market, Nations Healthcare has been successful in winning prestigious contracts in Bradford, Burton-on-Trent and Nottingham, becoming one of the foremost companies in its field. The development at the Queens Medical Centre in Nottingham is the largest Independent Sector Treatment Centre (ISTC) scheme in the country.

In all ISTC schemes, Nations Healthcare works in close partnership with local health communities to ensure the development of integrated approaches putting the patient at the centre and providing seamless services. The company contributes to clinical networks, supports the training and education of future healthcare professionals and works within the framework of the UK Government policy and major projects such as the National Programme for IT.

Nations Healthcare provides services commissioned by NHS Primary Care Trusts and offers a choice of private provision to patients. The company commitment to high quality ensures that everyone is treated in the same way no matter how care is funded.

Our Treatment Centres

Nations Healthcare runs three Treatment Centres. Click on the links below for more information.

  • Eccleshill NHS Treatment Centre
  • Midlands NHS Treatment Centre
  • Nottingham NHS Treatment Centre
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    ISTCs: Are they cost effective?

    Posted on August 5, 2009. Filed under: ISTC, News stories |

    OnMedica Views | Alan Maynard, professor of health economics, York | 5 August 2009

    Initially the Blair government wanted about 15% of elective care to bepublic_private provided by Independent Sector Treatment Centres (ISTCs). About half this capacity has been commissioned and starting in 2010 the contracts for over 30 units will come up for renewal.

    The initial rationale of ISTCs was the hope that they would act as a catalyst for the “inefficient” NHS to improve productivity and reduce waiting times. Inherent in this argument was the notion that elective and acute hospital work could be separated and that specialised ISTCs would be able to be more efficient providers of elective care than multi-product NHS hospitals.

    The initial contracts offered to private providers guaranteed volumes and reimbursement at tariffs plus 15%. A combination of weak PCTs and slow GPs failed to refer sufficient volumes of patients in the early years and as a consequence ISTCs were paid even though they did not provide contracted volumes.

    Their reimbursement at tariff plus was also problematic. Unsurprisingly ISTCs cream skim i.e. they avoid the complex cases and hip revisions and take those patients who can be quickly processed thereby yielding a nice surplus of tariff over cost.

    This cream skimming means that any complications are dealt with by transfers to the local NHS, who also treat those patients who may be only marginally profitable. Furthermore because of trauma and emergency obligations, NHS hospitals have to retain orthopaedic capacity even if most of the required local activity is dealt with in ISTCs.

    The evaluation of ISTCs is noticeable by its absence which means that the evidence base for recontracting in 2010 is absent. Efforts by researchers at York to analyse ISTC activity for the Department of Health has been hampered by their failure to submit data. NHS hospitals produce timely data as reimbursement by PbR is dependent on PCTs receiving activity data. With ISTCs guaranteed activity volumes in their contracts the incentive to submit data was weak and thus activity analysis has been problematic. It is sad that the Department of Health and the NHS did not see fit to rectify this poor data reporting in a timely manner.

    ISTCs cream skim and generally appear to have lower lengths of stay. However there is no cost data to compare them with NHS providers even if there were appropriate comparators in the public sector with such largely straight forward patient mixes. Consequently is no relative cost data to inform commissioning.

    ISTCs are nice examples of experimentation without evaluation. This faith based approach to health care reform enables the competing political factions to declare their policies a success if it suits their manifesto needs. As we approach the election, the initial contracts are expiring and government is considering how to manage the next phase of ISTC development.

    The 2010 commissioning of ISTCs is being managed by PCTs, organisations whose evidenced success as purchasers is noticeable by its absence! For local providers the choices are whether to compete with the private owners of ISTCs, to collaborate with them or to ignore them. It is unclear to whatextent the current government will accept NHS provider take over of local ISTCs.

    The Conservative Opposition has indicated that if elected they would regard PbR tariffs as maximum prices and PCTs would be expected to negotiate these downwards. The current government is telling PCTs that they must contract with ISTCs at PbR tariffs i.e. there is no local discretion to reduce prices for elective care. Fixed prices go uncomfortably with Labour rhetoric about wishing to use competition to catalyse change and improved productivity in the NHS. Flexible prices in the future with the Tories may mean the private sector is protected if it is given five year fixed tariffs before the election in 2010.

    Not only should there be debate about the reimbursement arrangements, there also needs to be greater transparency not only in relation to activity and relative cost, but also in relation to safety and patient reported outcome measurement (PROMs).Only with systematic analysis and management of such data can relative performance in terms of cost, activity and outcome be identified.

    It is impossible to identify the relative cost effectiveness of the ISTC reform let alone the relative performance of the competing private providers. This does not facilitate the forthcoming recontracting and offers neither patients nor taxpayers protection of their wealth and health!

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    Private firms to compete on same terms as NHS providers

    Posted on August 4, 2009. Filed under: ISTC, News stories |

    Healthcare Republic | 4 August 2009

    Private companies will in future have to compete on the same terms as other NHS providers, ministers have announced.

    In the past the contracts to run Independent Sector Treatment Centres (ISTCs) have included income guarantees, in order to limit the risk to the companies running them.

    This has often resulted in companies being paid for work that was never actually done.

    But last week health minister Mike O’Brien said that any future ISTCs would be paid at the same rates and under the same contracts as existing NHS hospitals.

    It will be up to PCTs to decide whether to renew existing ISTC contracts, under the new terms.

    Dr Hamish Meldrum, chairman of the BMA Council, welcomed the announcement. But he added, ‘‘It’s a shame it’s taken so long to get an acknowledgement that skewing the playing field in favour of private companies has been unfair and wasteful.’

    Up to 16 ISTCs could close when their contracts run out next year.

    Guarantees written into the contract will force the NHS to buy back their buildings at a cost of up to £200 million, the DoH has admitted.

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    Future of Independent Sector Treatment Centres

    Posted on July 30, 2009. Filed under: ISTC, Press/News Releases |

    Department of Health | News Distribution Service | 30 July 2009

    The future use of Independent Sector Treatment Centres (ISTCs) in the NHS, will be fairer and on the same terms as other providers of NHS services, Health Minister Mike O’Brien announced today.

    Under the changes set out today, each contract will be reviewed on a case-by-case basis and new services will be commissioned by the local Primary Care Trust where they are designed to meet local needs, provide value for money and benefit patients in that community.  Primary Care Trusts are already responsible for procuring a broad range of services from NHS and independent sector providers on behalf of local patients.

    In future, contracts to provide services from these treatment centres will also be paid under the same pricing arrangements as NHS providers. Services will be delivered under the terms and conditions of the standard NHS national contract for acute hospital services – the same contract used by NHS providers.

    Where the NHS identifies an ongoing need for services, there will be a competitive tendering process and bidders, including those from the independent sector, will be invited to deliver services at NHS tariff prices.

    Health Minister, Mike O’Brien said:

    “We need providers of NHS services, to deliver safe and high quality care for patients and value for money, but there should also be consistency in pricing and contracts. In the past the Independent Sector have sometimes been guaranteed payments. In the future it is intended that contracts will operate at NHS tariff prices using the standard NHS contract for hospital services.

    “Where independent sector providers offer value for money, innovation and high quality patient care, they have a role to play within the NHS.

    Independent Sector Treatment Centres have helped patients by increasing choice and capacity, and reducing waiting times.

    “Greater local control and day-to-day management will ensure these services are better integrated in to the local health system and reflect local needs.”

    The first wave of contracts are due to end from 2010.  Both independent sector and NHS providers will be eligible to bid for the new contracts, which will be commissioned locally by the NHS, rather than by the Department of Health.

    Independent Sector Treatment Centres (ISTCs) have helped improve health services for patients, reduce waiting times and improve patient choice in the NHS. More than 1.7 million operations, diagnostic assessments and primary care consultations have been provided to NHS patients at ISTCs. ISTCs have pioneered innovative approaches that have delivered improvements for patients in access to services and quality of care, such as fixed site treatment centres typically specialising in a range of elective procedures and mobile diagnostic services to NHS patients in locations close to their home.


    NDS Enquiries
    Phone: For enquiries please contact the above department

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    NHS to become a landlord for private treatment centres

    Posted on July 30, 2009. Filed under: ISTC, Journals |

    Health Service Journal | BY SALLY GAINSBURY | 30 July 2009

    The buildings and facilities of up to 16 independent sector treatment centres will need to be bought by the NHS over the next two years at a capital cost estimated at £200m, the Department of Health has confirmed. 1205215_hospital_patient_safety

    The £200m cost relates to the so-called “residual value guarantees” that were built into the first wave of the ISTC programme contracts in order to minimise the risk to the private sector of taking on five year contracts to treat and diagnose elective patients.

    The guarantees – which were made in addition to guarantees around the volume of work the centres would receive – require the NHS to buy back the remaining capital assets of the centres at their capital value at the point at which the contracts expire. The latest estimate given by the DH is £200m.

    The first contracts are due to expire at the end of the current financial year. The most expensive buy-backs are likely to be for the schemes in Nottingham – which the DH last year estimated would cost £41.4m – and the scheme in Cheshire and Merseyside, which the DH valued at £33.3m.

    The DH has said the question of who pays that cost – the department or the local primary care trust – differs between contracts.

    In a statement issued today, the DH said contracts would be renewed on a case-by-case basis. If they are renewed, ISTCs will be paid “under the same pricing arrangements as NHS providers”.

    Health minister Mike O’Brien said there should “be consistency in pricing and contracts”, adding: “In the past the independent sector have sometimes been guaranteed payments. In the future it is intended that contracts will operate at NHS tariff prices using the standard NHS contract for hospital services.”

    Where contracts are renewed, the NHS is now expected to act like a landlord to the private sector, which will lease the facilities.

    Director of the NHS Partners Network David Worskett told HSJ that got around the expected problem the private sector would have in refinancing their investments in the current banking crisis.

    “If they had to refinance the buildings that might have been a problem in the current climate,” he said. “But now they won’t have to because they will move onto a leasehold basis. The NHS will become the landlord.”

    He added that the private sector supported the move to standard contracts but objected to the implication the wave one guarantees were “unfair”. “That view shows pretty short term institutional memory,” he said. Volume and capital guarantees were necessary to compensate for “a whole list of pensions and other overheads which in the rest of the NHS is picked up by the Treasury and Richmond House”.

    He acknowledged the NHS had its own additional costs – doctor training and more complicated patients are the most frequently cited – but he said it “should not be beyond the wit of man in the DH to sort this out” so that transparent and fair prices could be established between the NHS and private sector.

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    Private patients ‘have full NHS rights’

    Posted on July 28, 2009. Filed under: ISTC, Journals |

    Health Service Journal | 28 July 2009

    Private patients have full rights to NHS critical care treatment if required, according to a newly ratified protocol.

    The agreement was signed by the Independent Healthcare Advisory Services, Department of Health, Intensive Care Society and National Critical Care Stakeholder Forum.

    It reiterates the underlying right to free NHS treatment contained in the 1977 NHS Act, which covers patients who are initially treated privately.

    The document says that where a patient is transferred from a private provider to an NHS trust, a charge will be made to the hospital or treatment centre for the transfer by the NHS trust.

    “It will be the responsibility of the hospital or treatment centre to make provision for payment. A separate charge may be made by the consultant intensivist or consultant responsible for stabilisation and transfer.”

    Each independent hospital or independent sector treatment centre must have a written transfer agreement in place with a specific NHS trust for both adult and paediatric transfers.

    After NHS treatment, patients can be transferred back to the independent sector with their approval, as long as the appropriate level of care can be provided.

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    The ‘patchwork privatisation’ of our health service: a users’ guide

    Posted on June 10, 2009. Filed under: GP-led health centres, ISTC, LIFT, Reports/papers, Social enterprise | Tags: , , |

    NHS Support Federation

    Executive summary

    • The government is carrying out the ‘patchwork privatisation’ of the NHS. For the first time, this report presents a comprehensive picture of the many kinds of privatisation occurring in the health service. It provides indisputable evidence that a process of privatisation is in train.

    • This is happening on such a scale and in so coordinated a way as to make it a unique phenomenon – the ‘patchwork privatisation’ of a major public concern.

    • Unlike the Thatcher privatisations of the 1980s, the entire NHS is not being put up for auction – but historically this is only one manifestation of privatisation. The deregulation of state monopolies, the outsourcing of state responsibilities and the cessation of services are the forms of privatisation we see in the NHS today.

    • The government is transforming the NHS from a comprehensive, equitable provider of healthcare into a tax-funded insurer, paying for care provided by others. What emerges will still be called the NHS, but it will take the form of a kite-mark attached to selected services.

    • The government argues that while the health service remains free at the point of need, funded from taxation, it is still public. However, access does not determine whether a service is public. ITV is free for all to watch, but is clearly different from the BBC. Neither does public funding automatically translate into public service status. There are examples of private ventures that are publicly funded.

    • The ‘patchwork privatisation’ of the NHS is deeply worrying because privatised healthcare tends to cost more; accountability suffers; the fog of ‘commercial confidentiality’ makes scrutinising public spending impossible; the profit motive encourages ‘cherry-picking’ of the lucrative work, ultimately leading to NHS services being cut.

    • The report presents an anatomy of NHS privatisation:

    Creating a market
    o ‘Patchwork privatisation’ is only possible because of the creation of a market. This process began with the purchaser/provider split introduced by the Conservatives, but has been greatly accelerated under Labour with the introduction of ‘choose and book’ and a new financial system – ‘payment by results’. The latter has been rolled out faster and further than in any comparable country, creating powerful incentives that will have unpredictable consequences.

    Privatisation in primary care
    o Privatising GP services – Huge multinational corporations are taking over GP surgeries. This process will have profound implications. There are already examples of continuity of care suffering where companies are unable to retain doctors.

    o Privatising the commissioning function of Primary Care Trusts – Takes privatisation into the heart of the NHS by giving the private sector a role in the decisions on what care patients can receive, determining to some extent how the NHS budget should be spent.

    o Practice-based commissioning – Transfers the buying power for purchasing many treatments from a public body with responsibility for the whole local population to practices accountable only for their registered patients. Increasingly these will be run by corporations that could dominate the market in any region and gain huge power over what kind of care patients receive and who provides it.

    o Outsourcing PCT care – The government wishes to see PCTs stop providing health care directly, instead contracting the private sector and social enterprises to provide services. This will increase administration costs and reduce flexibility.

    o Unbundling of primary care services – Primary care services are being broken up into saleable commodities in a process known as unbundling. The most high profile instance is out-of-hours GP care, where the private sector has performed poorly.

    Privatisation in secondary care
    o Independent Sector Treatment Centres (ISTCs) – ISTCs (private sector clinics usually specialising in straightforward procedures like cataract surgery) have not provided value for money, have made only a very modest contribution to cutting waiting lists and in many areas have seriously destabilised NHS hospitals causing service closures.

    o Privately run NHS hospitals – The fullest extension of the ISTC policy is the handing over of an entire hospital to the private sector as has happened at the Lymington New Forest Hospital. This is the first time a whole NHS hospital, including urgent care, is to be run by a private company, meaning local patients will have little choice but to use the private facility.

    o Off-shoring medical secretaries – NHS trusts are cutting trained medical secretaries in favour of cheaper services abroad, raising fears for safety.

    o Private ambulance services – Non-emergency ambulance services are being put out to tender. There are examples of serious problems where contracts have been awarded to the private sector.

    Privatisation in diagnostics
    o ICATS and CATS – Diagnostic and treatment centres that raise the prospect of conflicts of interest because of their ability to refer patients on for further care. One company, Netcare UK, has contracts for an ICATS and an ISTC in Manchester meaning it could refer patients to its own facilities.

    o Privatisation of pathology services – The government has signed large contracts with private sector companies for pathology and diagnostic tests, despite warnings of the dangers involved in fragmenting pathology services through privatisation

    Privatisation of NHS facilities
    o PFI – A vastly expensive way of building hospitals that is taking money away from frontline care. PFI has a direct effect on patient services, as the fixed costs are borne by the local NHS trust and have first call on the available money.

    o LIFT – Often referred to as the primary care version of PFI, LIFT projects are costing up to eight times more than traditional ways of building.

    o Subsidising private sector infrastructure – Department of Health guidance advises that the NHS could pay a “supplement… to cover the set-up or development costs faced by a new provider,” to “reduce the capital investment required” – i.e., supply the buildings.

    Privatisation in NHS supplies
    o Privatisation of NHS Logistics – The government outsourced NHS supplies to delivery firm DHL and its sub-contractor Novation, which will control over £4 billion of NHS money. Novation is being investigated in the US over bribery and defrauding American public health schemes.

    o Privatisation of oxygen supplies – The service supplying oxygen to patients with breathing difficulties was privatised in February 2006, resulting in chaos. One woman, Alice Broderick, died while waiting for an emergency delivery of oxygen that took nine hours to arrive.

    For full report click here

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    NHS overpaid independent sector treatment centres by £927m

    Posted on May 2, 2009. Filed under: ISTC, News stories |

    Healthcare Republic | 1 May 2009

    The NHS in England may have overpaid the first wave independent sector treatment centres (ISTCs) by £927m for clinical services, researchers warn.

    They call for a moratorium on all private contracts until the centres have been properly evaluated and investigated.

    The £5bn ISTC programme aims to provide extra capacity to the NHS and reduce waiting times for elective surgery.

    The researchers have based their estimate on detail of a Scottish contract they obtained under the Freedom of Information Act.

    They say that because the ISTC performed only 18% of the total annual contract value that Scottish health boards may have overpaid up to £3m in the first year of the contract. If the same findings apply in England, they estimate overpayment of £927m or almost two-thirds of the total first wave contracts.

    • Were ISTCs a waste of money?
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    Surgicentre contract signed after six years

    Posted on April 23, 2009. Filed under: ISTC, Journals, Providers | Tags: , |

    Health Services Journal | BY ALISON MOORE | 23 APRIL 2009

    An independent treatment centre that will treat up to 15,000 NHS patients a year has been given the go-ahead – six years after it was first proposed.

    Construction of the £31m surgicentre at the Lister Hospital in Stevenage, Hertfordshire, is expected to start within days and it will treat its first patients in April 2011.

    The centre, which will have staff seconded from East and North Hertfordshire trust, will take planned day case surgery and some short stay orthopaedic surgical patients, as well as outpatients. These services will be provided by Clinicentre – part of the Carillion group, which is also building the unit – under a five year £122m contract.

    Trust chief executive Nick Carver said: “By helping us to separate planned and emergency surgery, this exciting new facility should mean that our patients experience much shorter waiting times and fewer cancelled operations.”

    An independent treatment centre was proposed as part of a radical shake-up of services across Hertfordshire in 2003. Clinicentre was chosen as preferred bidder in 2005 but the final contract was only signed last week.

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    Independent sector providers (primary care)

    Posted on April 22, 2009. Filed under: ISTC | Tags: |

    Health Management Specialist Library | accessed 22 April 2009


    ‘3.43 We will ensure that both new and existing providers are allowed to provide services in underserved areas. Social enterprises, the voluntary sector and independent sector providers will all make valuable contributions in the longstanding challenge of addressing inequalities.’ (1)

    ‘Patients living in deprived areas should soon find it easier to get a doctor’s appointment following the launch of a Government drive to find extra GPs and nurses for those towns and cities with the fewest family doctors…

    ‘New services expected to open are extra family practices, walk-in centres and minor injuries units…The contracts for the new services will run for an initial five years, with the potential to extend for longer.

    ‘The ‘Fairness in Primary Care Procurement’ programme is expected to provide patients with better access to a family doctor and more choice of GP, including flexible opening hours and extended services, such as minor surgery…

    ‘Over the coming months, the department will work with further PCTs with the fewest GPs for their populations, as identified in the white paper, as well as other relatively under-doctored or Spearhead PCTs, to invite new providers to deliver extra local services.

    ‘The programme aims to attract a broad range of providers, from existing entrepreneurial GPs to social enterprises and corporate independent providers.’ (2)


    1. Our health, our care, our say: a new direction for community services. (Department of Health, 2006)

    2. More family doctor services for deprived areas. (Department of Health press release, 19 March 2007)


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