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News Analysis - Independent Sector Treatment Centres


We have before in Workers chronicled the ill-fated programme of so-called Independent Sector Treatment Centres. These are the institutions that the Government decided some years ago were necessary in order to reduce, and eventually eradicate, waiting lists for patients in the NHS. In practice they are private sector milch cows, owned often by foreign companies, but in all cases greedy for money and who have found a way, through this scheme, of free access to public funds.

These centres have a guaranteed contractual number of (standard, uncomplicated) operations to fill and get paid whether or not they do them. If that isn’t bad enough, they also obtain a guaranteed amount, usually 11 per cent, above the tariff, which is the amount NHS providers get paid under the internal market mechanism (Payment By Results) to undertake this work for the NHS. Although we have chronicled this over a period of time, the government has constantly said that the situation is improving. Is it?

The most recent figures available say that they have still only delivered 85 percent of their contracted value (up to the end of May 2008). That is an increase of just 1 per cent on the figure for September 2007. Because the NHS Primary Care Trusts have to pay the full contract value regardless of how many patients use the centres, this means that treatment centres are likely to have delivered less than 90 per cent of the work needed under their contracts from September to May. It now seems inevitable that the first wave of these centres will not deliver 100 per cent value over the five years of their contract. The King’s Fund recently predicted that by the end of the five year period of these contracts “the value delivered to the Health Service will be 10–15 per cent short”.

£220 million for doing nothing

These figures look disarmingly simple. Anything running at 90 per cent, you might think, is pretty efficient. Let’s look at the money involved. The first-wave ISTC programme cost a massive £1.5 billion. That means that if it runs at only 85 per cent capacity, its current figure, then this will mean that £220 million of the contract will be unused. In other words the private contractors will have pocketed £220 million (of an already inflated figure) for doing absolutely nothing at all. If the fact that they are being paid for work in excess of the NHS tariff is taken into account, then the total cost is around £350 million higher than paying an NHS unit for doing the same work. The number of clinical procedures originally planned to be carried out by ISTC was 1.25 million; it looks now that just over 700,000 will in fact be carried out.

So much for the efficiency of the private sector. So much for our needing to have the cutting edge of competition to improve our sluggish public services. A licence to print money would more accurately describe the ISTC programme.

In fact the situation might be even worse. The Greater Manchester Surgical Centre has to date only delivered 63 per cent of the contracted value, and that contract was originally costed at £86.1 million over five years. If usage carries on at the present level, then the NHS will, in this one ISTC alone, have paid nearly £332 million for work that has not been carried out.