At the Gloucestershire Health Debate (held on 18th May in Cheltenham), the private sector had representation on the panel in the form of Dr. Eduard Lotz, Executive Director of UK Specialist Hospitals South West. Dr. Lotz` area of responsibility includes the Shepton Mallet Treatment Centre which a recent report revealed has been paid almost £7 million of taxpayers’ money for operations it never performed.
This is a consequence of the very generous “take or pay” contracts, where the NHS allotted the private provider a set sum at the beginning of each year, in order to complete a fixed number of operations. Nationally, this and other features of the risk-free contracts enjoyed by the companies involved in the Independent (i.e. private) Sector Treatment Centres (ISTCs) have led to the squandering of £462m of taxpayers’ money (as revealed by a recent report from the Bureau of Investigative Journalism). This consists of £200m paying for operations that did not happen; more than £186m for “buying back” treatment centres at the end of contracts, and a compensation bill totalling almost £60m paid to companies when planned ISTCs were axed.
The full scale of the waste has only come to light as the contracts come to an end.
In their book, Confuse & Conceal: The NHS and Independent Sector Treatment Centres, Stewart Player and Colin Leys describe how there were already 16 NHS-run Treatment Centres in 2002, set up to try to tackle the enormous backlog of elective (i.e. non-emergency) surgery, when the government threw open the door to private sector bids. The political architect of the ISTC was Alan Milburn, the arch-Blairite who left the government the following year. Comparison of the truly NHS Centres with subsequent commercial ISTCs has never been allowed, an attempt by the House of Commons Health Committee, specifically directed in 2005 to review the performance of ISTCs was frustrated by “commercial confidentiality”.

ISTCs were also given indemnity from prosecution for negligence at little cost to themselves as they were granted Clinical Negligence Scheme for Trusts coverage paid for by the NHS.  By early 2007, all of the by now numerous ISTCs were confusingly allowed to call themselves NHS Treatment Centres.
None of this damning evidence was mentioned during the debate, instead, the audience was offered what can only be described as an advert for ISTCs, delivered by Dr Lotz in his less than perfect English, with Chair Branwen Jeffreys (the BBC`s Health Correspondent) acting as a stooge. If that sounds over the top, I offer this extract from the transcript as evidence:

Chair (Branwen Jeffreys):  “Dr.Lotz, you work in the private sector, but treating NHS patients, you have to be very focussed on the bottom line, while delivering quality for the NHS. Do you think there are things that the NHS could learn from the private sector – in terms of being more efficient – to face up to these challenges?”

Dr. Eduard Lotz  “Yes I definitely think so, I think through the private sector`s involvement now with the NHS in…over a number of years and more focussed over the last about 8 years there`s a number of efficiencies that has been introduced into the NHS”

“If you look at the amount of capacity that has been commissioned within the health environment over the past number of years and collate that to the waiting list that has gone down it has been proportionately come down much more than the amount of capacity that was introduced, as a general consensus”
  “If you look at for example…let`s use an opthalmology list, a standard NHS list a few years ago was 8 patients on a list”

Chair: “So 8 patients having their operation in one day”

Lotz: “in our programme we do on average 20 patients on a list. Once that was introduced the NHS local acute trust was very interested in the model how this was run”
 we work with them to experience how do you achieve a 20 patients on a list for eye surgery – and many trusts now achieve that”

Chair “So you think the NHS is now copying you, which is quite interesting – you`re working with them on that”

This exchange also failed to raise the issue of “cherry picking” where ISTCs have been found to be profiting from NHS funding by taking on less risky patients while being paid the same rate as publicly funded hospitals, according to a study of over 3.3 million patient records funded by the Department of Health. The study, which was conducted by the University of York and published in the journal Health Policy, found “evidence that hospitals are treating patients of greater complexity than treatment centres”. The authors add: “If these observed differences between hospitals and treatment centres drive costs, then payments should be refined to ensure fair reimbursement.”.
Another study by Allyson Pollock and Graham Kirkwood in the British Medical Journal (9 May 2009) found that in the first 13 months of operation only 32% of annual contract referrals to a Scottish ISTC were treated  (this was the only UK area where FOI requests yielded data).

But what of Dr. Lotz` claim that the NHS was now copying the “efficiency” of the ISTCs?
This claim is strikingly similar to that made by New Labour`s Alan Johnson, then Health Secretary, in an interview given to Fraser Nelson in the right-wing weekly, The Spectator (11 February 2009). In it, Johnson managed, with breathtaking cynicism, to spin the cancelling of some ISTC contracts as being due to the fact that they were no longer needed because:
 “When you introduce these [private] centres, you find that performance suddenly zooms in the local NHS hospitals that had previously said they couldn’t do any more hip replacements,’ he says. ‘So you had to decide if taxpayers’ money would be well spent on a lovely spanking new [private] centre that very few people would use.”

What is the future for the ISTC?

In a fundamental sense, the concept of an “Independent” Sector Treatment Centre will have no meaning if Cameron gets his wish to make the whole of the NHS “independent” in his own peculiar sense of the word, i.e. not under any pretence of democratic control. The symbolic death of the ISTC is perhaps marked by the recent passing of the Cheshire and Merseyside NHS Treatment Centre, which was run by Canada’s Interhealth Corporation and specialised in knees and hips. It had the best clinical results in the north-west (subject to the cherry-picking caveat), yet despite a campaign by local people, and the intervention of Fred Little, chief executive of Interhealth UK, it closed at the end of May.

There is no longer a need for a mollycoddled and contrived showcase for private healthcare when the whole system is destined for breakneck privatisation.
The Independent Sector Treatment Centre has had a very political birth, life and death.

Alan Milburn is now David Cameron`s Social Mobility Adviser.