ISTCs were born out of NHS Plan 2000 . They served as the entry point for the private sector as permanent providers of NHS clinical services. They were intended to 'unbundle' the high-volume low-risk lucrative NHS work such as cataract operations and joint replacements.
The ISTC providers were paid on average 12 percent more than would have been paid to do the same work within the public NHS. They were also paid in bulk in advance for a fixed number of patients, regardless of whether procedures were carried out or not. One ISTC provider 'Netcare' (a South African company) failed to perform 40 percent of the work it had been paid to do, receiving £35-million of NHS money for patients it never treated. Figures from 2010 show an overall average of just 85 percent of contracted activity had been delivered.
ISTC contracts give private providers special treatment relative to the NHS
- The ISTC contracts stipulate that costs of clinical complications and legal costs are still paid for by the NHS, not the private provider.
- The ISTC contracts permit the private providers to recruit up to 70 percent of their staff from the NHS. This nullifies the argument that ISTCs provided extra capacity, when in fact they took money AND staff from the NHS.
- The ISTC contracts guarantee a five year supply of patients. In some localities this is far more than any excess demand on NHS services, meaning that NHS patients are needlessly transferred to the private providers. This has the knock-on effect of making the NHS Diagnostic Treatment Centre that is loosing patients to the ISTC appear costly as it has excess capacity.
- The ISTC contracts permit private providers to use the NHS logo, meaning that patients are in the dark about who exactly provides their care.
- The ISTC contracts are protected from scrutiny by 'commercial confidentiality'.
An early bidder for ISTC contracts and one of the government's
preferred bidders was a company called Anglo-Canadian. They were deselected because their charges were ridiculously more than the NHS tariff for the same operations. In the case of ISTCs the government did not pretend that private providers would be more efficient than the equivalent NHS Diagnostic Treatment Centres. The idea was simply to introduce private provision to replace public provision - and to do so quietly without consulting the public!
The Blair government artificially extended the market in health care into the private sector by preferentially favouring these new for-profit providers. NHS trusts were forbidden from bidding on ISTC contracts. Sometimes the commissioning process itself was taken out of the hands of Primary Care Trusts and conducted at a national level by the Department for Health. When one Primary Care Trust objected to a deal being done on their behalf and without consultation the objecting board members were removed.
In 2003 at a meeting in Downing Street, Tony Blair said:
we are anxious to ensure that this is the start of opening up the whole of the NHS supply system so that we end up with a situation where the state is the enabler, it is the regulator, but it is not always the provider.
Despite the ideologically driven advantages given to private companies, it has still proved difficult for many of them to make a profit from the NHS, which is not surprising given the cost-effective nature of the public service they are attempting to replace. As their business is to make a profit, some companies decide to terminate an unprofitable contract early. (See UnitedHealth ).
Integrated Care is in a part a response to the fact that the private sector has found piecemeal privatisation challenging. It has meant private providers have to compete with the NHS, and while they are experts at bidding for contracts, they do poorly in providing the end service precisely because they are trying to make a profit.
In 2009 a paper in the 'Journal of Bone and Joint Surgery' reported much higher than expected rates of problems resulting from hip replacement surgery at an ISTC. Concerns were raised by a local NHS unit that was having to fixed the problems caused by the ISTC. The local NHS unit complained that this was adversely affecting their scheduled work. The 2009 paper concluded that:
Contracts should not be renewed [for ISTCs] and new contracts should not be signed until a proper independent evaluation has been published assessing referrals, actual treatments carried out and payments made for work done along with value for money analysis. Full contract details and costs must be placed in the public domain for this assessment to take place.
An article in Hospital Doctor stated:
If ISTCs are providing treatment at higher costs than the mainstream NHS, with poorer outcomes, why are we sending our patients to them?
The Surgicentre run by Clinicenta (who's names even sound like the closest thing you will get to bargain-basement MacSurgery) and owned by the failed construction company Carillion , was opened in 2011 to provide routine operations at the Lister Hospital. In 2012 the Care Quality Commission failed them in four out of five areas following unexpected deaths. The Clinicenta clinical director described the deaths as
unfortunate while the local NHS described them as
serious incidents - of which their were 21 in total, including six patients who suffered irreversible sight loss. The ISTC was taken back into NHS control in 2013.
In 2007 an NHS patient died in an ISTC during a routine gall bladder surgery where the patient haemorrhaged. The ISTC did not provide enough swabs to stop the bleeding and no emergency blood was stored. Storing blood for emergencies was not a requirement. Private providers are subject to different standards than the NHS. The NHS does what is necessary to safeguard patients, but the private sector may only do what is stipulated in the contract. Although this is changing as the NHS publicly-provided services are increasingly undermined, artificially run like businesses and placed in unnecessary competition with each other and the private sector.