Taxpayers facing private premium

PRIVATE firms could be paid a premium to carry out NHS work under plans to open up the health service to competition.

Unions are warning the move would leave the taxpayer with a bill far higher than that for a programme of 25 independent sector treatment centres set up by Labour in 2003.

Analysis by the Yorkshire Post suggests the first-wave of privately-run centres will cost at least £300m more than if the work had been carried out by the NHS after they were paid a premium of 11 per cent above NHS rates and guaranteed an annual income no matter how many patients were referred for treatment.

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But under plans by the coalition to open the NHS to greater competition, there are claims premium pricing could be re-introduced to encourage private sector entrants.

Impact assessments drawn up for the coalition suggest extra premiums of up to 14 per cent could be paid to private firms to overcome market “distortions” from advantages said to be enjoyed by the NHS including huge economies of scale, zero corporation tax and lower costs of borrowing.

Nick Parrott, health policy specialist for the Unite union, said it appeared one solution would be for new GP consortia, which will in future buy NHS services, to pay all providers the same but for the Government to give a top-up premium to private companies.

He said the extra cash paid to the treatment centres was relatively small compared to the impact of competition which would now affect the whole of the NHS and involve much larger sums.

“It will be embedded in every single service, not just a narrow sector,” he said.

The first wave of contracts for treatment centres will not end until 2013 when more than 700,000 procedures are due to be carried out. Latest figures indicate only 85-90 per cent of the value of the work is likely to be completed.

Figures show the Chesterfield centre serving patients from South Yorkshire and the East Midlands was paid £98.3m from 2005 to April last year but carried out work worth only £84.6m after too few patients were referred for operations including hip and knee surgery – a shortfall of £13.7m.

Health chiefs in Rotherham paid £5.7m but the value of the work undertaken was only £4.4m, while Sheffield’s primary care trust (PCT) paid £12m for work valued at £9.7m. In contrast, patients in Barnsley and Doncaster were sent there in greater numbers than expected.

PCTs in the East Midlands were far less likely to refer patients. Patients from Nottingham were scheduled to receive care worth £8.4m but instead work worth only £3.1m was carried out.

The Bradford centre, serving patients from the city and Leeds, was paid a total of £45.1m, only to perform operations and diagnostic procedures worth £37.8m in a deal which expired in June – £7.3m below target.

The centre faced controversy after the death of university lecturer John Hubley, 58, of West Park, Leeds, when a gall bladder operation went wrong in 2007. An inquest decided his death was due to “misadventure aggravated by neglect”. The centre is now under new management.

Spending by health chiefs in North Yorkshire at the Clifton Park centre at York was more effectively managed but remained £400,000 behind target when the contract ended last year. Significantly more patients from the East Riding were treated there than expected.

Ministers hope to use competition involving private firms to further drive changes to services under landmark NHS reforms.

But unions fear big business could “cherrypick” the most profitable areas, leaving NHS hospitals to provide more expensive services to more vulnerable patients.

The Department of Health said its plans would give NHS regulators powers to develop pricing systems which were “fair and promote quality of care and efficiency without government interference”.

“It is not this Government’s policy to pay private providers more for NHS services,” it added.