Wednesday, 5 August 2009

UK - NHS Faces Bill of £400 million for Private Contracts

The NHS is facing a bill of £400 million in the next two years, when independent sector treatment centre (ISTC) contracts with private sector operators expire.

Around £200 million will be paid for operation capacity bought by Primary Care Trusts (PCTs) but not used, as it is estimated that the health service only delivered around 85% of the agreed number of operations. A further £200 million will be paid to buy the premises built by the private sector operators.

Since ISTCs opened in 2005, they have cut waiting lists and introduced competition. So far, they have provided more than 1.7 million operations and other procedures, helping to cut the maximum NHS waiting time to 18 weeks.

ISTCs were originally commissioned by the Department of Health. They offered a five-year deal guaranteeing volumes of patients, with a buy-back clause on the buildings, and prices around 11% higher than NHS prices.

It will now be up to PCTs to decide if they want to renew the contracts, under different terms, most likely with no guarantees of volume and standard NHS prices.

Health Minister Mike O’Brien insisted that the initiative had been value for money, claiming it had cleared a backlog of 250,000 NHS patients who had to be treated to reduce waiting times. He told the Financial Times, “We wanted to ensure we had sufficient capacity. And if you hit your target, as we have, you have value for money.”

Further reading - A detailed review of the UK pharmaceutical market, including some background information on healthcare infrastructure, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

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