HSJ's ground-breaking analysis of performance by first-wave independent treatment centres indicates that more than 40 per cent of their capacity has gone unused, but the DoH is quick to dispute the figures. Alison Moore sifts through the evidence

HSJ's ground-breaking analysis of performance by first-wave independent treatment centres indicates that more than 40 per cent of their capacity has gone unused, but the DoH is quick to dispute the figures. Alison Moore sifts through the evidence

Independent treatment centres are performing less than 60 per cent of the procedures they need to carry out on average per year, HSJcan reveal.

An analysis of all ITCs open by April this year shows that almost every centre is underperforming, assuming they are expected to carry out a similar number of procedures annually, under five-year contracts.

Some centres are doing spectacularly badly - Will Adams in Medway had done just 551 procedures in seven months of operation, against a contract of nearly 20,000 over five years.

But even the centres that have performed relatively well would need to increase their referral rate substantially to fulfil their contracts.

The nature of the contract for first-wave centres means that unless primary care trusts can persuade providers to roll substantial amounts of work forward, or neighbouring PCTs to make use of the unused capacity, they will be left to pick up massive bills. Where ITC operators don't carry out enough procedures to reach a minimum guaranteed value, they still get paid - potentially costing the NHS millions of pounds for unused capacity.

However, the Department of Health says it would be misleading to say that uptake below 100 per cent amounts to lost activity and it is working with providers to shift capacity to the future.

PCTs and the DoH will not release figures for the numbers contracted per year or the cost on the grounds of commercial confidentiality.

HSJ's analysis brought together information revealed in parliamentary answers, Freedom of Information Act requests, public documents and newspaper reports to create a national picture of ITC performance for the first time.

While the paucity of evidence means calculations cannot be definitive and rely on an assumption that plans were based on evenly spread delivery of contract commitments over five years, widespread problems are undeniable.

The DoH does not accept HSJ's figures, and claims they are misleading - but has not produced its own figures to compare them with.

Instead it provided a figure of 84 per cent - achieved by adding performance of first-wave ITCs with the more successful general supplementary ('GSUP') short-term programmes, aimed at targeting long orthopaedic waits, and the performance of what it calls 'pathfinder' ITCs, assumed to be those which predated the national programme.

However, while HSJ's figures covered the period ending in April 2006, the DoH's were slightly more up to date, covering October 2003 to July 2006.

The DoH also said figures for July alone increased the total to 87 per cent.

The DoH also said it would be 'completely misleading' to state that figures below 100 per cent represent lost activity, as the contracts are for five years. A spokeswoman said there was 'ongoing contract management where we work with providers to shift capacity to the future where it is needed.' (See panel on page 15 for details of the cost to the NHS.)

When the five-year programme was announced, the DoH said it would provide up to 171,000 procedures a year. Not all of the centres are up and running yet, and the five years of the programme are staggered depending on their start date.

According to HSJ's analysis, the annual number of procedures carried out by the 18 centres open in April, plus the mobile eye chain and the national chain for MRI (magnetic resonance imaging) amounts to 46,073 - just 59 per cent of the 78,242 required to maintain even delivery of the contract. (This excludes the first ITC created as part of the programme: the Daventry Birkdale Clinic had its contract terminated when it was found not to have a licence.)

Although some of these contracts may be 'back weighted' to allow more work in later years, increasing referrals to achieve this is a substantial challenge.

So far, the ITCs have performed about 60,000 procedures in total, excluding diagnostic work. For this, they receive a premium of 11 per cent over NHS providers. And, under the 'take or pay' arrangements they are paid for a guaranteed volume, regardless of whether the work is done.

Contracts for the second wave of ITCs - which are being negotiated at the moment - are also to be offered some level of guaranteed income, HSJhas learnt.

This week the DoH confirmed rumours that the levels of guarantees would be 'tapered' over the period of the contracts, and said it was never the intention that phase two would be designed entirely on a 'pay-as-you-go basis'.

A spokeswoman was unable to provide details of how the 'tapering' of income guarantees will work, or who will underwrite them and would only say that 'each contract is different in how tapering works'.

Few in the NHS feel able to speak out about these issues openly. But an anonymous HSJsurvey of 42 chief executives elicited some strong responses:

  • Sixty-three per cent thought that the commitment of funds to ITCs was incompatible with patient choice.
  • Seventy-eight per cent felt their organisation's finances had been adversely affected by ITCs, including 7 per cent who thought the effect was disastrous.
  • Seventy-seven per cent thought their local ITC did not take sufficient account of local factors, such as the need for extra capacity and local travel patterns.
  • Fifty-nine per cent felt ITCs had not achieved their aim of providing additional capacity rather than replacing NHS capacity.

Their comments were telling: there was considerable scepticism that the NHS actually needs this additional capacity, with some saying it would lead to the substitution of ITC work for acute trust work and underuse of NHS resources.

This undermining of NHS capacity could affect acute services, according to a number of those who responded. Hiving off elective services in this way made it difficult to sustain trauma services and even accident and emergency.

'It will risk the ability to employ the numbers of surgeons needed to maintain a viable out-of-hours rota,' writes one. 'The ITC procurement could destabilise the local acute trust,' says another.

Although a number of respondents welcomed more competition - and there were some supportive comments about ITCs - there was widespread anger at the planning process, which several respondents felt had ignored local issues. 'Cock up', 'hurried, ill-considered and had the feeling of panic' and 'poorly planned and executed' were some of the comments.

The value for money offered by the scheme was also criticised, with one chief executive pointing out the services could have been provided more cheaply in the local trust. 'It is not value for money when you pay for something irrespective of use,' says another. Several called for a level playing field to enable NHS facilities to compete.

The programme was also felt by some to override choice: 'PCTs are forcing patients to go - which is not choice.'

One chief executive pointed out the current vulnerability of PCT chief executives, which affects their willingness to speak out. They said they were 'just waiting for someone to break ranks and go public' and described it as 'emperor has no clothes syndrome'.

So what impact have ITCs had on the NHS so far? The capacity they have delivered has been very small compared to the total carried out by the NHS - but it is often concentrated in small areas. Some of the work they are expected to do has been transferred from NHS hospitals - despite the original intention that they should increase capacity.

The DoH says transference has only occurred at the request of the NHS locally.

If patients then choose not to have these procedures carried out at the ITC, where will they go? Will local trusts see their waiting lists increase (presumably they have reduced their capacity)? And where does this sit with patient choice?

The DoH says its intention is for private providers to be positioned to provide choice in the long term, but they are expected to exist alongside the traditional providers in an integrated manner.

However, the first wave of ITCs - with guaranteed volumes, paid for at above NHS rates and uncomplicated cases - are likely to be very profitable contracts.

King's Fund chief economist Professor John Appleby says: 'Even the companies admit they got a pretty generous offer with the first wave. I think they could do it at tariff and still make a profit.'

He says even a tapered system of guarantees, such as that proposed for the second wave, will not discourage companies which are keen to enter the market.

Mercury is certainly enthusiastic about the second wave, says group strategy director Mark Smith.

But two fundamental questions remain: will companies ever compete at tariff and without guarantees of volume - the level playing field many in the NHS would like to see?

And is this additional capacity needed? Professor Appleby says the calculations on capacity at the time the first wave was commissioned were 'relatively crude and an overestimation'.

Since then the NHS has upped its game and waiting times have fallen: new NHS chief executive David Nicholson has spoken bluntly of the need for reconfiguration to deal with 'long-standing issues of overcapacity.' How will ITCs fit into this process?

Why has uptake been so low?

The independent treatment centre programme is relatively new. Some of the worst-performing centres have opened in the last few months and some have operated from interim facilities, where capacity may be limited.

So will the situation improve with time? There is reason to be optimistic: some ITCs which have opened recently are seeing a gradual increase in low referral numbers - probably the major course of underperformance - although in other cases this seems to have stalled.

Upward trajectory
St Mary's centre in Portsmouth has been on an upward trajectory since it opened before Christmas, according to PortsmouthCity primary care trust. But as early as June procedures were running at less than a third of expectations, although diagnostics was overperforming.

However, this expected performance is well below a pro rata rate, and six months after opening the unit had only carried out around 8 per cent of the average yearly activity.

However, there is a markedly better performance if Portsmouth City PCT's figures are looked at alone, which suggests that people may be reluctant to travel or GPs further away from the centre may be reluctant to refer.

If this is indicative of a national trend, it suggests ITCs may work better in concentrated urban areas. This may have implications for the whole choice agenda. The walk-in and minor injury centres at the same site - which are designed to serve a smaller area - have generally performed much better.

Portsmouth City PCT is now negotiating to reduce activity in some specialties and to develop a new service. The Department of Health says that where utilisation is lower than expected it tries to work with both sponsoring PCTs and providers to improve it.

Attracting patients
Other PCTs have found that location is important. Gedling PCT professional executive committee chair Dr Tony Marsh points out that an interim ITC in nearby Ilkeston attracted patients from the PCT area while the permanent site at Barlborough - 40 miles away - had more problems.

Even the companies involved in ITCs admit that geography can sometimes work against them. Mercury's Mark Smith says its Portsmouth ITC was meant to carry out 200 cataracts for Isle of Wight patients, many of whom did not want to make a ferry crossing when they could be treated on the island.

He also cites case mix as a problem in Portsmouth and Medway with, for example, more endoscopies being commissioned in Portsmouth than seem to be needed. 'All we can do is respond to what we have been asked to deliver,' he says. But the company is trying to help PCTs by adjusting case mix where possible, he adds.

Some other PCTs have admitted the build up has been slow. Wyre Forest, for example, says that for the first six months 'uptake was perhaps lower than expected'.

But the referrals are now above expected levels. Unfortunately, the contract for the Kidderminster ITC was front-weighted with 2,120 procedures in the first year and 1,720 for subsequent years.

Gainsborough ITC did 781 procedures in its first year, but then only 132 in the next three months: its contract is for an average of 1,273 per year.

GPs' reluctance to refer to ITCs is often thought to be the cause of some of these low numbers and there have been attempts to 'sell' the centres to GPs by both PCTs and the companies involved.

A major stumbling block may be that first-wave ITCs predominately employ doctors from abroad who are not known to local GPs, who may therefore be reluctant to recommend them to patients - which may impact on patient choice.

Local trusts
NHS Alliance chair and GP Dr Michael Dixon says many patients ask him where he would choose to be treated himself - and, when pushed, he opts for his local trusts where he knows the consultants and data is available on years of procedures (especially with big joint operations where problems can emerge five or 10 years later). In contrast, doctors at an ITC may return home overseas within months.

Mr Smith says there is anecdotal evidence that some GPs are reluctant to refer to independent sector organisations. The company is trying to market its facilities and has found that practice managers, for example, are impressed - and this can eventually translate into GP referrals.

Although Portsmouth and Medway have been slow so far, he says the figures are not so bad that they could not be made up over the rest of the contract - provided referrals start to flow.

Capio, which runs Bodmin treatment centre, says the initial low rate of referral has improved and the centre is now getting nearly all the referrals it needs to meet targets.

But the case mix has been adjusted to ensure it better meets local needs. The contract has shown how important it is to work with the local health economy before the opening of a centre, says contract manager Paul Tempest.

The cost to the NHS

So is money paid for non-existent operations lost to the NHS for ever?

In evidence to the Commons health select committee in March, NHS commercial director Ken Anderson said it was 'too early to say' if 'loss value had occurred' because the contracts were still live.

Department of Health head of demand-side reform Bob Ricketts suggested uptake was about to double. Speaking at the start of March, he said 60,000 procedures would be carried out in 2005-06, but this would rise to 117, 000 by next April.

Because the contracts are not in the public domain it is hard to be certain. In some cases, the centres may be able to do additional work to catch up - although for many simply getting to contracted levels will be a challenge.

A major factor will be the willingness of treatment centre providers to be flexible, mainly through agreeing to case mix changes and to roll forward more work.

The indications are that some companies involved are prepared to be flexible, but it remains to be seen how far this will extend. It also relies on a massive rise in referrals. Spokesmen for both Capio and Mercury said they may roll forward more work to provide better value for the NHS.

Capio contract manager Paul Tempest says that over the term of the contracts the company aims to provide 'excellent value for the NHS'.

Some contracts have a limited roll forward of unused capacity written in - for example, 5 per cent per month in Portsmouth.

But generally the scope for adjustments is limited. Gedling PCT has to 'reconcile' its cases every month with Barlborough ITC. 'You cannot carry on and catch up at the end of the year,' says Gedling professional executive committee chair Dr Tony Marsh.

Changing case mix within a specialty is also possible - but adding new specialties may need new staff, and potential extra expense for the provider.

The struggle to attract custom

The Will Adams Centre in Medway is one of a number of newly-opened independent treatment centres which have struggled to attract custom.

In evidence to the Commons health select committee, the Department of Health outlined the measures being taken to improve matters:

  • More marketing of the centre, with visits to local clinicians.
  • Transfer of 'waiting list activity' from the local NHS to the centre.
  • Attempts to transfer activity from surrounding primary care trust areas 'although subsequent investigation failed to identify a demand for this'.
  • Attempts to transfer more work from the acute trust, seconding clinicians and reconfiguring case mix.

In May, Medway PCT learned that activity was at 38 per cent of the contracted level. The meeting also heard that the PCT's overspend in 2005-06 would be around£2.4m, despite a major savings programme. Local reports have suggested underperformance at the Will Adams centre is costing Medway PCT£100,000 a month.

A second ITC is scheduled to open soon just a few miles away, in Maidstone. During the term of its contract it is expected to carry out 55,589 elective procedures and 48,993 diagnostic tests.