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The Parliamentary Review(Private Healthcare Edition)

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2014 PRIVATE HEALTHCARE EDITION A YEAR IN PERSPECTIVE F O R E W O R D S The Rt Hon David Cameron MP Professor Sir Mike Richards R E P R E S E N TAT I V E S Priory Group The Harley Street Breast Clinic Re:Cognition Health Blackhills Specialist Dental Clinic Ailesbury Hair Loss Clinics F E AT U R E S 96 Harley Psychotherapy The Cambridge Urology Partnership Fertility Solutions Allon Barsam Medical Diagnosis Review of the Year Review of Parliament ©2014 WE STM I N STE R P U B LI CATI O NS


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Foreword The Rt Hon David Cameron MP Prime Minister Four years ago our economy was in the danger zone. We now have one of the fastest growing economies in the developed world, and a better and brighter future for Britain is within reach. This hasn’t happened by accident – it is thanks to the ongoing sacrifices and determination of the British people, and because of the long-term economic plan the government is working through. The deficit is down by more than a third, safeguarding the economy for the long term and keeping mortgage rates low. 25 million hard-working people have had their taxes cut, helping families be more financially secure. There are 1.8 million more people in work – that’s 1.8 million more people with the sense of security and dignity that comes with a job. Immigration is down and benefits have been capped, ensuring our economy delivers for people who want to work hard and play by the rules. And 800,000 more children are now taught in good or outstanding schools, as we give the next generation a decent education, with the skills necessary to succeed in the global race. 44,000 people have received the life-saving cancer treatment they deserve, thanks to our Cancer Drugs Fund. Our Help to Buy schemes are enabling people to access an affordable mortgage and buy their own home, with nearly 40,000 people already on the property ladder as a result. And with crime down to its lowest level since records began, people up and down the country can feel safer in their own homes and communities. Those jobs that used to be sent overseas – they’re returning to these shores. The production lines that ground to a halt – they’re cranking into action. Businesses from all over the world are asking how they can invest in our country. But it’s not just what we are doing that matters, it’s why. Our ambitions are not only measured in percentage points on a graph but in the families who have the hope of a better, more secure future; the father who gets back into work after years unemployed; the moment when someone gets the keys to their first home, starts their first business, or receives their first pay cheque. Our recovery is real, but it has not been easy – as the articles in this year’s The Parliamentary Review demonstrate, it is thanks to the ongoing resolve of the British people that our country is starting to recover after such tough economic times. That is why it is so important that we stick to the plan. We must continue to take the difficult decisions to help us build a better Britain; one that rewards those who have put in, who contribute and who play by the rules. This way we can deliver a brighter future for our country – with Britain standing tall in the world again and its people more secure at home. “ We now have one of the fastest growing economies in the developed world, and a better and brighter future for Britain is within reach “ FOREWORD | 1


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Foreword Professor Sir Mike Richards Chief Inspector of Hospitals The role of the Care Quality Commission (CQC) is to inspect, monitor and regulate all health and adult social care providers in England. These cover more than 40,000 locations and include NHS hospitals, mental health services, community health services, ambulance services, primary medical (GP) services, dental services and care homes – both in the NHS and in the independent sector. The CQC is not an improvement agency, but we do believe we are an agent for improvement. Over the past 18 months, the CQC has been undergoing a major transformation. Three chief inspectors have been appointed, and between us we cover all sectors. We have introduced entirely new approaches to inspection, involving clinical experts and experts by experience (patients and carers) working alongside CQC staff. In all the services we inspect, we ask five questions: is it safe? Is it effective? Is it caring? Is it responsive to people’s needs? And is it well led? We will then rate each of these services on a four-point scale – outstanding, good, requires improvement and inadequate. Our judgments are based on a combination of the information that we collate before undertaking an inspection and what we see and hear while we are on site. The new programme is furthest advanced for acute hospitals, where we have now inspected almost half of the 160 acute NHS trusts. While we are still on a learning curve, we have clear independent evidence that our new approach is more robust and credible than that used by the CQC in the past. We have found wide and unacceptable variation in the quality of care provided in the NHS. There is variation between trusts, with one already having been rated as outstanding and several as inadequate. There is also variation between services within trusts – sometimes it is just a single ward where we find poor-quality care. We provide immediate feedback to the trust chief executive, and we take enforcement action where necessary. We are now extending the new approach, with appropriate modifications, to independent-sector providers. During autumn 2014, we are piloting the programme in six independent hospitals of varying size. Ultimately, our objective is to rate independent-sector providers in the same way as we do NHS providers, as we believe this will be valuable for patients who wish to make informed choices. Ensuring consistency across all our inspections is crucial. Recruiting and training high-quality teams, setting out clearly what we see as the characteristics of good and outstanding care, and reviewing all reports carefully at a national level will help to minimise any inconsistencies. We are currently consulting on the way we regulate independent health services. We are keen to hear your views – full details of current consultations and how to contact us are on our website. “ While we are still on a learning curve, we have clear independent evidence that our new approach is more robust and credible than that used by the CQC in the past 2 | FOREWORD “


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Review of the Year Battle with the Office of Fair Trading, Competition Commission and the Competition and Markets Authority market in Britain to the Competition Commission. The OFT said the market power of the big three hospital groups and a lack of information on outcomes and prices had ‘individually or in combination [acted to] prevent, restrict or distort competition in this market’, adding ‘we consider that these [factors] impair the ability of patients, GPs and private medical insurance providers to choose between competing service providers, including new entrants, on the basis of superior quality of services to patients and better value for money.’ Chairman of the Competition Commission, Roger Witcomb The single biggest news event in 2014 was the unfolding saga of the private hospital groups versus the private insurers and government competition authorities. Indeed, the wide-ranging and high-profile investigation has the potential to significantly alter the shape of private hospital services in the UK. The year started with a bombshell announcement from the Competition Commission that it would force the sale of some private hospitals to counteract what it saw as market dominance from the three main companies. The news in January formed one of the most significant parts of a long process, initiated by earlier complaints made to the government regulators. In December 2011 the Office of Fair Trading (OFT) published a consultation document announcing its provisional decision to refer the private healthcare The provider end of the private healthcare market was braced for considerable disruption as a result of the subsequent Competition Commission findings. And in August 2013 it appeared that these fears would be largely realised, when the Competition Commission concluded customers paid too much and that the market was not functioning as it should. The commission concluded that the power of the big three hospital groups – BMI, Spire and HCA – was not sufficiently offset by the size of the main two insurers, Bupa and AXA PPP. BMI, Spire and HCA account for 53% of the privately funded healthcare market, the commission said, adding that its research had identified 101 private hospitals facing ‘little’ local competition. In its January report the regulator said a ‘conservative estimate’ of the excess profit, or ‘customer detriment’, from the market power of the big three companies was between £173 million REVIEW OF THE YEAR | 3


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THE PARLIAMENTARY REVIEW Highlighting best practice and £193 million per year over the period 2009–2011. These sums are equivalent to roughly 10% of the total private revenues of these firms. It also said incentive schemes for consultants to choose particular providers for diagnosis and treatment further restricted competition. The commission’s report criticised the amount of information made available to private patients. It said the information available to patients and insurers was often not comparable, and the overall level of data was sometimes less than that provided to NHS patients. These factors combined to ensure the customer, be it a private medical insurer or an individual patient, paid more than they should, Competition Commission chairman Roger Witcomb concluded. In January this year the commission issued its provisional decision on remedies, the most contentious of which were forced hospital sales. HCA would be made to sell two of its central London hospitals, Princess Grace and London Bridge, while BMI would have to divest itself of seven hospitals across the capital, Home Counties and North West. One Spire hospital in Leeds had also been considered for forced sale. There were three other recommendations – on providing better information, incentives for consultants and partnerships with the NHS – but it was the forced sales that provoked a furious response from the sector. BMI boss and the company’s former legal counsel Stephen Collier said the decision was ‘bizarre’ and the sales would do nothing to lower costs or increase competition. Mike Neeb, chief executive and president of HCA International said the commission was ‘threatening unfair and unjustified measures’. He said the company’s acquisition of the London Bridge hospital had been comprehensively cleared by the OFT in 2000. Both companies threatened to contest the decision in the courts, although, perhaps unsurprisingly, insurance firm Bupa welcomed the announced measures. Mr Witcomb conceded that ‘requiring operators to sell hospitals is a big step’ but said his team had ‘focused on those areas where a sale will be effective in increasing competition – where a single operator owns a cluster of hospitals which face little rivalry’. But in April it appeared the Competition and Markets Authority (CMA), the successor body to the OFT and the Competition Commission, had climbed down significantly. The authority had dropped any mention of BMI being The Competition Commission concluded that the power of the big three hospital groups – BMI, Spire and HCA – was not sufficiently offset by the size of the main two insurers – Bupa and AXA PPP The Spire hospital in Leeds was one of a number of hospitals considered for forced sale 4 | REVIEW OF THE YEAR


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PRIVATE HEALTHCARE EDITION divest itself of either the London Bridge and the Princess Grace hospitals or the Wellington hospital, including the Wellington Hospital Platinum Medical Centre. HCA’s group commercial director Keith Biddlestone told The Daily Telegraph that the CMA’s most recent decision was only a ‘minor victory’, and being asked to sell one of its hospitals was like being asked ‘which of my children to put up for sale’. Mike Neeb of HCA International said the commission was ‘threatening unfair and unjustified measures’, and that HCA’s acquisition of the London Bridge hospital had been comprehensively cleared by the OFT in 2000 forced to sell off hospitals, while HCA would have to divest itself of fewer London hospitals than originally envisaged. The Daily Telegraph described the move as a ‘dramatic retreat’ for the CMA, and quoted Mr Witcomb, conceding: ‘It was ultimately not possible to extract a consistent picture from it. Having considered the analysis carried out after provisional findings, two members of the five-strong inquiry group decided they could no longer be confident that local concentration outside central London had led to higher prices for insured patients.’ BMI boss Stephen Collier said the authority had reached ‘a sensible, measured and fair conclusion’. But HCA continued to decry the decision. The CMA said the company must Mr Neeb of HCA said that, when drawing its conclusions about the prices HCA charged, the authority had failed to consider his company’s mix of patients, investment structure and the complexity of procedures it performed. He accused the CMA of ‘making up competition policy on the hoof’, and said HCA had ‘invested millions to turn what were average hospitals into world-beaters. We should be proud of [that] rather than dismantling it.’ The company is challenging the decision at the government’s Competition Appeal Tribunal, and hearings are due to commence in January. The same hearings will also rule on the CMA’s proposals on consultants’ fees. Consultants’ fees were something that complainants to the authority had wanted to see greater transparency on, but on which the CMA has encountered resistance. Of the three remaining measures, the first took effect at the start of October and covered private sector partnerships with NHS trusts’ private patient units (PPUs). The cost of building a new hospital means that running a private patient unit at an existing NHS hospital would be an attractive option for any new entrants to the private healthcare market. PPUs as part of an existing NHS development are also attractive to patients, because there is almost always an intensive-care unit on site in REVIEW OF THE YEAR The CMA required HCA to sell several of its assets, including the Wellington Hospital Platinum Medical Centre as a potential sale | 5


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THE PARLIAMENTARY REVIEW Highlighting best practice case anything goes wrong. Evidence submitted to the CMA’s inquiry said the increasing complexity of procedures meant this was of growing importance to patients and providers. The Health and Social Care Act 2012 means most NHS trusts are now able to earn a greater proportion of their income from private work or partnerships such as a PPU. The evidence presented to the CMA included a report in the Guardian from 2013 that 40 NHS trusts across the country were considering opening a PPU. The list included some of England’s largest teaching hospitals such as Barts Health NHS Trust and St George’s Healthcare NHS Trust. The CMA had originally considered a blanket ban on hospital operators who already faced weak competition in an area from running an NHS PPU, thinking if they did so it would block new entrants to the market. But the authority softened its stance in the final instance, and the rules will now say that the CMA has the right to review future PPUs and prohibit any that might substantially lessen competition – rather than applying the new rules retrospectively. Circle Partnership told the researchers for the CMA that HCA’s position in the capital was such that not only should it be made to divest itself of the two central London hospitals but it should also be banned from running any PPUs in London for the next five years. The suggestion was not taken up. Insurance firms told the CMA they were disappointed the remedy would do nothing to tackle existing concentrations of market share and barriers to entry. HCA has a PPU in partnership with Guy’s and St Thomas’ NHS Foundation Trust that was assessed by the OFT to see if it constituted a merger. The OFT concluded that it did not. The new order on PPUs took effect at the start of October, and will see providers being required to notify the CMA of any such developments. The authority will then decide whether a PPU constitutes a merger governed by existing legislation. If it does not The OFT concluded that the PPU which HCA has in partnership with Guy’s and St Thomas’ did not constitute a merger 6 | REVIEW OF THE YEAR


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PRIVATE HEALTHCARE EDITION meet this threshold, the CMA would assess the proposal, applying the same ‘significant lessening of competition’ test used by the existing merger‑control rules. The authority said it was confident the measure would prevent providers from opening PPUs where they already face only weak competition. Incentives hospitals clinics and laboratories, other than salaries paid to doctors who are employees of those facilities.’ The CMA’s final report said that, while there was evidence of incentives affecting a doctor’s choice of where he or she would refer a patient, there was less evidence of it affecting the type of treatment a patient received. The final document said: ‘We would expect the ethical and regulatory constraints on consultant behaviour and, to the extent that it applies, peer or multidisciplinary team review, to offset to a substantial extent any economic incentive for a consultant to offer advice on treatment that was otherwise than in the patient’s best interests. We would not rule out that, on some occasions, some consultants might be influenced by economic incentives so as to overtreat, but we consider that such incidents are likely to be few and far between.’ But it added there were incentives for doctors to ‘conduct unnecessary diagnostic tests or consultations’. Bupa said it had found evidence of overdiagnosis by comparing the number of diagnostic procedures carried out by the private sector with those in the NHS. The insurer said the NHS was ‘not a perfect benchmark, but that the extent of private treatment, which was in some instances three or four times greater than in the NHS, raised significant concerns as to whether all interventions were required.’ Evidence from the USA was produced to support their argument and overdiagnosis but the CMA said REVIEW OF THE YEAR AXA PPP said that any register of doctor’s interests should go beyond payments by pharmaceutical companies and include all payments to doctors other than salaries A press release from the Competition and Markets Authority (CMA) in October promised a ‘crack down’ on private hospitals offering incentives to doctors to refer them to their facilities. The authority said it had found some benefits that had been offered to clinicians that distorted the operation of the market. These included hospital groups offering doctors free secretarial or administrative services, corporate hospitality, and deals involving the equity on medical equipment or a contribution to an individual medic’s professional indemnity insurance. In the wake of the Competition’s Commission’s findings at the start of the year, AXA PPP’s chief medical officer and its head of operation wrote to the British Medical Journal in February calling for the General Medical Council to establish a register of doctor’s interests. Their letter said: ‘We believe it is essential that any register should go beyond payments by pharmaceutical companies and include all payments to doctors by device manufacturers and by | 7


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THE PARLIAMENTARY REVIEW Highlighting best practice the market here might not be fully comparable. The hospital groups strongly disputed the evidence of overtreatment and overdiagnosis, and countered that there was instead evidence of undertreatment in the NHS. Spire’s half-year statement said the company had seen a ‘significant increase in orthopaedic and ophthalmology surgical activity, and a general increase in inpatient case complexity across specialties’ compared with the previous year. In its final order the CMA prohibited ‘any scheme or arrangement intended to induce or may reasonably be regarded as inducing a referring clinician to refer private patients to the facilities of a particular private hospital operator’. The private hospitals will also now be obliged to publish online details of ‘referring clinicians practising at their hospital who together with the hospital operator have a share or financial interest in the hospital or equipment used at the hospital’. Exactly how the investigation and regulation of these practices will play out in practice remains to be seen. The CMA said its measures ‘should result in hospital operators competing for patient referrals on the basis of price and quality rather than on the basis of how generously they incentivise clinicians to refer patients to them for tests or treatment’. The measures on benefits and incentive schemes will come into force in April next year. As the dust settled, there was a consensus in the private hospital sector that, hospital disposals aside, the measures were something the industry needed to address. The CMA, which replaced the Office of Fair Trading and Competition Commission in April, will review the situation in April 2019. The private healthcare industry must expect significant scrutiny for several more years yet. Hospital groups strongly disputed the evidence of overtreatment and overdiagnosis, saying that there was instead evidence of undertreatment in the NHS A prescription for growth? There was optimism in some parts of the sector about increasing the size of the private healthcare market over the next year. But other operators were more guarded in their optimism, pointing to the continuing decline in the number of individual private patients in a ‘stagnant’ market. In October, Bupa published Prescription for Growth, which posited a growth of more than £2 billion if private healthcare was made more accessible, largely through removing tax disincentives. The report from the insurer said the overall size of the market could go from £3.6 billion to £5.8 billion in 2025 if the economy recovered and some reforms were made to the industry. This would have the side effect of freeing up £1.1 billion in resource for the NHS by 2025, Bupa’s researchers found. 8 | REVIEW OF THE YEAR


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PRIVATE HEALTHCARE EDITION Spending on private healthcare has been flat in real terms for more than a decade, and the analysts also warned that the failure of the market to improve once the economy returned to growth in 2009 was especially worrying. Managing director of Bupa Health Funding Dr Damien Marmion wrote in his foreword to the report that the sector ‘could see consultants growing their private practices, hospital groups better utilising their excess capacity, and more customers turning to health insurers, and private healthcare as a whole’ if they focused on the needs of customers. He also urged the players in the market to work to overcome their suspicion of one another. He noted that the Competition and Markets Authority (CMA) inquiry group chair Roger Witcomb described the sector as one that ‘appeared, generally, to be characterised by distrust, disagreements and disputes’. But the report was also stark in its warning, saying: ‘The sector has to ask itself whether it appears to be running out of steam because of rising prices, failure to innovate, a perceived lessening of the quality differential compared to the “free” alternative, a failure to adequately demonstrate value to the consumer – or, all four?’ The researchers from Laing and Buisson who wrote the report for Bupa concluded that price inflation might be the biggest single factor hampering the growth of the sector. Citing evidence of revenue increases significantly higher than inflation in private practice and at private hospital groups, the report concluded: ‘This demonstrates a reliance on customer loyalty that may not continue.’ It said that, while there was no imminent risk of a downward spiral in demand from corporate clients, this was already the case in the individual‑payer segment of the market. As a proportion of the sector’s income, individual payers have already been overtaken by NHS work. ‘People with company-paid health cover are now the largest single group of independent hospital customers, accounting for an estimated 34% of patients, followed by NHS-funded (28%) and individual-paid private medical insurance (21%).’ The data indicated that, since the abolition of tax relief for private medical insurance contributions in 1997, individual customer numbers had fallen by a third. Could tax relief on private healthcare stimulate growth? Yes, argued the report, but it was conceded that this measure ‘is not on the political agenda’ at the moment, and is not likely to return to it until public finances improve. The report said this was down to ‘the ‘dead money’ argument – a belief that the amount of ‘new’ money that would be drawn into healthcare would be greatly exceeded by the value of tax relief spent on people who would have bought private medical insurance. Instead, the document suggested lobbying the government to reduce tax disincentives on employers buying corporate medical insurance schemes. Bupa said even ‘conservative’ economic modelling showed there were REVIEW OF THE YEAR Bupa’s report said that the overall size of the market could go from £3.6 billion to £5.8 billion in 2025 if the economy recovered and some reforms were made to the industry | 9


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THE PARLIAMENTARY REVIEW Highlighting best practice significant benefits to the economy of expanding workplace health cover. The document outlined substantial benefits to the national workforce and that removing the tax disincentives could see another 2.3 million employees covered, 3.8 million fewer sick days taken a year and nearly half a billion pounds of productivity gains for employers. But existing corporate customers cannot be taken for granted, according to data gathered for a study by pollsters YouGov in July. This showed that, while 53% of businesses that offered private medical insurance to employees considered it to be a standard benefit, more than half of the business leaders polled thought the industry needed to be overhauled – a higher proportion than for the banking industry. The data showed 48% saying private healthcare should be ‘more affordable’, while 42% of those whose companies did not offer it said price was the main barrier to their using private healthcare. The report warned that continued above-inflation price increases from the healthcare provider companies could see existing customers decide the scheme had become unaffordable. Failing that, the report said, ‘new, non-traditional providers’ could be encouraged to enter the sector. It said this could see ‘significant efficiencies … delivered while maintaining outcomes and safety’. Perhaps unconvincingly, the report added: ‘While this may appear to be against the short-term commercial interests of some private hospitals, it would benefit both the sector and individual providers, as a more efficient service offering better value for money will stimulate increased demand for health cover overall.’ Bupa also called on the private hospital groups to plough some of their profits back into expanding the market. The conclusion of Prescription for Growth called for: ‘An agreement with hospitals to dedicate some of the efficiency savings for use in partnership with insurers to promote private healthcare and bring new customers into the sector.’ Laing and Buisson’s Health Cover report showed the proportion of the UK population covered by private medical insurance falling from a high of 12.5% in 2007 to just over 10% in 2013. The report contrasted this with the picture in Australia, where ‘According to latest government figures over 11 million Australians have hospital cover (47% of the population) and over 12 million (or 55% of the population) have some form of general treatment cover.’ Dr Marmion of Bupa said increasing the customer base was particularly important because: ‘Any sector that has seen its prices rise and a consistent drop in the number of individuals choosing its products, over a number of years, has issues to address.’ He added: ‘That challenge becomes even more severe when its customers have access to a free alternative.’ The report said both insurers and providers need to work together to A report by Laing and Buisson’s showed the proportion of the UK population covered by private medical insurance fell from a high of 12.5% in 2007 to just over 10% in 2013 10 | REVIEW OF THE YEAR


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PRIVATE HEALTHCARE EDITION efficiencies the NHS is also trying to encourage, such as a move towards day surgery and the use of local rather than general anaesthetics. Senior figures in the sector admit in private that the industry is starting to see the effect of above-inflation price increases. There was some sympathy with the Bupa analysis that the industry might be nearing the threshold at which care becomes unaffordable for a significant proportion of the customer base. But there are already some signs of a better relationship between the big hospital groups and insurers. provide ‘proof’ of the effectiveness of private healthcare. It said this would involve publishing data on the performance of ‘all doctors and hospitals’ plus ‘active collaboration between insurers, hospital operators and privately practising doctors [to] make the sector a genuine beacon of transparency by giving patients and customers easy-to-understand data’. Part of this would involve more leadership from clinicians in not pressing for the most costly procedure for patients. This would mean reconciling ‘efficient medical practice while maintaining excellence and reasonable clinical freedoms’, it said. The report highlighted the kind of At the start of November, Spire announced details of a deal with Bupa that fixes prices for between four and six years, starting from April 2015. In a joint statement, Spire and Bupa said the ‘comprehensive agreement’ would address some of the ‘key challenges’ faced by their customers. They said: ‘This includes improving affordability, particularly for outpatients, and measures to build on existing high standards of quality of care.’ In line with Bupa’s entreaties in the conclusion of Prescription for Growth, Spire said: ‘The key terms of the agreement reflect a desire by both parties to encourage increased private healthcare customer volumes.’ The companies also agreed to work together on a ‘quality framework’ for customers. Spire healthcare chief executive Rob Roger said that, after the conclusion of the CMA review, the announcement of Bupa’s agreement with Spire represented ‘a decisive shift to a more partnership-style approach, the aim of which is to build on the current excellent working relationship between Spire and Bupa, in order to drive volume growth in independent patient numbers, based on affordable healthcare and great clinical outcomes.’ Bupa’s managing director of health funding Dr Damien Marmion said the agreement was ‘groundbreaking’ and REVIEW OF THE YEAR Providing ‘proof’ of the effectiveness of private healthcare would involve publishing data on the performance of all doctors and hospitals Rob Roger, healthcare chief executive of Spire, said its partnership with Bupa would help drive volume growth in independent patient numbers | 11


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THE PARLIAMENTARY REVIEW Highlighting best practice that the new arrangements were ‘a solid basis to address the affordability of private healthcare’ while increasing quality. He added, perhaps pointedly, ‘we will be looking to work with other hospital providers in a similar way’. Circle and the NHS It has been an eventful year for what is arguably the highest profile private healthcare group in the UK. In August it was revealed that Circle Partnership, which was granted the franchise to run Hinchingbrooke Health Care NHS Trust in Cambridgeshire, had neared its £5 million limit in losses at the hospital. Circle, which took over the running of the NHS trust in 2012, had spent £4.85 million in ‘cumulative support payments’ at the trust. The 10-year contract with Hinchingbrooke states that the company will cover any deficit at the trust via the support payments – up to a cumulative total of £5 million. Above this point ‘both parties must agree the basis for the continuation for the franchise’, Circle’s half-yearly report said. The news came after a year in which NHS policy seemed to back decisively away from the idea of letting private firms run NHS trusts under a franchise agreement. 2014 saw proposals for three such schemes dropped at Weston Area Health NHS Trust in Somerset, Wye Valley NHS Trust in Herefordshire and George Eliot Hospital NHS Trust in Warwickshire. George Eliot Hospital had seen bids entered by Circle, Care UK and South Warwickshire Foundation Trust. The only NHS trust where a private management franchise is still being considered is Peterborough and Stamford Hospitals NHS Foundation Trust. This is, in all likelihood, down to the approaching general election, and because private franchise management has always been considered controversial. In November, the Health Service Journal reported that plans to downgrade the accident and emergency department at Hinchingbrooke were being considered in the local health economy. This could potentially leave the hospital as a hub for more lucrative elective work. Senior sources in the health economy said planning was not at an advanced stage, and a spokesman for the firm said it was ‘open minded about the future form of services there’. In September, the hospital was inspected by a team from the Care Quality Commission, which noted several problems with standards of care at the hospital. While noting the concerns, a spokesman for Circle said the organisation had come a long way in quality terms over the two years. Circle’s chief executive Steve Melton said at the release of his company’s half-year report that the nature of NHS procurement was starting to move away from franchises. He pointed to the abandoned George Eliot Hospital Dr Hisham Adbul-Rahman, chief executive of Hinchingbrooke Hospital 12 | REVIEW OF THE YEAR


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PRIVATE HEALTHCARE EDITION Salford Royal NHS Foundation Trust, and is expected to make wide-ranging recommendations on the form of governance NHS hospitals can take. In November, Circle was embroiled in another row with the NHS over a different form of contracting, this time in Bedfordshire. The local NHS budget holder, Bedford Clinical Commissioning Group, had appointed Circle Partnership as the ‘prime provider’ to run £120 million worth of integrated musculo-skeletal services in the area – a contract Circle had won over the local NHS trust. proposal as one that ‘probably signals a change of political guidance to the NHS, which I interpret to be “Why do these projects one by one … when perhaps that isn’t going to be on the scale required to solve the NHS’s problems?”’ Mr Melton said he was encouraged by a government review of ‘hospital chains’ in the NHS, which he said provided the opportunity to ‘tackle failing hospitals on a much bigger scale than perhaps one-off procurements’. The review is being carried out by Sir David Dalton, chief executive of But a row subsequently broke out between Bedford Hospital NHS Trust and the clinical commissioning group, with the trust saying that, if it could not get a minimum income guarantee for the work it would deliver, it could not guarantee the sustainability of the trust’s accident and emergency services, because the elective work Circle now controls cross-subsidises the loss-making trauma services at the trust. As a result, the trust had decided not to sign the contract to be a supplier to the prime-provider contract tendered by the clinical commissioning group, and would instead market its own services to the population of Bedfordshire, in competition with Circle. This situation remains unresolved to date, and could have future implications for this form of contracting with the NHS. A similar contract for musculo-skeletal services was awarded to Bupa as part of a joint venture in Sussex. This too has seen the local NHS trust raise concerns about its trauma work being destabilised. But many thought the complaints from the NHS providers were merely attempts to block changes they were unhappy with, and commentators pointed out that both trusts had bid for the contracts they were now complaining about. REVIEW OF THE YEAR Bedford Hospital NHS Trust said that if Bedford CCG could not provide a minimum income guarantee it could not guarantee the sustainability of accident and emergency services Musculo-skeletal work is a good specialty to outsource because it forms a high proportion of a commissioner’s overall elective‑care spend and is a rich source of potential savings | 13



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