The NHS in England may have overpaid the first wave independent sector treatment centres by as much as £927 million for clinical services, warn researchers in an article published on bmj.com today.
They believe that the time has come to call a moratorium on all private contracts until the centres have been properly evaluated and investigated.
The £5bn independent sector treatment centre (ISTC) programme aims to provide extra capacity to the NHS and reduce waiting times for elective surgery. It is part of the government's policy to use NHS funds to contract with for-profit multinational healthcare corporations to deliver clinical services.
Until now, all contracts have been confidential. But, following an appeal under the Freedom of Information Act in Scotland, the only Scottish ISTC contract is now in the public domain.
This provides the first opportunity to evaluate contract performance against the claims made for the policy. So Professor Allyson Pollock and Graham Kirkwood at the University of Edinburgh analysed this contract together with a private sector report on the centre's value for money.
They found that the contract reporting requirements do not conform to NHS standards.
They also highlight concerns over the "take or pay" payment mechanism for ISTC contracts. The first wave schemes are based on patient referrals rather than actual treatments delivered. This means that providers are paid a guaranteed amount even if they don't treat the contracted volume of patients.
For example, the Scottish ISTC contract is £18.7 million over three years, £5.7 million a year for referrals. The contract payments are based on 90% take or pay on referrals, but it carried out only 32% of contract referrals worth £1 million in the first thirteen months of operation. This means that in the first year of operation it performed only 18% of the total annual contract value.
Scottish health boards may have overpaid up to £3 million in the first year of the contract, say the authors. If the same findings apply in England then as much as £927 million or almost two thirds of the total first wave contracts worth £1.54 billion might have been overpaid to ISTCs.
The second phase of contracts is valued at over £3.5 billion, but neither the payment mechanisms nor the payments made for these have been published.
The authors also point to concerns over availability and quality of data, making it impossible to assess ISTC performance and value for money against NHS operated treatment centres.
Finally, they warn that, not only are ISTCs selecting the low risk patients, but they are choosing easier procedures within the contract. In either case "the impact may be serious and destabilising for the NHS both financially and for training."
"The time has come for to call a moratorium on all ISTC contracts, until all the contracts have been published, and the ISTCs properly evaluated and investigated," they conclude.