Myth 10: Private providers will just cherry-pick the easiest cases, undercutting the NHS

The Government's Claim:

The less complex the procedure, the less someone – including in the private sector – will be paid. Unlike Labour, we will not rig the market in favour of the private sector.

The Rebuttal

"we will not rig the market in favour of the private sector"

This has been addressed on another page. The private sector gets a huge advantage by not having to provide training, teaching hospitals, A&E, or research and development, yet it will be the NHS providers who will be penalised by being charged by the government for "state services". The "market" will be rigged against the NHS.

"The less complex the procedure, the less someone – including in the private sector – will be paid"

This shows a stunning lack of understanding about how Payment by Results works. Each procedure, for example, cataract removal, is paid at the same rate (the tariff). However, not every patient is the same. There will be some cases that are more difficult than others even though they are covered by the same tariff. There is plenty of evidence where this has happened with last government's Independent Sector Treatment Centre programme (ISTC). Allyson Pollock and Graham Kirkwood (BMJ 2009;338:b1421) have written about ISTCs and they highlight many problems that arise when private providers are used. They point out:

ISTCs are explicitly allowed to cherry pick, selecting the low risk patients. Browne and colleagues have shown how case mix in ISTCs differs from that in the NHS, making any comparisons of costs and quality difficult. Our analysis also shows that ISTCs are performing the easier procedures within the contract. For example, data from the Information Services Division show that only 6% of referrals contracted for joint replacement and 11% for general surgery resulted in actual treatments, compared with referrals for minor procedures, which have much higher rates of treatment completion of over 80%.

The ISTCs were paid fixed tariffs for the work they carried out (however, as the current government points out, these were on average 11% more than the NHS tariff). Pollock and Kirkwood found that ISTCs would re-refer the more difficult, and expensive, patients back to the NHS: "cherry-picking" patients. A patient may have conditions unrelated to the elected procedure they will receive, for example a patient receiving cataract surgery may have learning difficulties, or epilepsy or Parkinson's all of which will require extra precautions have to be taken and hence the simple tariff-based procedure becomes more expensive for the provider.

The problem with the ISTC programme is that the provider was paid for referral, not for treatment. The government says that providers will be paid for treatment, but they do not say that once referred the provider must treat the patient, since there is no such provision in the Health Bill it means that once a private hospital receives a more complicated case they may refer the patient back to the NHS. The NHS has a responsibility to treat patients, private providers will never have this responsibility because they know that the NHS is always there for the more difficult cases.

There is another interesting piece of information from the Pollock and Kirkwood study: the restriction of commercial confidentiality. They say:

[the] lack of access to data due to commercial confidence clauses means that the contracts, performance, and value for money cannot be scrutinised.

This means that if the private providers are cherry picking we will not know about it because such data will be "commercially confidential". There is nothing in the Health Bill to prevent this, indeed, the Health Bill enables private providers to be even more secretive and apply "commercially confidentiality" clauses to their contracts with the NHS.

The Health Bill will not prevent private providers cherry picking because it does not mandate that once referred the provider must treat the patient. The Health Bill also strengthens the use of commercially confidentiality and so the public will not know whether the private sector are cherry-picking.
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