28 April 2006
The Department of Health faces pressure to open up its procurement arrangements following concerns that its £4.6bn programme for private treatment centres does not offer good value for money.
The calls were made by the Commons health select committee, which this week accused Health Secretary Patricia Hewitt of being overly secretive about information the department claims is 'commercially sensitive'.
They come amid controversy over NHS deficits and the costs of new GP and consultant contracts, which the department has admitted underestimating.
The committee is now concerned that the DoH might also be paying over the odds for its independent sector treatment centres. But it has been unable to conclude its investigations, as the DoH has refused to release the methodology used to evaluate contract bidders, nor the full business cases of the 13 so-far successful bidders.
Committee chair Kevin Barron told Hewitt at a hearing on April 26 that the DoH's reluctance to release the documents was 'preventing us from properly scrutinising the procurements'.
Hewitt replied that the procurements had been 'vigorous' and added: 'There are aspects of any procurement that are commercially confidential and we undertook not to publish and not to share that information.'
She agreed to check that the DoH was not being 'more restrictive' than other departments in what it releases to committees.
Concerns over the costs of the ISTC programme stem from the premium paid for operations and the guaranteed revenues given to contractors.
Whereas the DoH claims that the centres are paid, on average, only 11.2% above the NHS tariff for the elective treatments they perform, the committee has been told that it is nearer 30%, once the less complicated case mixes of ISTCs is taken into account.
Those concerns relate to the first wave of ISTCs. A much larger procurement process was launched in 2005. It follows a revised value for money guidance set out in a review of the first wave, which the DoH has also refused to show the committee.
However, a briefing document released to Public Finance under the Freedom of Information Act confirms that the DoH assumes that all successful bidders will continue to receive revenue guarantees.
The committee hearing came in a tough week for Hewitt. Backed by Prime Minister Tony Blair, she had repeatedly to defend her claim in an interview on April 23 that the NHS had had its 'best year ever'.
Later, on April 26, she was heckled and jeered for the second time in the week when she spoke at the Royal College of Nursing conference in Bournemouth. She had endured similar treatment two days earlier when addressing the Unison conference in Gateshead.
PFapr2006
