The government has moved to make the use of independent sector treatment centres for National Health Service procedures a much fairer process to help foster a more level playing field for the commissioning of services.

The £5 billion ISTC programme is one of the government’s flagship initiatives in the rolling programme of health reform, and is designed to help alleviate the pressure on stretched health services by paying private profit-making healthcare companies to carry out certain procedures for the NHS.

Supporters of the policy maintain that introducing a more competitive element to healthcare will help to improve the quality of services, and the government claims the use of ISTCs has helped to reduce waiting times and boost patient choice, another key focus of reform. According to the Department of Health, more than 1.7 million operations, diagnostic assessments and primary care consultations have been provided to NHS patients at ISTCs.

However, opposition to public sector involvement in healthcare remains fierce, with those against the principle arguing that it will only serve to fragment the health service and allow the private sector to profit at the expense of patients.

And earlier this year, the policy’s reputation took a huge hit on the publication of research in the British Medical Journal, which claimed that the NHS in England could have overpaid ISTCs by nearly £1 billion in the first year of contracts.

The researchers pointed out that ISTC contracts do not conform to NHS standards and stressed that the payment mechanism - whereby private centres are given cash for the number of patients referred and not the number of procedures carried out - could be responsible for a huge waste of money as centres fail to deliver the number of services commissioned.

However, it seems that the government has now moved to address this concern, promising that in future contracts to provide services from ISTC will not only be paid under the same pricing arrangements as NHS providers but will also be delivered under the terms and conditions of the standard NHS national contract for acute hospital services.

“We need providers of NHS services, to deliver safe and high quality care for patients and value for money, but there should also be consistency in pricing and contracts,” said Health Minister, Mike O’Brien. “In the past the Independent Sector have sometimes been guaranteed payments. In the future it is intended that contracts will operate at NHS tariff prices using the standard NHS contract for hospital services,” he added.

2010 expiry
The first wave of contracts are due to end in 2010, and both independent sector and NHS providers will be eligible to bid for the new contracts, which will be commissioned locally by the NHS, DH. Bidders will be invited to deliver services at NHS tariff prices, under Payment by Results (PbR) - a transparent system where payment is linked to activity and adjusted for casemix to ensure a fair and consistent basis for funding - for the services they provide.

But commenting on the move, Dr Hamish Meldrum, Chairman of Council at the British Medical Assocation, said: "It's a shame it’s taken so long to get an acknowledgement that skewing the playing field in favour of private companies has been unfair and wasteful. Independent sector treatment centres have been able to cherry-pick "easier" cases, potentially destabilising existing services. Even in future, private companies will be at an advantage because when things go wrong with a patient’s care, it’s the NHS that picks up the tab".

And he went on to stress that in the current turbulent economic climate the NHS "cannot afford poor value contracts, unnecessary competition, and duplication of services", and called for a "whole-systems approach" to healthcare provision, in that the NHS should be run "on the basis of co-operation collaboration, not competition".