The National Health Service in England could have overpaid independent sector treatment centres by nearly £1 billion in the first year of contracts, according to research published in the British Medical Journal.

The £5 billion ISTC programme is a flagship initiative under the government’s rolling programme of health reform, and is designed to help reduce the strain on stretched health services by paying private profit-making healthcare companies to carry out certain NHS procedures such as routine operations.

But the policy has been hit by criticism right from the start, with those against public sector involvement in healthcare arguing that it will only serve to fragment the health service and allow the private sector to profit at the expense of patients.

Contracts have been confidential to date, but Professor Allyson Pollock and Graham Kirkwood at the University of Edinburgh were able to analyse the only ISTC contract in Scotland - between NHS Tayside and Amicus Healthcare - after an appeal under the Freedom of Information Act opened it up to public scrutiny.

Worryingly, their analysis discovered that reporting requirements for the contract do not conform to NHS standards. Furthermore, they voiced concern over a clause written into the first wave of contracts that gives private centres cash for the number of patient referrals and not the number of treatments undertaken.

Pollock and Kirkwood found that this payment mechanism could be responsible for a huge waste of money, as analysis of the Scottish ISTC agreement found that, while it is being paid £5.7 million a year for referrals, it carried out treatment for just 18% of the contracted value in the first year.

This, the researchers write in the BMJ, means that Scottish health boards may have effectively overpaid the scheme by £3 million in the first year of the contract. Moreover, applying these findings to England churns out a potential overpayment to ISTCs of a breath-taking £927 million in just the first year.

However, a spokesperson for the Department of Health told PharmaTimes UK News that the figures quoted by the researchers “are based on one ISTC in Scotland and are not representative of the performance of the ISTC programme in England.”

In addition, the spokesperson stressed “nationally, utilisation at Wave 1 and Phase 2 ISTCs is 87% and 85% respectively for the year to March 2009, significantly higher than the estimates made by the researchers”.

Last year, Pollock claimed in a BMJ article to have uncovered “a worrying failure” by the Department of Health to collect and publish data on the performance of private treatment centres. And these concerns have come to the fore again, with Pollock and Kirkwood criticising the availability and quality of data, which, they say, makes it “impossible” to assess the performance of ISTCs against the NHS.

‘Cherry-picking’ patients
Furthermore, they warn that ISTCs are not only cherry-picking low-risk patients but also the “easier procedures” in the contract, which could be “destabilising for the NHS both financially and for training”.

But the DH spokesperson insists that the ISTC programme “has helped improve health services for patients, reduce waiting times and improve patient choice”, and that performance is monitored during a contract. “The Department works with providers and the NHS to ensure services are responsive to local need and that any under-utilisation is recovered where possible”, he maintained.

But commenting on the paper, Dr Jonathan Fielden, Chairman of the British Medical Association’s Consultants Committee, said that the ISTC scheme “has been shown to be a politically motivated billion-pound experiment”, and he warned that in the current economic climate, “the government must end its costly fixation with private provision and concentrate on promoting the best care for all, using the great talent available within the NHS.”

The findings of the analysis have prompted Pollock and Kirkwood to call for a suspension on all ISTC contracts until all have been published and “properly evaluated and investigated”.