Initiatives like 'payment by results', foundation hospitals, and the "deliberate injection" of independent sector treatment centres (ISTCs) and other private sector services all create a sophisticated "supplier market" in UK health care, says the author.

The escalating use of the private sector stems from the NHS Plan in 2000, when the Government pledged to reduce waiting times, but realised that the NHS was too short of doctors and facilities.

The NHS already paid for extra capacity from private healthcare on an ad hoc basis, usually to meet year-end targets. But at prices sometimes 40% higher than the average NHS cost for each operation, Health Secretary Alan Milburn was keen to find a more cost-effective system, says the author.

Independent sector treatment centres, derived from fast-track surgery units in the US and staffed from overseas to avoid draining the NHS, were his answer.

The reforms have proved unpopular with the wider Labour party, but successive health ministers have pursued the policies, says the author. Within a few years, for instance, ISTCs will perform 500,000 operations - providing the private sector with more than 1bn worth of business annually.

The most important of the reforms is 'payment by results', says the author, which underpins all others since it fixes a rate for treatment based on average NHS costs. Critics say that ISTCs are not good value for money, as they are paid at the national tariff per case but mainly perform simpler - and below average cost - procedures. The NHS is left with more difficult and costly cases, but only paid the average rate.

Private sector providers have to date also been given guaranteed volumes of patients f
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Contact: Teresa Hagan
thagan@bma.org.uk
020-738-36174
BMJ-British Medical Journal
10-Nov-2005