Written evidence submitted by Independent Healthcare Providers Network


About IHPN


  1. The Independent Healthcare Providers Network (IHPN) represents independent healthcare providers of both NHS and privately funded clinical services, from acute, diagnostic, clinical home healthcare, primary and community services. 




  1. Before the onset of the Covid-19 pandemic, independent providers delivered more than 500,000 surgical procedures every year, as well as almost 10% of all NHS-funded MRI scans, with almost half of all NHS community services providers found in the independent sector. This partnership working was further strengthened during the pandemic, including through the national independent/NHS hospitals contract whereby the entire independent hospital sector made available their beds, staff and equipment to the NHS this ensured that some 3.3 million vital non-covid treatments could continue, significantly easing pressures on the NHS. A similar partnership was also set up with independent diagnostics providers who delivered over 250,000 NHS scans in the first year of the pandemic. Likewise, independent community providers across the country worked with their NHS colleagues to repurpose their services and ensure that vital treatment and care could continue.


  1. Since the pandemic, independent healthcare providers – and IHPN on their behalf – have been working proactively with NHS England, the Department of Health and Social Care, and NHS local systems across the country to contribute to the ‘elective recovery. While national contracting arrangements established during the peak of the pandemic have lapsed, independent providers have offered to deliver increased capacity for NHS-funded activity to help reduce NHS waiting lists.


  1. Unfortunately for the past 18 months, and despite this capacity offer, NHS activity delivered through the independent sector has struggled to return to pre-pandemic levels across almost every specialty (ophthalmology being the notable exception). A key part of this issue is that referrals to the IS through the electronic referral system (eRS) have remained below pre-pandemic levels across the majority of specialties. It is within this context that IHPN and the IS view the ongoing crisis facing NHS waiting lists. The latest NHS performance figures show a record waiting list in excess of 7 million, with some 400,000 of those having been waiting for more than one year for treatment.


  1. Tackling the NHS backlog in both acute, diagnostic, and primary/community care must be the number one priority for all parts of the healthcare system. IHPN welcomed the publication of the elective recovery delivery plan in February 2022, and recognised the clear commitments within that to utilising independent sector capacity.


  1. However, the experiences of our members, and the data on activity still indicate that a great deal more progress is needed if real inroads into the backlog are to be made. In our last submission to the Public Accounts Committee on NHS waiting lists, we highlighted the need for the NHS/independent sector partnerships to be strengthened even further, in particular through the establishment of long-term, stable contracting mechanisms with the independent sector to bring in new capital, capacity and innovation; through strengthening patient choice and giving people greater control over where they are treated and how quickly; by implementing fair pricing models which incentivise providers to treat as many patients as they possibly can while ensuring local systems budgets can be managed to create additionality of capacity, rather than simply alternatives; and by developing inclusive local system working to ensure local areas make use of all available capacity and look at new ways of bringing in vital investment and innovation. Our clear view is that further work still remains to be accomplished in each of these areas.


Independent sector hospital utilisation


  1. A clear commitment within the NHS elective recovery plan was is that there will be ‘more people offered the option of treatment by high quality independent sector providers, free at the point of care.’ At a simplistic level, this goal has been realised – in August 2022, RTT activity delivered by independent providers was 16.3% higher than it had been in August 2019, pre-pandemic.


  1. However, this number – the ‘headline figure’ for independent sector activity – does not tell the whole story. When viewed by specialty, it is clear that little progress has been made within the specialties that face some of the most significant challenges. Ophthalmology activity showed an increase of 126% compared with August 2019, whereas trauma and orthopaedics – a key area of independent sector support for the NHS – was up just 1.7% compared with the pre-pandemic baseline. In fact, August 2022 is just the second month since the end of the national hospitals contract in April 2021 where trauma and orthopaedics activity in the independent sector has outperformed pre-pandemic levels. Meanwhile, gynaecology is down 7.8% and gastroenterology is down 41.3% compared with 2019.


  1. Over the course of the past 18 months, IHPN, and the independent sector in general, has enjoyed a positive working relationship with the elective recovery team at NHS England. That said, despite the clear intentions of NHS England to work with independent providers at a national level, our members experience has been one of significant variations in relationships with NHS systems locally. Unfortunately this inconsistency of approach locally has been the biggest barrier to maximising the utilisation of available capacity.


  1. Broadly, the barriers encountered can be broken down into the following categories:


Patient choice


  1. We have significant concerns that, as things currently stand, the patient choice process – primarily through ‘Choose and Book’ and the eRS – is not functioning for a large cohort of patients across a large number of local NHS systems. It is not necessarily clear what the reasons are for this – potential influencing factors are the increased usage of triage centres and referral assessment services, lack of appropriate information for primary care providers and patients, and direction to referrers from trusts and systems on referral routes.


  1. Pre-pandemic, approximately 80% of independent sector elective activity originated via eRS referrals. However, data shows that, among the top six specialties by volume in the independent sector, only opthalmology referrals are currently above 2019 levels; the majority of these referrals coming from high-street optometrists, and not from primary care as with other specialties. Among other specialties, the most recently available data showed orthopaedic referrals down 8% compared with 2019, dermatology referrals down 30%, gastrointestinal and liver referrals down 35%, ear, nose and throat referrals down 51% and gynaecology referrals down 32%.


  1. In order to maximise elective activity in the independent sector and give the overall recovery efforts the best chance of success, these eRS referral trends need to be reversed as a matter of urgency. Information from our members indicate that, largely, addressing these issues will require targeted local action. Our view is that there is a clear disconnect between the policy direction coming from the Department for Health and Social Care and NHS England, and the implementation of these policies on the ground.


  1. At present, most NHS systems appear to be prioritising the process of transferring patients to the independent sector from existing waiting lists, rather than maintaining a flow through eRS. From a trusts’ perspective, this approach can help mitigate health equality concerns – trusts are able to fill available activity slots with those patients who have waited the longest. However, this method can be inefficient in terms of overall patient volume, and invariably leads to fewer patients being treated overall.


  1. Patient choice was introduced in the NHS in the early 2000s as a key way of both driving up efficiency and quality in healthcare, as well as ensuring NHS patients who are unable to pay for private care can have greater control over where they are treated and how quickly. While these legal rights for NHS patients to choose where they receive care if they need to see a consultant for diagnosis or treatment (including in an independent provider) have been in place for well over a decade now, patient awareness of these choices remains low, with polling consistently showing that less than half of the public are aware of their right to choose.


  1. It is particularly important that patients are able to make choices at the point of referral about who provides their care and any move towards introducing Single Patient Lists in ICSs should ensure that choice is not undermined, given the efficiencies that come from patients themselves choosing their preferred provider. Likewise, as the Health and Social Care Select Committee have previously made clear, it’s important that patients retain the right to receive treatment outside the area served by their local Integrated Care System. 


Fair and transparent NHS payment systems  


  1. Currently, NHS providers – chiefly trusts – are paid through the aligned payment and incentive scheme (API). Introduced in 2020, but due to the pandemic only fully implemented this year, API is a form of block contracting, albeit one with an inbuilt bonus/penalty system for over- or under-performing systems. Currently, under API, a system is allocated a pot of money to fund an agreed level of activity for the financial year. The agreed activity level for 2022/23 is – as a national average – 104% of comparable activity delivered in 2019/20. Individual systems have agreed differing individual targets based on a variety of local and regional factors, including capacity and past performance.


  1. If a system exceeds its agreed activity target for the year, it is paid for the additional activity carried out, at a rate of 75% of the national tariff price for that activity. If a system falls short of its agreed activity target for the year, it is required to pay back funding received for activity not delivered, also at a rate of 75% of national tariff price for that activity.


  1. Independent providers, meanwhile, are largely paid through the national tariff – effectively a payment by results system, where providers are paid at an agreed rate per unit of activity delivered.


  1. This dual system creates a serious conflict with the goal of delivering as much activity as possible. Firstly, NHS systems who do not expect to meet their activity target (the majority of systems) and who are already expecting to be run at a deficit, are unlikely to be incentivised to maximise activity, but rather to protect the finances that they have secured as an insurance against future costs. The marginal rate ‘top-up’ for additional activity is simply not attainable for most systems in 2022/23.


  1. Worse, from the perspective of maximising additional capacity through the independent sector, the API scheme sits in direct conflict with tariff. Where a system has contracted for the use of IS capacity, it will still be obligated to pay for IS activity at 100% of the contracted price even if the system does not hit is overall activity target and so is penalised at 75% of tariff rates. This means that, for systems who are uncertain of hitting their targets, contracting with the IS becomes extremely unattractive, with the possibility that a system would find itself in a position where financial penalties mean it has to make significant savings in one area in order to meet its payment obligations to the ISP.


  1. Given that systems are already extremely cautious about the financial settlement – and many are predicted to run with significant deficits – this is further encouraging many systems to see the IS as an unaffordable risk, instead of as a key partner in elective recovery. Feedback from members is clear that many systems would rather protect the funding that they have received and keep it ‘in-house’ – even if that comes at the cost of delivering additional activity through independent sector partners. Our strong view is that the most direct way of mitigating this is a move back towards a system of payment by results for NHS providers on electives.


Stable long-term contracting mechanisms 


  1. Tackling the NHS backlog is likely to take many years to achieve, and it’s therefore vital that sustainable, long-term measures are introduced to ensure the system has enough capacity to meet patient demand in the next decade. 


  1. A significant barrier in realising this aim is the frequently last-minute nature of planning guidance, financial settlements to trusts, and other indicators from NHSE and DHSC to local health systems. Planning guidance and tariffs are routinely published less than 24 hours before they are due to come into effect. This continues to create significant uncertainty for all parts of the healthcare system.


  1. This is affecting not only providers commissioned by the NHS locally, but also independent organisations on the Increasing Capacity Framework, which has been established to help bring in independent capacity and cut waiting lists.


  1. More broadly, however, there remains a significant appetite within the independent health sector to support the NHS over the coming years, including through capital investment for new and remodelled services which can benefit NHS patients. This is likely to be more nimbly deployed than public capital and entail less public sector risk, and could play a significant role in increasing NHS capacity – particularly with regards to cancer treatment and diagnosis – if sustainable, long-term contracting mechanisms are put in place.  


  1. The benefits of long-term NHS/independent sector partnership-working was demonstrated through the establishment of Independent Sector Treatment Centres in the 2000s. These centres were introduced in 2003 to provide services to NHS patients but were owned and run by organisations outside the public sector under five-year contracts. This new approach helped bring in new investment and capacity to the NHS and successfully helped reduce waiting times. It is perfectly possible that this could be replicated again given the current pressures on the system.


Inclusive system level working  


  1. With local systems needing all the capacity they can get, it’s vital that the new Integrated Care Systems take an inclusive approach and work with all local providers – including those in the voluntary, social enterprise and independent sector – to bring in new capacity as well as new ideas and ways of working.


  1. We remain concerned that the establishment of a new procurement process in the NHS could inadvertently establish practices that, as the Health and Care Bill Committee said might, “favour incumbents and excludes innovators”- impeding the adoption of new and better ways of cutting the backlog.


Maximising the use of insourcing


  1. Insourcing providers also have a key role to play in enabling NHS providers to maximise their activity levels and deliver efficiencies in the use of the NHS state. This route for delivering capacity can help maximise the use of NHS facilities, providing genuine additionality in terms of activity, and can be scaled more readily than some other solutions. We are concerned, however, that despite these benefits, the existing Insourcing of Clinical Services framework has been allowed to lapse, and is unlikely that the new framework will be in place before March 2023. Additionally, there is not yet a clear policy framework related to the Elective Recovery Plan to target an increase in the use of insourcing alongside outsourcing models of additional independent sector activity.




  1. The majority of people on NHS waiting lists are waiting for diagnosis. The contribution of improved diagnostics to tackling the elective backlog is therefore really important, and IHPN and its members are supporters of the Community Diagnostic Centre programme which is aimed at improving diagnostic capacity across the NHS.


  1. However, the CDC programme has not yet delivered its full potential, with levels of diagnostic activity in most areas no higher than it what prior to the pandemic. We believe there is more that the independent sector can deliver to move this programme forward.


  1. Nevertheless there are a number of barriers to delivering higher levels of diagnostic tests through improved partnerships with independent providers. These include:


-          An over-reliance on mobile scanning services that can be located at Trust sites for long periods over which time it could be more efficient and cost-effective to invest in fixed provision.

-          A sense that the CDC programme has led to investment in diagnostic facilities on existing hospital sites rather than in community based locations. The emphasis on using hospital sites has also arguably led to increased costs of development in CDCs given the need to invest significant sums in upgrading facilities whereas purpose-built community sites may well be delivered at lower cost.

-          A lack of strong procurement expertise at system level that can help facilitate long-term partnerships with the independent sector, potentially including the deployment of independent sector capital to help turbo-boost the CDC programme


Community based services


  1. We believe it is vital that the waiting list for community provision is given equal importance at the elective backlog. Greater understanding at all levels is needed both about the options for tackling community based waits, and also that the contribution community services can make to the elective backlog both in helping to avoid the need for interventional care (e.g. through pain management) or by supporting people to keep healthy while they wait (e.g. “prehabilitation”).


  1. To achieve this is it vital that Integrated Care Systems are encouraged to work constructively with the diverse market of community services providers that includes large numbers of independent sector organisations including social enterprises and the voluntary sector alongside commercial entities.


November 2022