16. The other key development is a series of decisions which have put into question the Government's policy of allowing private sector companies to compete for NHS-funded treatment.
17. One of the main elements of this has been the significant weakening of the programme for Independent Sector Treatment Centres (ISTCs). In 2005, Ken Anderson, then Commercial Director at the Department of Health, set clear standards for the viability and stability of the market.14 These are not being met. The Department of Health is setting up a range of contracts which have no long term sustainability. Wave 1 of the ISTCs was fairly successful procured and completed. But in Wave 2 many schemes have failed to be procured on time. It is unlikely that the planned 250,000 patients a year treated that was due to occur in Wave 2 will actually be achieved.
18. The most striking example of this is the cancellation of BUPA's highly successful treatment centre at Redhill by the Surrey and Sussex NHS Trust.15 This was recognized as a very successful centre which was delivering a high quality service and in which BUPA and NHS staff were working side by side. The decision not to continue this contract must raise doubts about whether any centre, however successful, is going to get local backing once the special national support ends.
19. There have also been delays in the development of the Framework for Procuring External Support for Commissioners (FESC). This is a framework of services commissioned at the national level to support PCTs that wish to gain a range of commissioning skills and services from the private sector. It has been reported that there has been nearly a three month delay in finalising the list.16
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14 Anderson, K. (2005), IS-TC Market Sustainability Analysis. "For a provider to have basic national coverage with presence in all regions, the provider would need to have approximately 10 centres across the country. Therefore, to achieve a sufficient level of operating efficiency a provider should have at least 150k procedures per year (i.e. 10 centres with 15k procedures per centre) to be able to have the basic infrastructure to compete in most regions. This analysis would indicate that the size of the market should be at least 600k procedures per year to have four national providers and create healthy levels of local competition on a national scale …. There is an emerging IST market which is not sustainable with the current volumes and number of players - it needs to grow and/or consolidate, otherwise in four to seven years time it is likely to stagnate and ultimately collapse."
15 Financial Times, 23 May 2007.
16 Health Service Journal, 19 July 2007.