The National Treatment Purchase Fund has come under fire but its chief executive says it does get value for money. Martin Wall reports .
The National Treatment Purchase Fund (NTPF) has said that a new analysis of expenditure has found there is no widespread variation in the amount it pays to hospitals for similar procedures.
The NTPF said that for the 15 most common procedures funded last year, 75 per cent of hospitals levied charges that were within 20 per cent of the average.
The NTPF came under criticism in a report of the State spending watchdog, the Comptroller and Auditor General in the summer over whether it was securing value for money. The report found there was a wide variation in the amount that it was paying different hospitals for the same procedures.
Appearing before the Dáil Public Accounts Committee at the end of last month, the Comptroller, John Purcell said: "We examined the top eight procedures by volume for 2004, which represented 28 per cent of all treatments paid for by the NTPF in that year.
"We performed a detailed analysis on these cases from three angles - the extent of variation between prices paid for what appeared to be the same procedure; how the price paid compared with the putative cost as calculated under the Department's case mix system; and the hospital referral pattern for the funded treatments."
Purcell said there was some considerable variation for prices paid for the same procedures, in some cases up to three times the lowest figure negotiated, "which suggests there may be room for achieving better value for money even when taking the different patient profiles into account.
However, the NTPF's chief executive Pat O'Byrne claimed a new price analysis found that a large majority of hospitals were charging average prices.
"Following the publication of the Comptroller and Auditor General's report, the fund conducted a further price analysis of the top 15 procedures performed in 2004," he said.
Details of the analysis are contained in the fund's submission to the committee. The analysis, which deals with a range of minus 20 per cent to plus 20 per cent of the fund's average prices, shows that 11 per cent of hospitals are above that price range and 13 per cent of hospitals are below it. Therefore, 76 per cent of hospitals are within the range," he said.
Since it was established in 2002, around 35,000 people, who had previously been on lengthy waiting lists , have received treatment on foot of NTPF funding.
The general perception among the public is that the fund takes patients from public hospital waiting lists and pays for them to be treated largely in the private sector or in hospitals abroad.
However a report drawn up by the Comptroller strongly challenged this view.
It maintained that more than 40 per cent of procedures funded by the NTPF actually took place in public hospitals. More than third of treatments paid for by the fund actually took place in the very public hospital where the patient had languished on the waiting list in the first place. The Comptroller, however, acknowledged that in terms of the volume of cases dealt with, the NTPF had been a success.
He told the Dáil Public Accounts Committee last month that the NTPF "had gone some way some towards addressing the problem of the long wait endured by those requiring elective surgery".
Certainly, it would appear that the heat has very much gone out of the issue of public hospital waiting lists.
Not long ago, waiting lists generated widescale political controversy and were seen as the defining problem of the public health service in the same way that accident and emergency difficulties are today.
Brian Cowen, as Minister for Health in the late 1990s, publicly acknowledged that there was "a crisis" concerning waiting lists.
In the years following the introduction of the NTPF, it would appear that the numbers on waiting lists for public hospital treatment have fallen although we still do not have full figures for the entire country following a change in the methodology of calculation.
However, the inroads made into the waiting list figures have not come about cheaply. Up to the end of 2004 the NTPF spent around €79 million. Its budget for this year was more than €60 million.
Given the amount of work being carried out in public hospitals, the Comptroller's report begged a number of questions. Were public hospitals maximising their own capacity to carry out elective procedures or were they using the NTPF as a new income stream over and above their official State allocation?
Similarly were hospital consultants who could not , or were not allowed to carry out elective procedures due to a shortage of beds or lack of theatre space being paid, in effect, a second time for carrying out the treatment under the NTPF?
Last week, O'Byrne defended its operation. He said that it had provided treatment for 35,000 patients while operating on a budget of around 0.5 per cent of total public healthcare spending.
He said that the fund was charged with treating as many patients as possible, focusing on those who had been on waiting lists for the longest periods. He said that it had provided treatment for one patient who had been on a waiting list for eight years.
"One of the National Treatment Purchase Fund's core aims is to secure value for money. Its prices are influenced by factors such as prevailing insurance prices, capacity availability, complexity requirements and geographic considerations," he said.
"The fund uses case mix costs, estimated insurers' prices, consultant costs based on the insurers' schedule of fees and the prices proposed by peer hospitals as reference points when it is compiling its prices."
O'Byrne said the prices paid varied because the cost base of the different hospitals varied. He also indicated that prices took account of the nature and age of the patient being treated.
"A patient who needs surgery to have a gall bladder or prostate gland removed but who is otherwise fit and healthy requires a certain type of care, whereas a patient who needs such surgery but who has a history of other illnesses, such as heart disease or breathing problems, will require a more intensive and more costly form of treatment," he said.
O'Byrne said that the NTPF Purchase Fund, however, negotiated an overall inclusive price with hospitals which included all consultant fees.
He said that the Comptroller's report had referred to the use of the Department of Health's case mix system as a tool for price comparison.
He added that case mix operated by classifying hospital patient data into over 600 diagnostic related groups, or DRGs. However, he said that as "case mix provides the costs of treating patients with similar conditions, not the cost of a particular procedure, the question arises as to the effectiveness of the comparison".
O'Byrne said that in certain cases there were compelling reasons for the NTPF to use some public hospital capacity. These ranged from necessity, clinical considerations, the best interests of patients and practical reasons.
According to O'Byrne the NTPF made efforts to ensure that cases referred to public hospitals did not interfere with their normal activity. He said the fund had contracted for hip and knee operations to be carried out in hospitals that were not on call for accident and emergencies.
The NTPF had also used opportunities to use facilities in public hospitals on Saturdays where services would not normally be provided, he said.
"It is also the case that there is minimal paediatrics capacity within the private sector. To offer children the benefit of the national treatment purchase fund, a desirable objective, no alternative was available other than to use public facilities. This was achieved, for example in the case of grommets, by using otherwise unused capacity on Saturdays.
"Some other circumstances compelled the use of public in-house capacity in cases where, for reasons of clinical or patient complexity, it was clearly best clinical practice to have certain patients treated by their own consultant in the hospital in which they were on the waiting list. Not to have taken these opportunities would have left patients, both adults and children, untreated," said O'Byrne.
Public hospitals were funded on the basis of an agreed level of activity against a specified budget, which was set out in the annual service plan, he said.
"Accordingly, hospitals are charged with reaching targets as set out in the service plans. NTPF activity is over and above core funded activity. The agreement between public hospitals and the NTPF is that operations performed in-house will not displace normal activity," he said.
To ensure this, the NTPF knows which patients are being treated - we have their names and addresses - by whom they are being treated, the conditions for which they are being treated in hospital and how much each operation costs," said O'Byrne