Independent review teams found that plans for a second round of private sector treatment centres worth £550m a year “should be well-matched to the [NHS's] requirement”. The solutions – intended to generate competition to NHS hospitals and provide extra capacity for patients – were “suitably tailored to regional needs”.

Meanwhile, outline contracts to buy £200m a year of extra diagnostics “represent good value for money and are deliverable”, the reviewers concluded in October 2006. Key stakeholders, such as strategic health authorities, told the review that the deals were “appropriate and very welcome”.

Barely a year later, however, Alan Johnson, the health secretary, cancelled the bulk of the contracts, arguing in November that NHS performance had improved so much that they were no longer needed.

Seven contracts remain under review. But the indications are that not all of those will go ahead.

And the health department is currently negotiating over tens of millions of pounds that it will have to pay out in contractors’ bid costs for the cancelled deals.

The independent assessments were undertaken through the so-called “gateway” process, in which outsiders review large government projects at key stages in their development.

Projects’ chances of success are scored according to a “traffic-light system”, rating them as red, amber or green. The two procurements – unusually for a gateway review – scored green in all categories.

The Financial Times used the Freedom of Information Act to ask for the studies, but the health department refused to disclose their conclusions on the grounds that they related to “the formulation of government policy”. The FT, however, has seen the reviews.

They do note challenges still to be overcome, stating that the main risk to the diagnostics contract is the level of commitment to it from primary care trusts and GPs.

But the risk that the treatment centres would be underutilised had “diminished significantly”, the reviews found, and while success depended on third parties, “there are good grounds for having confidence that the delivered solutions will be well-fitted to customer need”.

The reports show that “something must have gone badly wrong when these projects were going so well a year earlier”, said Nick Bosanquet, professor of health policy at Imperial College London. “It does beg the question: what?”

Ken Anderson, the commercial director who was negotiating the projects, left the department for UBS, the investment bank, three months after the reviews reported. Lord Warner, the health minister in charge of pushing them through, also quit shortly thereafter.

Shorn of ministerial drive and Mr Anderson’s commitment, the contracts seem to have drifted for six months before Chan Wheeler, the new commercial director, took the helm in June, just as Gordon Brown became prime minister and Mr Johnson health secretary.

Mr Wheeler concluded that the capacity in some of the schemes had been “severely miscalculated” and recommended cancelling most of them. His review confirmed that “the volume required by the NHS had reduced since the gateway reviews”, a departmental spokesman said yesterday.

Prof Bosanquet said he suspected the health department had refused to disclose the reviews’ conclusions “because they contradict the action that ministers took later. This absolutely confirms the need for an independent competition authority, [to] which the private sector can go to ensure there is a level playing field for NHS business”.

He added: “Ministers claim rising NHS performance makes these schemes unnecessary. But Office for National Statistics figures show that NHS productivity has been falling – however it is measured.”

Opinions vary on cancellations

There is widespread agreement that procuring the independent treatment centres took far too long, with the specifications repeatedly changing.

Beyond that, however, explanations for the retreat vary. The health department says NHS productivity had improved so much that extra capacity was no longer needed. But others believe the argument also changed as key ministers and officials left the department and Gordon Brown replaced Tony Blair.

Part of the justification for extra treatment centres was that they would disrupt the established order, the review acknowledges. Some were “aimed primarily at introducing contestability into the local health economy” to act “as a spur to efficiency improvements among existing NHS providers”.

When new ministers and officials arrived and asked local NHS officials if they wanted the extra centres and the competition, the answer was “no”. Most were then scrapped.

From:
http://www.ft.com/cms/s/0/223e6174-d458-11dc-a8c6-0000779fd2ac.html