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Government defends private contracts as managers seek to make savings

By Ian Quinn

Exclusive: The Government has defended the performance of privately-run treatment centres after NHS managers claimed they were not providing value for money.

A report by NHS Manchester said it was forecast to lose £2.7m this year because of the major under utilization of Clinical Assessment and Treatment Services (CATS) run by private provider Care UK.

The out of hospital services, which operate across a raft of trusts in the Greater Manchester area, have struggled to reach the expected levels of referrals after being given a seven year deal by the Department of Health two years ago.

A string of services are operated by Manchester CATS treatment centres, including MRI, CT scans, x-ray, ultrasound, endoscopy, gynaecology, ENT, MSK, urology, audiology, orthopaedic, general surgery and general therapies such as physiotherapy.

But the PCT said they had been achieving just 56% of its capacity in 2010/11, adding: ‘As experienced in 2009/10, this represents poor value for money for the PCT.'

Under the terms of the contract, which was negotiated by the Department of Health, trusts which use the service are liable to pay up to 85% of the contracted value for the service ‘regardless of actual usage'

A Department of Health spokesperson said: ‘It is for the NHS locally to manage these contracts and work in partnership with suppliers to address any difficulties which arise.

'The Department is aware of concerns the service was being underutilised in its first year of operation in 2009 but that the situation has been steadily improving.'

A spokesperson for Care UK said:‘Greater Manchester PCTs and Care UK are working collectively to raise referral levels and reduce any underutilisation, in addition we are implementing changes in the case mix which will assist in improving the overall utilisation of the GM CATS contract , these changes are anticipated to deliver from the 1 April 2011.'

Elsewhere it has emerged NHS London was so desperate to end an agreement with controversial private firm Clinicenta, it has agreed to pay an estimated £10m in compensation, to get out of the contract early.

Pulse revealed last week the service, which had been contracted by the DH to provide care on behalf of 20 PCTs in the capital, was being wound up.

It has since been revealed that under the terms of the original deal, due to run until March 2014, Clinicenta would have received £136m in payments from trusts up to March 2014.

A spokesperson for NHS London confirmed it would be paying Clinicenta for the early termination of the contract but said: ‘The final settlement figure is confidential under the terms of the contract held with Clinicenta.

‘However, it is financially prudent that we end this contract now rather than continue to pay for a service that is underutilised and does not provide adequate value for money.'

A DH spokesperson added: ‘The department, as a signatory to the contract, reviewed and approved the decision to terminate the contract based on a recommendation by NHS London. The service has not achieved the volume of activity required to deliver value for money to the NHS.

‘Early termination of the contract provides much better value for money against continuing to pay for an under-performing service.'

Government defends private contracts as managers seek to make savings