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Specialist Orthopaedic Hospitals and Services

Volume 458: debated on Wednesday 21 March 2007

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Watts.]

I am pleased to have the opportunity to open this debate and to be able to do so with you in the Chair, Mr. Bayley.

I begin by underlining that we are fortunate to have in this country outstanding orthopaedic hospitals and services, with expert and dedicated consultants, doctors, nurses and staff at all levels. They are rightly held in high regard by patients and the public at large.

What is more, thanks to the additional resources that our Government have put in, there has been remarkable progress in orthopaedic provision during the past 10 years. Waiting lists are down, staffing levels are up, and new facilities are taking shape at many orthopaedic hospitals across the country.

In my constituency, the Nuffield orthopaedic centre is moving into a new £42 million state-of-the-art hospital, which will replace outdated facilities and buildings. The wonderful new facilities include a room-sized open MRI scanner, the first of its kind in the world, a best-in-class hydrotherapy pool, a specialist gait laboratory and expanded sports injury and medicine services. All that is alongside the hospital’s Oxford Centre for Enablement, with its specialist services and equipment for long-term conditions, disability and rehabilitation, and the Oxford university Botnar research centre, which is home to the Institute of Musculoskeletal Sciences, and the Tebbit centre.

The hospital and its staff and patients have benefited from substantially increased Government health expenditure and spending on the private finance initiative project that is providing the new building and its servicing, but the fact that the hospital has received significant charitable support from generous donors large and small is also crucial, and reflects the esteem and affection in which it is held locally and throughout the world. During the past 15 years, the Nuffield orthopaedic centre charity has contributed £15 million to the hospital for new buildings, facilities and equipment, including £6.6 million towards the PFI development and £4.5 million for the Botnar research centre.

So we have a remarkable hospital with remarkable staff and remarkable public support. Similar stories can be told about the UK’s other specialist orthopaedic hospitals; for example: the Robert Jones and Agnes Hunt Orthopaedic and District Hospital NHS Trust, which came out as one of the top trusts nationwide for standards of care and professionalism; the Royal Orthopaedic hospital in Birmingham, which is an internationally renowned centre of excellence for the diagnosis and treatment of bone and soft tissue cancers; the Royal National Orthopaedic hospital in Stanmore, another great centre of excellence, which trains 20 per cent. of the UK’s orthopaedic surgeons, and the Wrightington hospital, which serves the Minister’s area and is now merged with the Wigan and Leigh NHS trust.

Those first-rate hospitals, which are committed to providing the best orthopaedic services through the NHS, are at the leading edge of best practice in medicine. We must ensure that they are sustained and developed for the future. I know that the Minister and the Government as a whole want that, but it is such a tragedy, with so much happening that is good, and with such committed staff and public support, that a dark shadow of financial uncertainty still hangs over those centres of excellence because of the failure, over a number of years, to resolve the national tariff question and fairly pay hospitals for the specialist and complex work that they do.

We were able to touch on the issue briefly in a Westminster Hall debate two weeks ago that was initiated by the hon. Member for Wyre Forest (Dr. Taylor), in which my hon. Friend the Minister stated:

“I understand the situation in which those providers find themselves and the argument that they make about the costs of providing specialist orthopaedic work not being adequately reimbursed through the tariff. I understand that point. The process of payment-by-results will refine and improve as we progress so that there can be a further differentiation between high-value work and work that can be provided at a lower cost. I recognise the need for a sustainable solution.”—[Official Report, Westminster Hall, 7 March 2007; Vol. 457, c. 496WH.]

My hon. Friend referred to a recent meeting that he and the Secretary of State for Health had with the trusts concerned, and their commitment to work towards finding a solution. I know that he subsequently initiated a consultation on the development of payment by results, including fair payment for specialist services. I welcome that commitment and the consultation, but I want to take this opportunity to underline just how imperative it is, for both the care of patients and fairness to the hospitals concerned, that a solution is found as soon as humanly possible.

The existing top-up funding from the Department of Health, with additional funding for 2007-08 from primary care trusts and strategic health authorities, has provided some respite, but the hospitals are still left grappling with uncertainty about future finances, which is debilitating, demoralising and damaging. I would like to stress some of the key dimensions of that. The exact impacts vary from trust to trust, depending on their combination of standard, specialised and highly specialist work, but common pressures and uncertainties are at work. What is particularly galling for all who care about the hospitals is that the difficulties are not of their own making but arise from the incomplete policy framework within which they must operate.

First, all trusts are obliged to seek foundation status. However, because the specialist tariff question is unresolved, those with a high proportion of specialist work cannot demonstrate future financial stability to meet the criteria. They have been placed in a classic Catch-22 position. The Robert Jones and Agnes Hunt trust has had to delay its foundation application because of that, and the Nuffield orthopaedic centre was turned down in wave 1 of foundation applications for that reason alone.

Secondly, much-needed facilities and service improvements are being delayed. For example, at the Royal National Orthopaedic hospital, the business case for replacing its outdated Nissen hut accommodation has been turned down by the strategic health authority—again, because of financial uncertainty arising from the tariff problem.

Thirdly, relations with independent sector treatment centres risk being damaged. The specialist orthopaedic centres have gone along with the introduction of ISTCs and the extra capacity that they have brought on stream, but they now find themselves in the galling position of being paid below cost for complex treatments, which ISTCS cannot undertake, while ISTCs are guaranteed premium payments for routine work that, in some cases, is transferred from specialist hospitals.

I and, indeed, the medical staff at the Nuffield have defended the contribution that pluralism in provision can make, notably to increasing capacity and cutting waiting lists, but there must be a level playing field, and an absolute requirement for parcelling out the more routine work is fair remuneration for the complex work that only specialist centres can undertake. Neither of those conditions has been satisfied at present.

Fourthly, there is a worry that the vital training and education that the specialist centres provide will be damaged unless their financial and operational viability is properly secured. That concern is compounded by the challenge of retaining a sufficiently wide mix of work, particularly the routine and specialist work of the orthopaedic centres, in the volumes that are vital to train surgeons and specialist nursing and support staff properly. Any consultant at an orthopaedic centre will say how worried they are about that issue and its implications for the future.

Several other issues have a bearing on patient care and the economics of health provision, which are relevant to this debate. Specialist orthopaedic hospitals are at the forefront of good practice in limiting infection rates in hospital and reducing unnecessary lengths of stay, which are crucial to patient care and the wise use of resources. We need more of that expertise, not less. Infection rates for knee replacements across the UK as a whole are about 3 per cent. and there are 1,800 such cases a year. As well as the human cost to patients, each of those cases costs about £80,000 to put right, which has a financial cost to the NHS of £146 million a year. If we could get that infection rate down to the average in the specialist orthopaedic hospitals, where it is 0.2 per cent., there would be 120 infected knees a year at a financial cost of £9.6 million, which is a potential saving of £146 million a year. That would also have benefits for patients.

Similarly, the specialist hospitals have a remarkable record on lengths of stay, especially considering that the complex nature of much of their work might be expected to lead to longer than average stays. However, across 18 procedures monitored by the Specialist Orthopaedic Alliance, the percentage of procedures where the length of stay was less than the national average was 83 per cent. at the Robert Jones and Agnes Hunt trust, 78 per cent. at Wrightington, Wigan and Leigh NHS Trust, 72 per cent. at the Royal Orthopaedic Hospital NHS Foundation Trust and the Nuffield Orthopaedic Centre NHS Trust, and 67 per cent. at the Royal National Orthopaedic Hospital NHS Trust. Those hospitals are all examples of good practice and provide real benefits to patients and the NHS.

Lastly, I warn against a merger with district general hospitals as a reaction to the financial uncertainties facing specialist orthopaedics. Such mergers are not a solution to the present shortcomings and financial problems created by the absence of a realistic tariff. A merger in those circumstances would mask rather than resolve the underlying problems. In the case of the Nuffield orthopaedic centre, a merger with the John Radcliffe hospital, which has difficult enough challenges of its own to deal with, would mean either cutting back on specialist orthopaedic treatments, or, given that much of the routine work is carried out by ISTCs, cross-subsidising specialist treatment from non-orthopaedic work. Neither cutbacks nor cross- subsidy would make any sense and would not be in patients’ interests. We need to tackle, sort out and get right the underlying challenge of fair remuneration for the specialist work itself.

Infection rates are significantly higher on average in district general hospitals and service integration between specialist orthopaedic centres and district hospitals would raise real worries about the risk of orthopaedic infection rates going up, which would damage patient care and add to NHS costs. If management teams only were merged, the savings would not amount to much as studies show that orthopaedic managements perform well in comparison with acute trusts.

It is conclusive that specialist orthopaedic hospitals play a vital and distinctive role in the NHS. They represent a precious national and local resource that is rightly held in high esteem by patients and the public. Such hospitals will have a crucial role in the future. With an ageing population, people are, wonderfully, able to live longer and healthier lives and are having hip, knee and other joint replacements. Such operations will have to be revised or replaced in the future. Pressure on orthopaedic services will increase, and we will need our specialist centres more than ever. We should value such centres in deed as well as in word, and act now to sort out the tariff, treat those excellent hospitals properly, and ensure that they and their dedicated staff are secure for the NHS and its future patients.

I apologise for being unable to stay until the end of the debate, but I shall make a brief contribution. I congratulate the right hon. Member for Oxford, East (Mr. Smith) on securing the debate and on his fantastic work setting up the all-party group on specialist orthopaedic services and hospitals, of which I am a member.

The right hon. Gentleman spoke about the Nuffield orthopaedic centre in Oxford, which is a facility that serves my constituency in west Berkshire. It is of the highest standard and achieves fantastic outcomes for patients in my constituency and many others in the area, and I am speaking today in order to support it. I want to make one major point: we must resolve the issue of providing trusts with adequate recompense for the work and costs of caring for people with complex orthopaedic disorders. Under payment for results, there was a simple nationally set tariff. It is clear that for specialist orthopaedic facilities, a nationally set tariff is a blunt weapon and provides a broad-brush approach that simply does not deliver the results necessary for such organisations to survive.

We were told by some of the organisations that we are trying to help today that

“an operation to save the limb of a patient with bone cancer may cost £7,600”,

but under the nationally set tariff that

“attracts a payment of only £1,700”.

When those figures are spread out across the country, the problems we are facing become clear. Such organisations have also said that an amputation, which costs around £8,500, is inadequately reimbursed under the tariff and that

“A patient with a history of hip dislocation work and corrective surgery, needing a hip replacement in her mid-40s may cost a hospital up to £14,000 for the hip operation but attract a payment of only £5,000.”

I hope that the Minister will respond to those points.

One of the consequences of the difficulties faced is that specialist orthopaedic hospitals are unable to plan for the future. Slow progress on resolving the tariff issue is preventing some trusts from making long-term plans to improve their service. We have already heard about the problems at Stanmore, where there are 1940s Nissen huts. There is great concern at the NOC in Oxford about where it will be in four or five years’ time. We all know where it wants to be, and as the right hon. Gentleman has pointed out, the services that it provides are of great long-term benefit to the national health service, because they reduce the costs of hospital-borne infections. The NOC is doing exactly the Government’s bidding by developing the NHS in specialist terms, and unless we can resolve the problems the uncertainly surrounding its future will not be resolved.

The way forward is to resolve the tariff situation. I know that the Specialist Orthopaedic Alliance is working with the Department of Health, but the negotiations are taking a long time. I hope that the Minister can demonstrate today that he is injecting some leadership into resolving the problem.

I conclude by making two vital points. The first, which was touched on by the right hon. Member for Oxford, East, is about hospital-borne infections. We have heard that the infection rates are much lower in orthopaedic facilities. If that rate can be achieved across the NHS, the Government will have done remarkably well.

It is important to recognise that the hospitals that we are talking about today do not have accident and emergency departments, which is a crucial difference when it comes to managing infection in hospitals.

I entirely accept that. However, unless the problem can be resolved—the future of some centres seems to be in doubt—where would those patients then go for treatment? They would have to go to the district general hospital. The vast majority would probably be treated very well, but the risk of infection would increase.

My final point is that resources have a major influence on the NHS in other respects. As a teaching hospital trust, the Nuffield orthopaedic centre in Oxford provides a large number of placements and fellowships for student doctors, nurses and other health care professionals in training, who benefit from the expertise and experience of some of the most skilled clinicians in the world. It would be a tragedy if a failure to resolve the problem were to result in the loss of that fantastic resource to the NHS.

I congratulate my right hon. Friend the Member for Oxford, East (Mr. Smith) on securing this debate. He raises an important issue and I wholeheartedly support all that he said. He outlined exceptionally well the difficulties that face all such hospitals, especially their financial stability both now and in the future. I fully agree with all that he said.

I turn specifically to the problems at the Wrightington hospital in Wigan. It is somewhat different from the others in that it is the only specialist orthopaedic hospital attached to an acute hospital trust. I shall give a little background information about the hospital. It started as a TB sanatorium before becoming a specialist orthopaedic hospital in the 1950s. It was one of the pioneering orthopaedic hospitals. Indeed, the first ever hip replacement operation was carried out there by Dr. Charnley. For many years it was a stand-alone orthopaedic hospital.

In the late 1990s, the Department of Health made a move to merge the Wrightington hospital with the then Wigan and Leigh acute hospital trust. That was opposed by the clinicians and administrative staff at Wrightington, who felt that it would be better as a stand-alone hospital. The Wigan and Leigh hospital board thought that it was marginally okay to merge, and the hospitals eventually merged in 2001. I emphasise that the merger was made at the request of the Department of Health but that it was opposed by the Wrightington people, and that the Wigan and Leigh people acquiesced under pressure. That is an important point, and I shall give the reasons later.

In the past, the Department of Health expressed a number of concerns about the way in which the Wrightington hospital was being run—rightly so, because many of the hospital’s operational statistics were not good. The management and the clinicians sat down together and worked out exactly what they should do and how they should do it in order to ensure that the hospital improved.

The hospital now has additional operating theatres and wards, elective surgery is 16 per cent. better than a year ago, and non-elective surgery is 9 per cent. better. The 11-week out-patient target has been met; next year it will be reduced to nine weeks. The 20-week in-patient target will be achieved by the end of this year. Suspensions from lists—those taken off for non-medical reasons—are down by 75 per cent. A one-stop shop has been opened in the hospital to help ensure that people receive the proper treatment quickly. The wait for follow-up appointments has been dramatically reduced through the use of additional staff. The deficit at the hospital has been reduced from £3.4 million to £1.1 million.

The trust has been a three-star trust for the past three years, and it has been in overall surplus for a number of years. Therein lies the rub. Because Wrightington merged with Wigan at the request of the Department of Health, and because the trust is in surplus—it had to stay within budget at the Department’s request, and rightly so—we do not even get the sticking-plaster that the other four hospitals have. Not only do we have the problem of the national tariff not being sufficient to pay for the specialist work done at the hospital, but we do not get the top-up that has been agreed with the Department that applies to the other four hospitals. The reason is that Wrightington is attached to an acute hospital and is surplus—again, all at the request of the Department. The effect is that Ashton, Leigh and Wigan primary care trust is subsidising other PCTs that use the specialist orthopaedic hospital at Wigan—to the tune of £1.1 million.

We are not profligate in Wigan. As I said, we have a three-star PCT, a three-star acute hospital trust and a four-star council—and we have the best lift company in the country. It is not the Wigan way to be anything other than very proper in the way that we manage our affairs. I know that the Minister is well aware of that. We know how many beans make five. We know that if we have £1, we can spend 19s 11d, and if we have 19 bob, we can spend 18s 11d. The problem at the moment is that someone else is spending our bob for us. We would like to spend 19s 11d, but we can spend only 18s 11d. That is not right. It is not fair. It is the result of the Department of Health’s pushing Wrightington into the Wigan and Leigh acute trust.

I remind the Minister that the Wigan PCT is £11 million underfunded in accordance with the Department’s formula for health needs in the Wigan and Leigh area. In addition, because we manage to keep our affairs in order, we were top-sliced last year to the tune of £3 million. As well as the £11 million, another £3 million was taken off us to subsidise spendthrift PCTs elsewhere in the country. Again, we are suffering because we carry out our duties properly.

What are the options for the Wrightington hospital? What can the Wrightington, Wigan and Leigh hospital trust do? It could again become Wigan and Leigh; in other words, we could get rid of the Wrightington site, which is very valuable. It is in exceptionally nice countryside, very close to the M6 and not far from Manchester, Preston or Leigh. Best of all, it is close to Wigan. The site could be sold for a lot of money; that would solve the problem of Wigan and Leigh trust’s £1 million deficit. The money could be spent on patient care. It would also be a huge capital receipt, which could be used to develop the Wigan site and the Leigh hospital site that the acute trust has.

Clearly there would be a bad downside. For instance, the hospital’s brand name would be lost. The work of Dr. Charnley has been continued by many others since, and I have no doubt that the Wrightington hospital has an incredibly good name in the medical profession.

My hon. Friend is making a powerful argument. In all hospitals, but perhaps especially in the orthopaedic centres of excellence, there is a real dedication on the part of the staff. There is also deep and strong affection and support for them from the public. Brand names are not the only consideration; there is a much wider constellation of commitment to excellence. Were that to disappear there would be very damaging consequences for patient care and for staff. Does my hon. Friend agree?

My right hon. Friend is absolutely right, and his comments are true of all five trusts. The particular difficulty for Wrightington is that it is part of a general hospital trust, so if it were to disappear, the general hospital trust would not attract the people who come to the specialist hospital trust at present. If it was a stand-alone hospital, however, it would be in the same situation as the other four hospitals in being able to attract those who want to specialise and be at the cutting edge of orthopaedic services. “Cutting edge” might be a particularly appropriate phrase to have used, given the subject of the debate.

It is important to be able to attract such people. Most general hospital trusts do not have that opportunity; they do not have a specialism. Wrightington’s status as part of the Wigan and Leigh hospital trust means that the brand name attracts people to the trust, and it obtains not just people who want to work in the orthopaedic field but other doctors and consultants who want to work elsewhere in the hospital. However, my right hon. Friend is right in the general sense.

Another effect is the effect on patients—not just those in Wigan. We should remember that each of the four hospitals serves a huge area. Wrightington hospital serves not only the north-west, but the whole north of England—it is the natural place for people to go for such specialist operations from York and the north-east, as well as from the north-west. It is hugely important for lots of people throughout the north of England. We could let down not just patients in Wigan, who use it for more general work, but people in the rest of the country, and there could be a tremendous effect—a point that was well made by my right hon. Friend the Member for Oxford, East and the hon. Member for Newbury (Mr. Benyon).

If Wrightington went its own way, and was not sold off, it would get the money from the Department of Health, because it would suddenly become a specialist, stand-alone orthopaedic hospital. The sticking-plaster whereby additional money is received because of that status—the other four orthopaedic hospital trusts receive it already—would suddenly come to Wigan. So why do we not get it now? Why do we have to jump through the hoop of dividing up the hospital in order to get the extra money? Why can it not be recognised that the Wrightington hospital is an orthopaedic, specialist trust hospital that has the same problems and financial difficulties as the other four hospitals, and that the money should therefore be awarded now?

The Department of Health has a moral obligation in the matter. It was the Department that pushed the Wrightington hospital into the Wigan and Leigh trust to make it the Wrightington, Wigan and Leigh hospital trust. It was also the Department that—quite rightly—made sure that the trust was in surplus and did not spend money that it did not have. It is basically immoral for the Department then to turn around and say that, because the hospital is part of an acute hospital trust and because that trust is in surplus, it will not award money that is given to the other four hospitals. I hope that the Minister will seriously reflect on that point. Despite all the other issues that exist, that one would be fairly easy to resolve.

A solution would make a huge impact on the Wigan trust, which will be applying for foundation status in 2008. We applied for it before, and one of the major reasons why the application was turned down was the impact of the orthopaedic specialist tariff on the finances—not just the status of the finances at the time but the uncertainty of future finances. None of that has changed, so all the other things that have been done will have no impact if there is no resolution in that respect. We will be turned down for foundation status for reasons that are beyond the ability of the trust to resolve.

I give 100 per cent. support to everything that my right hon. Friend the Member for Oxford, East said about the national tariff. There is a special case for Wigan, however, and I hope that I have set out that case. I hope that the Minister will respond positively.

I congratulate the right hon. Member for Oxford, East (Mr. Smith) on securing the debate. I know that it is good form to offer such congratulations, but I offer them very sincerely on this occasion, because he brought all his Treasury experience to bear in giving us a competent lesson on the hard facts of health economics, and he presented a rational and persuasive case on an important issue. Essentially we are concerned with the survival of specialist services in the NHS under the new financial regime, which is based on payment by results and on the need for every cost centre to be in balance or to secure foundation trust status. The issues have already been flagged up to some extent in connection with children’s hospitals such as Alder Hey. At times there has been a vociferous outcry in connection with that hospital—the tariff has been adjusted under pressure. It is perhaps harder to find champions for the orthopaedic sector, which is a less glamorous area of medicine, so I congratulate the right hon. Gentleman on having forced himself forward as that champion—it is an important role.

Orthopaedic complaints are a massive cause of absence from work. One thinks of the numbers of people who are off work today with back pain, and of the poor quality of life that is endured by people who suffer with such complaints. There are mobility issues as well. Thousands if not millions of people in the country have chronic conditions. Orthopaedics are also important from the point of view of preventive medicine. Just think what might be achieved if a treatment were secured that prevented the early onset of complaints such as osteoporosis.

Orthopaedics are bread and butter medicine, and increasing longevity will mean that there will be no shortage of work for people in the field. The Government have recognised that. Historically they have identified the long waiting lists that have existed, and the big demands that have been made on GP time and hospital time, and on ancillary services such as occupational therapy, physiotherapy and so on. In all, I think that 10 million people are currently affected by orthopaedic complaints in the UK.

There has been a long-standing need for specialist and training institutions in the field. That is a need that is recognised by everyone in relation to complex cases—accident victims, sports injuries and so on. The Government are to be congratulated on having recognised that and on having done some positive things about it. I do not want to overdo my congratulations to the Government, but they have genuinely increased diagnostic and treatment capacity for standard cases. The expert patient initiative has enabled certain chronic conditions to be managed outside of clinics—or at any rate outside of hospitals. If I were really pushed I could also congratulate the Government on a degree of capital investment and on having put in place a new service framework.

That is all good, but in doing it all the Government have created a new problem, as the right hon. Member for Oxford, East suggested: they have financially destabilised the specialist services. That is because the standard cases are often now undertaken by independent sector treatment centres, which in the past allegedly subsidised the complex cases undertaken by certain specialist hospitals; although, in fact, some of those cases are still done by the specialist hospitals and the NHS.

As the health economists and the right hon. Member for Oxford, East no doubt appreciate, the NHS carries the dual burden of competing against ISTCs and at the same time providing after-care for the patients of ISTCs and back-up for those patients when things go wrong. That is not a perfect financial model; in fact, one could say that it is a ruinous one. If one adds to that the move into the community of some services for chronic conditions, one could say that the future of the specialist services and specialist hospitals is in some doubt. Greater efficiency in those institutions can alleviate that only to a degree. As the right hon. Gentleman said, those institutions are graded as pretty efficient at the moment, if not as efficient as they possibly could be.

The key fact is that we need specialist services, and the NHS gives a guarantee not simply to the standard patient but to the non-standard patient who requires such services. We also need the developments and advances in medicine that can only be obtained through specialist hospitals.

I do not object in principle to the separation in treatment terms of highly skilled intervention, of the kind with which the specialist hospitals deal, from lesser skilled, standard interventions that are performed by ISTCs. I shall draw an analogy, although it is not a very helpful one in many respects. If my car just needs its exhaust replacing, I am perfectly happy to take it to Kwik-Fit, but if there is a major problem with the fuel management system, I will go to a specialist outfit. However, that model works only if the highly skilled institutions are appropriately rewarded. The allegation is that they are not, and I share that view. The model works only if the existence of ISTCs and the regime under which they operate do not imperil the specialist provision, and I think that that is possibly happening.

None of this would worry us under previous financial management arrangements, whereby everyone was under the same NHS umbrella and a surplus in one place would simply become a subsidy in another. However, there clearly is at any rate a prima facie case that specialist provision can be worn down, if not eliminated altogether, unless three things happen, and in my view none of those things is happening at the moment.

First, the costs of running treatment centres need to be fairly borne by them and not offloaded on to the NHS in some covert way. Secondly, payment by results needs to be sophisticated so that it is capable of fairly reflecting the costs of specialist treatments. I am in some doubt as to whether that can be done, but if it can be, it should be, and it currently is not being done. Thirdly, sufficient controls need to be in the hands of local NHS managers to ensure that no matter how complex or straightforward the condition, the NHS guarantees to patients can be delivered on in a seamless, organised fashion.

Those are three fair conditions, and I think that in supporting them I would join the right hon. Member for Oxford, East; I think that we are both suggesting that none of those conditions is currently being met.

I congratulate the right hon. Member for Oxford, East (Mr. Smith) on initiating the debate and on setting up the all-party group, which is a very positive move. I also congratulate the Specialist Orthopaedic Alliance, as it has informed much of the debate that we have been having today.

In talking about specialist orthopaedic services, we should reflect on the fact that many of the things that we have been debating that relate to the tariff and independent sector treatment centres relate also to many other tertiary services. One of the jewels in the crown of our NHS is the ability to have tertiary services—specialist centres—that focus on conditions that are not routine. If I may say so, the hon. Member for Southport (Dr. Pugh) was a little pejorative in his description of the work load of ISTCs, but there is certainly a world of difference between some of the routine work done by them and the work done by highly specialist centres of the sort that we have been describing today.

We have mentioned the five specialist orthopaedic hospitals in this country. I have a particular affection for the one at Oswestry, because it is where my wife trained to be a physiotherapist. It is important to recognise that, within our specialist centres, a great deal of extra work is done over and above simply treating patients. That extra work has to do with training and research. Much of what is good about specialist centres is that in treating patients with complex disease, there is also the ability both to train people, not just doctors, although doctors seem to get all the attention, but others as well, in a highly specialised environment, and to conduct research that is world renowned. One of the characteristics of our health care system is the fact that we have centres of international repute—indeed, far more than one would naturally expect in a country of this size.

That is worth celebrating in a week that is not exactly full of celebration of the stewardship of the NHS, given that the report published yesterday by the Select Committee on Public Accounts, “Financial Management in the NHS”, is very much in people’s minds. No doubt the Minister has been scrutinising it. I hope very much that he will have learned some of the lessons in the report concerning management of finances in our health service and getting effective results and clinical outputs from the admittedly large sums of money that the Government have applied to the NHS over the past few years.

Earlier this week, the Prime Minister launched in Hackney the first of his policy reviews of public services. We understand that he wants more competition and contestability and more information for patients. It is perhaps salutary to contrast that with the perverse and somewhat opaque tariff and the lack of openness about ISTCs, which is based largely on the grounds of commercial confidentiality.

We have learned from the Minister, fresh from his “Days out in the NHS”, that he wants to inform the public via statements about the cost of NHS services. On the face of it, that is quite a reasonable idea. We shall have to see what the costs of such an initiative would be, but I suggest to him ever so gently that if we are to inform patients in that way, it needs to be done on the basis of accurate information. As things stand, there is no real way in which patients will be informed of the true cost of their treatment in specialist centres, because the tariff on which presumably such a statement would be made would be based on a false premise, which is that people can be and are treated in specialist centres in the same way that they are treated in ISTCs or, indeed, in our district general hospitals. We have heard today that the cost of treatment in our specialist centres greatly exceeds the cost of treatment in ISTCs.

The tariff is, as my hon. Friend the Member for Newbury (Mr. Benyon) said, a somewhat blunt instrument. In the context of describing orthopaedic surgery, the phrase “blunt instrument” can suggest all sorts of things. I am sure that none of the five specialist centres that we have been discussing would ever use a blunt instrument, but the phrase provides a good analogy for describing the use of the tariff in the current situation.

In theory, the tariff is fine. Indeed, if we are to support the notion that funds should follow patients, we must have a tariff. The trouble is that it is very much a guesstimate. It was arrived at by canvassing the views of directors of finance in NHS trusts as to what they felt was the cost of particular health care resource groups. Of course, different finance directors will come up with different figures. The tariff was arrived at by averaging them out. Unfortunately, the cost drivers in different trusts will be different, so there will be losers and winners under such a system. Overall, one would hope that for a hospital it would pretty well even itself out. Although particular parts of the country have particular pressures, one would hope that overall such a guesstimate would enable a hospital to maintain some sort of balance. However, that is not necessarily the case for a hospital that deals exclusively with the sector that we are discussing today.

The Royal National Orthopaedic hospital in Stanmore, Middlesex, for example, receives £1,428 for excising a sarcoma; it thinks that the true cost of that is £8,674. That is a big difference. That is all right provided that service work—routine work—can be used to leaven out the difference. I remember doing orthopaedics and being, quite honestly, rather bored with much of the routine work that orthopaedic surgeons do. Their work is not necessarily glamorous, as the hon. Member for Southport pointed out, and nowhere is that more the case than in the routine work. Arthroscopies consume a huge amount of time. It is such routine work that ISTCs have scooped up and are doing, based on the tariff, and I suspect that they are doing quite well out of it, but that has removed the means by which specialist orthopaedic services are able to cross-subsidise the more expensive work that I have described.

At the heart of the problem lie two issues. One is the tariff and the other is the advent of independent sector treatment centres. As has been said, most people would not have a problem with ISTCs provided that they operated on a level playing field with other parts of the NHS. The evidence suggests that, at the moment, they do not. In mitigation, ISTCs have not been going for very long. I hope that the Minister will say how he has learned from the first three or four years of the operation of ISTCs and what might be done in the future to level out the uneven playing field. We suspect that at the moment there is a 10 per cent. difference in the costs applying to ISTCs and to the rest of the NHS on a case-by-case basis. That is very big difference indeed. Of course, ISTCs are paid irrespective of whether they actually do the work, and that goes back to the old days of block contracts, with their inherent inefficiencies. As we know, it is difficult to forecast patient throughput, and that causes particular problems in terms of utilising ISTCs to the maximum benefit of the NHS.

Do ISTCs offer value for money? As we have discussed today in the context of orthopaedics, they probably do not. In July 2006, the Select Committee on Health said that it was “impossible” to say whether ISTCs provided value for money, because of poor data. It is extremely difficult to benchmark the success of ISTCs against NHS providers if we do not have adequate data.

In 2003, the Department of Health imposed the first wave of ISTCs, and some primary care trusts felt at the time that they had been dumped with capacity for which they had not asked and which they could not use, but for which they still had to pay. Such a system is not conducive to ensuring good value for money.

Nothing daunted, the Government launched their second wave of ISTCs in May 2005. The Greater Manchester surgical centre has run at less than 60 per cent. capacity in its first six months, but half of PCTs are delaying operations to save money. Why can we not use the excess capacity that we have identified in some ISTCs to treat patients whose procedures are being delayed as we speak?

We must compare quality and outcomes if we are to achieve an adequate comparison of the work done by ISTCs and NHS providers. According to the Healthcare Commission, national data on the quality of ISTCs are

“incomplete and of extremely poor quality”

Ministers should be worried if their purview of what is going on in ISTCs is so insufficient that the Healthcare Commission should have to make such remarks.

The British Medical Association rightly demands a

“robust, peer-reviewed clinical audit that is transparent and not hindered by the issue of commercial confidentiality.”

How is that being achieved? The Royal College of Surgeons is unhappy with the evidence of outcomes from ISTCs and specifically cites orthopaedics.

We have talked about research and training in connection with ISTCs and specialist centres, but another externality must be patient choice. I am afraid, however, that such choice is still being overlooked, even though all politicians like to talk about promoting it. We have had the rather bizarre situation of the Department of Health issuing edicts to PCTs telling them that they must use the private sector more, and ISTCs are, of course, encompassed within that. We have heard reports that PCTs have felt obliged to use ISTCs, when patients might choose to use other centres.

On 22 February, the Health Secretary said of orthopaedics that she did

“not want to see any activity that places the well-being of an organisation above the well-being of patients”,

and that is particularly pertinent in the context of patient choice and how patients might choose a specialist centre rather than an ISTC.

Simon Stevens, who will be well known to the Minister as an adviser to the Prime Minister, said that

“the time has come to consider vesting NHS tariff construction in an arm’s length…technical agency…Given the weight that is to be placed on the tariff mechanism, we need more precision, predictability and permanence in its operation. That’s the bottom line”.

Does the Minister feel that the time has come to vest the setting of the NHS tariff with an independent economic regulator, given its importance and its relevance to today’s debate?

We need to sort out the tariff to safeguard our internationally renowned tertiary centres, and that is the business of the Department of Health’s Casemix service. Healthcare resource groups are needed to support the tariff system that underpins payment by results. The current version of HRGs, which has been running since October 2003, is subject to a major review, and we expect HRG4 to be in operation by April. Where are we on that? Will HRG4 be introduced as planned next month? Will tariffs approximate to the reference cost index and thus provide relief for many specialist centres?

In particular, will we have more tariffs? Will the HRGs be narrower so that we can remove some of the bluntness to which my hon. Friend the Member for Newbury referred? We use the tariff system to apportion costs to particular procedures, and sharpening that blunt instrument by narrowing HRGs would give us a solution to many of the issues that the right hon. Member for Oxford, East rightly raised. That is the wish of the Specialist Orthopaedic Alliance, and I very much hope that the Minister is listening carefully to it.

Let me say at the beginning that there is not a great deal that divides us on this issue. I pay tribute to my right hon. Friend the Member for Oxford, East (Mr. Smith) on the way in which he introduced his remarks and, more generally, on the excellent way in which he has campaigned on this issue. As I told him in the debate a couple of weeks ago, which he has mentioned, I accept that there are genuine issues here, and we need to work with the five specialist orthopaedic hospitals to get them right so that we have a sustainable solution going forward.

Like my right hon. Friend, I have a great respect for the five specialist orthopaedic hospitals. As my hon. Friend the Member for Wigan (Mr. Turner) has said, my constituency, like his, is served by Wrightington, Wigan and Leigh NHS Trust. I also recently visited the Royal National Orthopaedic hospital in Stanmore. Without a shadow of a doubt, those are first-rate international hospitals with excellent reputations. In all that I do as a Minister, and in all that the Government do to refine and improve the payment-by-results process, we must always have at the forefront of our minds the principle that payment by results must support and nurture that excellence and allow it to continue, which is very much my motivation in taking these matters forward.

I agree with my right hon. Friend that there has indeed been significant progress in orthopaedics in recent years, not least on waiting times, and I shall come to that later in the context of independent sector treatment centres, to which several hon. Members have referred. My right hon. Friend has mentioned the new facilities at the Nuffield orthopaedic centre, which are indeed excellent. Many specialist Orthopaedic hospitals raise funds from voluntary contributions, and I saw the excellent facility at the Royal National Orthopaedic hospital in Stanmore, which has first-rate sports facilities and helps to rehabilitate people and make them more active.

I know, therefore, that our orthopaedic hospitals are being improved through a combination of investment. At Stanmore, however, I also saw some of the outdated buildings and facilities that my right hon. Friend has described. I therefore understand the need to resolve the finance issues, so that those excellent hospitals can plan for the future and bring the necessary investment to the parts of their estate that need it. My right hon. Friend has described orthopaedic hospitals as a precious national resource, and I agree.

May I say a few words about the principles behind payment by results, because it is important that we put them on the record as the context for today’s debate? The fundamental principle behind the system is that hospitals should not be paid simply for existing, but for the quality of what they do. That way, people will choose to use their services. I argue strongly that the payment-by-results system has brought transparency to NHS funding and is placing a renewed emphasis on improving and increasing productivity. As I have said, it has brought an emphasis on quality as well.

The hon. Member for Westbury (Dr. Murrison) has asked about financial management in the NHS, on which the Public Accounts Committee touched this week. I hope that he accepts my argument that payment by results and the tariff systems have brought much greater financial rigour to the NHS, which has allowed a spotlight to be shone on finances across the country revealing overspending and inefficiency. That will lead to some uncomfortable questions about the sustainability of certain parts of the NHS estate. I did not hear him question whether the payment-by-results system is wrong in principle—I think he said that it was fine. I point out gently that it is bringing renewed clarity to NHS finances and enabling parts of the system that have traditionally tolerated inefficiency or overspending to face up to that and to take the necessary steps to address it.

I am slightly concerned that there is a degree of complacency implicit in what the Minister has just said. I hope he accepts that the tariff system is by no means perfect. A great deal of this debate is concerned with one of those imperfections.

I accept that point, and I think that I began by saying as much. I am surprised that the hon. Gentleman has made no reference to the document that the Department published last week, “Options for the Future of Payment by Results”. If he had read it, he would have seen that some very honest and searching questions are being asked about the matters being discussed today. There was a detailed section on specialist hospital services that put forward some options for further refining and improving the tariff structure to address precisely the issues eloquently raised by my right hon. Friend the Member for Oxford, East, my hon. Friend the Member for Wigan and the hon. Member for Newbury (Mr. Benyon). There is no complacency on my part, and I shall address those issues specifically.

I want to put on the record some of the fundamentals of payment by results so that they are understood and that people know why the system is being refined progressively and introduced into the NHS. It would, of course, be impractical to have a price for every single procedure or diagnosis that might be recorded when a patient is cared for by the NHS, which would result in about 15,000 prices. For that reason, we set our price list and the national tariff at a more aggregate level. The main tariff currency or unit of payment are health care resource groups, of which there are about 550. They are designed to be clinically coherent and to contain items of broadly equal value. The price for each group is calculated on the weighted average of the different procedures and diagnoses. In other words, we acknowledge that a group might contain a mix of lower and higher cost procedures.

For a typical provider treating a typical mix of patients, that approach works well. It will make a surplus on some procedures, but a loss on others—to be fair to the hon. Member for Westbury, he said that a moment ago. The price is never exactly right for any one procedure, but the surpluses and deficits even out, so that over a year the provider is fairly rewarded for the mix of services within the group. However, we have always acknowledged that for specialised services the swings-and-roundabouts approach has its limitations. If we took no further action, providers doing more of the complex work would be disadvantaged. We accept that point entirely.

I shall address head on the point made by the hon. Member for Newbury and repeated by his Front-Bench colleague. I think that it is a little unfair to describe the tariff system as a blunt instrument, because there are specialised tariff top-ups for a defined list of specialised orthopaedic procedures and diagnoses. Those are aimed at health care resource groups that contain a mix of complex and more routine work. Perhaps I can provide examples of such procedures—hip and knee revisions requiring a bone graft, shortening of bones, re-amputation at a higher level, correction of congenital deformity, or shoulder or arm infections owing to internal prosthetics. The top-ups recognising the complex nature of such work are set at 70 per cent., so if, for example, a hip replacement revision required a bone graft, the tariff would increase from £7,185 to £12,215. Those top-ups are paid to not only single speciality trusts, but all trusts that carry out such work. That might reassure my hon. Friend the Member for Wigan.

Does the Minister agree that there is a serious discrepancy in a large number of treatments carried out by such centres that are not catered for by the special top-up figures that he has mentioned?

I accept that there are still gaps between the full cost of work and that the current system does not reflect the full cost of some of the more specialist work carried out by the five hospitals being discussed today. As the hon. Gentleman will know, however, transitional arrangements are in place to cover the cost and losses that those hospitals face as a result of doing that work. A general set of transitional arrangements is available to all hospitals under the payment-by-results system. Further to that, a further top-up is available to specialist orthopaedic hospitals, although that is not the concern of my hon. Friend the Member for Wigan. We recognise the point that the hon. Member for Newbury has made.

In a moment I shall come to the question asked by the hon. Member for Westbury about healthcare resource group 4, which will take the system a further step forward and improve accuracy and refinement in the targeting of payments. I hope that that will form the basis of a more lasting and durable solution for the five specialist hospitals being discussed today. We are looking at interim arrangements before moving on to a better solution for those hospitals.

The Minister has objected to the description of the tariff as a blunt instrument and has said that he wants to refine it, but one wonders how long that process of refinement will take. I am not aware of any other society with a similar system where the tariff settles down for good. What is his reaction, therefore, to the suggestion by the hon. Member for Westbury that there should be a permanent mechanism for resolving tariff difficulties, rather than simply responding to Adjournment debates from time to time?

I am coming to that point.

A durable solution is needed. Hon. Members have asked about international experience, and I shall touch on that point now. We commissioned a report from the London School of Hygiene and Tropical Medicine to compare the approaches to activity-based funding in eight countries to see what lessons we can learn. The key finding was that there is no single correct answer to which we should all aspire. All the countries in the study supplement their basic tariff payments with funding provided through other means—a kind of top-up or supplementary payment.

Although the terminology and detail differ, there is significant similarity between those approaches. Germany’s approach of allowing certain services or specialties to be excluded from tariff if they meet certain criteria is not unlike our pass-through payments, through which commissioners can make additional funding available if certain criteria are met. Those criteria include the use of new technologies or the provision of high-cost services in a limited number of centres.

Some countries pay surcharges, not unlike our own top-up payments, and others provide funding for education and research separately from tariff, as we do in England. The hon. Member for Southport (Dr. Pugh) might want to take a further look at that revealing piece of work, which shows that other countries do not have perfect systems and that many of them are grappling to find a sustainable solution to this problem. However, it provides a basis for a way forward, and some of that is reflected in the document that we issued last week.

I recognise the role that my right hon. Friend the Member for Oxford, East plays as the chair of the Specialist Orthopaedic Alliance. Like the hon. Member for Southport, I believe that he has played an extremely valuable role in bringing these issues to our attention. We have worked with the main providers of specialist services on introducing measures that ensure that their work is fairly rewarded. For the 2005-06 tariff, we worked with the Specialist Orthopaedic Alliance when considering the arrangements for orthopaedic services and agreed procedures for which an additional top-up was payable, some of which I have mentioned. As the top-up was closely targeted on few procedures, it was very high at 156 per cent. The prices of other services within the tariff were reduced pro rata so as not to over-compensate for less complex activity. We also agreed a list of tariff exclusions for treatments that take place at unpredictable intervals or have an exceptionally high cost and cannot therefore be easily priced for tariff purposes. Such treatments are paid for at locally agreed prices.

For the 2006-07 tariff, we again consulted the Specialist Orthopaedic Alliance about how best to ensure that services are fairly rewarded. It advised that we should widen the range of procedures for which top-ups are payable, which led to a reduction in the specialist orthopaedic top-up to 70 per cent. With the alliance’s help, we also reconsidered the list of exclusions and consequently increased income for providers of specialised orthopaedic services.

Those arrangements have been rolled forward for 2007-08. We have also explicitly recognised that few NHS providers in England have orthopaedics as a sole specialty, which means that they are unable to spread any of the financial risk of their orthopaedic work across a broader range of services. A few specialist providers of children’s services face the same problem. With that in mind, we arranged with the strategic health authorities for a review of the impact of payment by results on the income of specialist providers. The review recommended limiting to 4 per cent. the gap between providers’ incomes under previous local prices and their incomes under the current national tariff. As a result, two specialist orthopaedic providers, Robert Jones and Agnes Hunt Orthopaedic and District Hospital NHS Trust in Shropshire and the Royal National Orthopaedic Hospital NHS Trust, will receive more than £3 million in additional support in 2007-08, which will be funded by the commissioners of their services.

The Minister has suggested that there are only two groups of specialist hospitals to which those circumstances might apply—children’s and orthopaedic hospitals—but will he accept that there are one or two others? The Royal National hospital for rheumatic diseases in Bath is a tertiary centre and faces many of the pressures that we have discussed.

That hospital faces many of the issues that we are discussing, and the options section in the payment-by-results document is not confined to orthopaedic and children’s services, but research within the Department suggests that the problems that are being aired this morning are felt most keenly in those two sectors. That is why such attention is being paid to those services, but I do not rule out the idea that the problems are felt more broadly across the NHS. The measures that I have described have helped to cushion the immediate issues, but—this should answer the point made by the hon. Member for Southport—we need a payment currency for the longer term that better differentiates between routine and complex work. We need to calculate a tariff that more fairly rewards specialist services and ensures that there is less need for additional measures, thereby nurturing excellence.

I welcome the Minister’s commitment to sorting this out, but these problems have been evident for a long time and have not been resolved so far. I urge him not to underestimate the corrosive effect that the constant medium-term black hole that looms ahead of hospitals has on morale and on their ability to plan for the future. He should set a deadline by which the longer-term issues will be sorted out, so that hospitals can look to the future and not have to read bland SHA assessments that simply say that they are financially unviable while another part of his Department assures us that their financial viability is going to be sorted out.

My right hon. Friend makes a fair point. Of course, we cannot simply hold out hope that everything will be sorted out and take the approach that, “There’s jam tomorrow.” I understand his point exactly, and I was about to discuss healthcare resource group 4, which will address whether a permanent black hole exists. An updated version of HRG4 has been developed that offers several potential benefits. There are more groups, so there is greater granularity, to use the jargon, which allows more precise alignment of costs. We had hoped to introduce the new version in 2008-09, but that would not be consistent with our commitment to publish a tariff by December and allow the NHS a period of road testing before tariff publication. We will, therefore, introduce version 4 in 2009-10. That might disappoint my right hon. Friend, but we will continue to work with the Specialist Orthopaedic Alliance in the intervening period to get these matters right. The judgment is always about not rushing to introduce a new system that we might later regret or realise that we should have taken more time over. That was the conclusion of the Lawlor review on the implementation of payment by results: we should take time to get things right.

I come to my right hon. Friend’s point about how uncertainty affects the ability of organisations to plan, think ahead and fulfil ambitions. On my visit to the Royal National Orthopaedic hospital at Stanmore, I was truly impressed by the commitment, enthusiasm and professionalism of the people whom I met. They were clear about what they want to achieve for the hospital. I understand the connection between the lack of a durable solution and aspirations for the capital redevelopment—potential private finance initiative redevelopment—of that estate.

That takes me directly to a point raised by my hon. Friend the Member for Wigan about our local trust and foundation status. He rightly pointed out that the issue had an impact on the trust’s plans to gain foundation status the last time around. It would not, perhaps, be right to put it any more strongly than to say that it is an issue that the trust has to monitor and prove that it can resolve if it is to pass through the gateway and receive foundation status. I understand entirely the points that have been made about the need to resolve and get some permanence about these issues so that specialist and excellent organisations can continue to develop.

We now understand that HRG4 will not be rolled out until 2009-10, but the supplement that the five hospitals that we have been discussing enjoy runs out in 2008, so that leaves 12 months in which there might be no supplement or prospect of amending the tariff because it relies on HRG4. What will happen in those 12 months?

I again refer the hon. Gentleman to the document that was published last week, in which paragraphs 3.33 to 3.40 address the issue directly. It states that, in the light of the delay to the introduction of HRG4,

“we are considering the following measures for 2008/09: further refinement of the relative weights of the specialised top-up payments; basing prices for certain HRGs on the costs submitted from a sample of providers who deliver the highest volumes of activity in those HRGs”.

The suggestion was made by a particular specialist provider that the prices for certain groups should be based on the average of the specialist providers rather than on that of a broader community.

The hon. Member for Westbury said that the five hospitals receive this top-up tariff. I should point out that only four do—the Wrightington hospital does not. I do not know whether the Minister will come on to that, so will he tell us whether the Wrightington will get the top-up tariff in the interim period before HRG4 is introduced?

I was just about to discuss the particular issues that my hon. Friend raises. He tempts me to blur my roles and adopt a constituency hat. There is no doubt about the Wrightington’s place in medical history, given the work that he has described, or the fact that its situation is different from those of the other hospitals that we are discussing. My right hon. Friend the Member for Oxford, East warned about the consequences of merger with a district general hospital, which, as my hon. Friend said, happened in the Wrightington’s case. It might be said that there are pros and cons to going down that route.

I understand my hon. Friend’s points entirely, but I must speak wearing my ministerial hat on this occasion. He talked about a moral obligation, and his comments will have been heard. He rightly said that the services of the Wrightington are not confined to his constituency or to mine, because it provides specialist work to commissioners in the whole of the north-west and beyond. It is fair to say that particular attention needs to be paid to the individual circumstances of the trust—[Interruption.] I hear the hon. Member for Westbury laughing, but I am not making a constituency case. I am merely describing a self-evident truth: the hospital has not benefited from some of the extra help that has been available to the other specialist hospitals. As has been said, the losses incurred have been absorbed by the general income and expenditure of the district general hospital site.

My right hon. Friend the Member for Oxford, East talked about the dangers of mergers with district general hospitals. There is a danger in this debate of ascribing all the difficulties and uncertainties faced by the specialist orthopaedic hospitals to tariff; there is an easy dumping ground, because people can say that everything is an issue of tariff.

Let us be clear that questions of productivity also need to be faced by the specialist orthopaedic hospitals; they should not be insulated from such questions, because the rest of the national health service is not. Difficult questions about productivity, optimum use of facilities and the efficiency of working practices need to be addressed. The big point that I should make to my right hon. Friend is that, although I accept the obligation to help on some of the issues that he raised, a two-way street is in operation, because there is also an obligation on the hospitals to address questions of productivity, efficiency and changing working practices, where that needs to happen.

I take the point that the Minister makes: we are dealing with a wider constellation of issues and challenges. I am not lumping everything on to the tariff, but is there not a particular perversity? Such is the discrepancy between the cost of undertaking the specialist work and the prices that the hospitals are paid for it that the more productive they are, the worse off they will be under this system.

The point is well made, and we must have particular regard to it. I was struck by the point made by my hon. Friend the Member for Wigan that, if the merger he mentioned had not happened, more support would be given. I am sure that careful note will be taken of that by those who need to do so. The answer is to work towards a durable solution and take away as many of the imperfections as we can along the route. We need to whittle away the imperfections, while in no way undermining the organisations that are involved.

The question of independent sector treatment centres—ISTCs—was raised by most of those present. The hon. Member for Southport began by describing the effect on people’s lives of the orthopaedic conditions that we are discussing. It is important to recognise that ISTCs have reduced the long waits that blighted the lives of those who were told that they had no choice, that there was not enough capacity and that they would have either to go private or wait for a very long time.

One thing that has bedevilled the orthopaedic sector is the lack of capacity around the country. It is sometimes suggested that there is an ideological commitment to saying, “This must be the way that things are done.” Nothing of the sort exists; we simply want to put in place the additional capacity to allow people who need access to treatment to improve their quality of life, to remove the blight on life that often exists, and to provide early and ready access to treatment.

In the past, the private sector traded on the back of the failings of the NHS. Waiting times are now coming down quite quickly. In this financial year, I believe that we will see a significant reduction in the waits for orthopaedic procedures as we move towards having an 18-week maximum wait. That is an important part of the role being played by the ISTCs. It is also indisputable that the presence of an ISTC has sharpened consideration of questions of productivity in certain hospitals. That is not a bad thing. It is good for patients, who get treated more quickly, and for the NHS, which is able to question and challenge what it does and improve how it operates. I shall cite an example of that.

Yeovil district hospital, in the south-west, is making huge strides towards delivering the 18-week target, which it confidently says will be hit at some point this year. All its patients will therefore be treated within 18 weeks of a general practitioner referral. It openly says that a large amount of the progress that it has made was kick-started by the arrival of the ISTC at Shepton Mallet, which was seen as an opportunity rather than a threat. Such things need to be borne in mind.

The hon. Member for Westbury raised the question of a level playing field. We are working towards that, but the NHS always spot-purchased from the independent sector and, in doing, so often paid inflated prices for the use of that capacity. I am sure that he knows more than I do about how that may have happened in the past and about how it was not necessarily the best use—

I need to correct the implication behind the Minister’s remark. A few years ago, my colleagues were laying into him for the contracts with the private sector—what he termed “spot-purchasing”—that were wasting vast sums of money on his watch, not on mine.

I was explaining to the hon. Gentleman that one of the reasons for the ISTC programme was that it brought down the cost. The NHS has always used the private sector in that way, through various waiting list initiatives that occurred under his Government, as well as this one. The programme has enabled those reference costs to be brought right down, as Laing and Buisson recently recognised in their review of the private health care sector market.

We have had a rich debate on legitimate questions for these excellent national assets: the five specialist orthopaedic hospitals. I give my right hon. Friend the Member for Oxford, East an assurance that I am committed to reaching a sustainable solution at the earliest opportunity. I understand the points that he has raised. I simply ask him to acknowledge that there is another argument in respect of productivity and the need to ensure that the services are as efficient as possible. If the trusts and the Specialist Orthopaedic Alliance work with us on these questions, I am confident that, in a short time—perhaps a matter of months or a couple of years—we shall arrive at the right solution for those important hospitals.