To give credit where it’s due, Lord Alton has published the full text of the letter he received from Lord Howe on the subject of the cost of abortion services to the NHS, giving us the opportunity to make a direct comparison between the contents of the letter and the information given by the Daily Telegraph.
The letter also provides some additional data, which – as you’ll see – will prove rather useful. So let’s look at what Lord Howe actually had to say:
In my letter to you of 25 July, I undertook to keep you informed of the outcome of our work to understand differences in reported activity data in relation to NHS-funded abortions.
Previous replies to you, and others, have calculated the costs to the NHS of abortions by using unit cost and activity data submitted to the Department through its annual Reference Costs collection. This is the method used to answer similar questions about other services and is used because the Department does not collect the total costs of abortions direct from the NHS. Abortion is however different to most other services in that a large proportion of NHS-funded activity is commissioned from the independent sector by PCTs, or sub-contracted to the independent sector by NHS providers. It is also different because there is a parallel collection of activity data within the Department through the legally required notification of abortion to the Chief Medical Officer.
Fair enough – that pretty much explains why the previous data given on the cost of abortion services didn’t include full data related to the contracting out of services to the independent sector.
That said, this is answer is also slightly worrying in the wider context of the government’s efforts to push through NHS reforms which will result in many more services being contracted out to the private sector. As its the government that ultimately pays the bills, using taxpayers’ money, you would expect them to keep on top of all NHS expenditure, including costs incurred via outsourced contract, so its a bit disturbing to find that this isn’t currently the case at a time when arrangements like those which exist in relation to abortion services are likely to become much more common in the future.
That’s the preamble over so, moving on to the meat in Lord Howe’s missive, the Telegraph had this to say on the subject of concerns raised by Lord Howe in regards to the figures previously given to Parliament:
But in a letter to Lord Alton, the health minister in the House of Lords has admitted that “concerns” have been raised about these calculations, partly because organisations have interpreted guidance on collecting costs in different ways.
Earl Howe wrote that the Department’s method of calculating costs is “less reliable” than the figures on abortions provided directly to the Chief Medical Officer by law, which in future will provide the basis for the statistics.
This is covered in more detail in the next part of the letter:
Our work over the past three months has revealed two concerns with using this approach to estimate the cost of abortions. Firstly, the data is collected using Healthcare Resource Groups (HRGs) which are standard groupings of clinically similar treatments which use common levels of healthcare resources. Due to the way in which this grouping takes place, it is not possible to calculate easily the number of abortions from reference costs data as there is not a single, simple HRG for abortion. In the past, we have attempted to calculate the number of abortions using a number of HRGs which include relevant abortion procedures. This has resulted in the number of ‘abortions’ reported in Reference Costs not matching the CMO abortion statistics data.
And with that statement goes the following table of figures:
Together, these confirm what I suspected yesterday, i.e. that the previous figures given for NHS costs included both elective and non-elective terminations, although the figures given do not add up to the full £82-£83 million that has previously been cited in response to written questions in the House, for reasons we’ll get around to in a moment.
What this figure also shows are the current tariffs for different abortion procedures and the way in which the average cost of termination has been calculated, and straight away we run into something of problem when it comes to extrapolating the cost of abortion services provided by the independent sector from these figures.
Elective abortions are, quite obviously, abortion carried out at the behest of pregnant women under the provisions of the Abortion Act 1967.
Non-elective abortions are abortions carried out due to medical necessity, i.e. in situations where the life of pregnant women is at serious risk, and include the termination of ectopic pregnancies and, I think, terminations following a miscarriage where the foetus has either died in the womb or where the foetus and placenta tissue has only been partially expelled, placing the woman at risk of serious infection, e.g. sepsis.
Non-elective abortions are emergency procedures that, more often than not, require women to be stay in hospital for a couple of days following the procedure and this is reflected in the higher tariffs attached to these procedures, which can be anything from 28% to 133% higher depending on the exact procedure used.
Non-elective abortions are not undertaken by independent sector providers or, at the very least, not by the two main providers, BPAS and Marie Stopes International – I can’t say definitively that other private sector hospitals that are licenced to perform abortions never undertake non-elective abortions but as the private sector tends to be notorious risk averse when it comes to emergencies, I think it highly unlikely that any non-elective terminations are performed outside the NHS.
The upshot of all this is that the NHS’s estimated average unit cost for a termination – £680 – is inflated by the inclusion of costs relating to non-elective procedures which are not undertaken by the independent sector and this is, therefore, neither a fair nor an accurate basis from which to estimate total NHS expenditure in the independent sector. If we exclude non-elective procedures – as the NHS should when calculating costs relating to independent sector provision of elective abortions – and apply the same market forces weighting then the average unit cost figure on which its estimates should be based is on is only £580, after rounding to the nearest £10.
So, already, the method by which the NHS has chosen to calculate its average unit price for a termination will have the effect, when applied to the independent sector, of overestimating its income by 17.2%.
The second of Lord Howe’s concerns is explained as follows:
Secondly, we have identified that the organisations completing the reference costs collection have interpreted in different ways the guidance on how to report directly commissioned and sub-contracted activity. However, even if all organisations had been interpreting the guidance in a consistent manner, this would not help because of the issues outlined above. The difference between the number of legally required notifications to the Chief Medical Officer and the data returned as part of the reference costs has led us to conclude that, for the independent sector, the reference cost data is the less reliable of the two data sets.
Going back to the figures, there is a discrepancy of around £18 million between the costs cited in previous responses to Lord Alton, and other MPS, and the combined costs given in the NHS reference costs table used to calculate the average unit cost of a termination, and this is because the earlier figure did, in fact, include some information relating to the costs of abortions carried out by the independent sector where, so it appears, these services were sub-contracted out by the NHS rather than being fully contracted out via the normal commissioning process.
This is basically an accounting error which had the effect of inflating the costs cited for direct NHS expenditure by around £18 million but had no impact whatsoever on the main thrust of the questions tabled by Alton and others over the last three years, which were digging after estimates of the value of independent sector contracts, as no separate figures were ever given for the independent sector.
So, its still a bit of reach to suggest that Parliament has been misled as, until this letter, it has never directly answer the question about independent sector costs.
So that’s the problem outlined in full – what is Lord Howe proposing to do about it?
We are therefore proposing to change the way we calculate the cost of abortion to the NHS. Going forward, we will use the activity data submitted to the Chief Medical Officer, in the absence of appropriate cost data for providers, we will multiply this activity figure by the national price paid by an NHS commissioner for an abortion provided by an NHS organisation (please see the attached annex for an explanation of this figure)*. Our understanding is however that the contracts which the NHS has with the independent sector are generally set below the national tariff and data from the annual accounts of the major independent sector suppliers would seem to bear this out.
*This is the table I’ve already given above.
No, no, no, no, no!
As I’ve already pointed out the national price set out in the cost table – £680 – is based on figures which include the costs of non-elective terminations, which are not undertaken by the independent sector, and this inflates the average unit cost by 17.2% over and above the unit price, if calculated solely on the basis of the figures for elective terminations. And this is all before we take into account Lord Howe’s frank admission that the independent sector already provides abortion services at a ‘discount’ rate which is lower than the standard NHS tariffs.
Our understanding is however that the contracts which the NHS has with the independent sector are generally set below the national tariff and data from the annual accounts of the major independent sector suppliers would seem to bear this out.
Based on its 2009/10 accounts, BPAS carried out 52,000 abortions and derived a total income from all contracted services of £25.009 million on the year, so even if we assume that all this income is solely derived from its NHS abortion contract – which it isn’t, although it does account for the majority of its income – this give us an estimated cost per procedure of only £480 (including the cost of a pre-abortion consultation for which BPAS charges private patients £65)
If we use the figures from the table above to recalculate the NHS’s average unit cost for an elective abortion for 2009-10, based on that year’s tariffs, we get a figure of £620 after including the market forces weighting and, after weighting this figure for the impact of including non-elective terminations (17.2%), a final unit cost of £729*.
*This figure is higher than the estimate for 2010-11 because the tariff for medical abortions, which accounted for 45.8% of the elective procedures included in the 2010-11 figures, has fallen from £502 per procedure to £473 between 2009-10 and 2010-11.
So, had Lord Howe’s proposals been applied in 2009/10, this would have overestimated BPAS’s income for the year by just over 51%.
This would be a troubling enough conclusion were we dealing with the figures for a wholly uncontroversial procedure, say hip replacement operations, but at a time when independent abortion providers are being routines, and dishonestly, attacked by the anti-abortion lobby on the back of wholly unevidenced claims that they are acting under a conflict of interest and dealing with clients in a wholly ethical manner purely to boost their own income, for the government to propose a new method of estimating their income which inflates the figures by as much as 50%, once we take into account the fact that BPAS, at least, charge the NHS considerable less than its own standard tariff rates, is both unconscionable and irresponsible.
Using this proposed new calculation, Lord Howe provides Lord Alton with the follow table, which shows the estimated impact of these proposals on current estimates:
If, however, we recalculate the figures using the suggested method, but based on the same reported activity data and more realistic estimates of the unit costs, i.e. unit costs for elective abortions only and unit costs extrapolated from BPAS accounts and allowing for inflation using UK CPI and RPI at September 2010, the RPI rate being the figure used in April 2011 to uprate pensions and welfare benefits, then we get the following estimates:
In reality, even the figures extrapolated from BPAS’s accounts could overestimate the independent sector costs as these figures have not been adjusted to take into account the fall in tariff for medical abortions (£29 per abortion) which, in 2010, accounted for 43% of all abortions carried out in England and, based on the data reported to the CMO and the NHS activity figures, 42.7% of all abortions carried out in the independent sector, although any difference is likely to fairly marginal compared to degree to which Lord Howe’s proposed method would lead to an overestimate of somewhere in the region of 40-50%.
To finish off Lord Howe’s letter, it then goes on to add:
In PQ reference 11307 tabled in August you asked about the percentage of abortions commissioned by the NHS and performed by the independent sector that were ‘non-elective/ The categorisation of procedures as ‘elective’ and ‘non-elective’ is not a feature of the abortion activity reported to the CMO. It is therefore not possible to answer this specific question.
I find this answer slightly worrying as the provision in law for non-elective abortions is covered under grounds F & G in the Abortion Act 1967:
Although grounds A & B might appear to cover the same territory…
A. The continuance of the pregnancy would involve risk to the life of the pregnant woman greater than if the pregnancy were terminated;
B The termination is necessary to prevent grave permanent injury to the physical or mental health of the pregnant woman;
…these are still elective abortions, even though there is an acknowledged and, in some cases, life-threatening risk of serious injury.
To clarify how these grounds differ, F & G would apply to something like an ectopic pregnancy, i.e. an emergency admission where there is an imminent risk of serious injury/death. A & B, on the other hand, come into play in, for examples, situations in which a pregnant woman is diagnosed with life-threatening condition, such as cancer, where a choice can be made at whether to delay treatment in order to give the foetus the best possible chance of survival, at the risk that this reduces the chances of the woman, or abort the foetus in order to take up the treatment, which may save the woman’s life but only at the cost of killing the foetus or placing it at serious risk of injury or malformation, etc.
One would have hoped that Lord howe, or rather his civil service advisors, would have understood that non-elective abortions carried out under grounds F & G are not, and have never been, included in the information that the NHS and other abortion service providers are required to send the Chief Medical Officer, by law, under the provisions of the Abortion Act 1967.
So the correct answer to Lord Alton’s question about non-elective abortions should be zero, so far as the independent sector are concerned, and these are all undertaken by the NHS and are not included in the annual abortion statistic produced from data sent to the CMO, which relate only to elective abortions.
This leave me only to make the following observations:
First and foremost, Lord Howe’s proposed new method of calculated the cost to the NHS of abortion services is woefully inadequate and unfairly and unreasonable gives an innaccurate and vastly overinflated estimate of the costs arising from the outsources of elective abortions to the independent sector.
Second, the fact that the independent sector provides its services to the NHS at a cost which is below standard NHS tariffs, as Lord Howe openly acknowledges, hardly fits in the anti-abortion lobby’s claims that service providers, like BPAS and MSI, are operating under a conflict of interest and acting unethically in order to boost their revenues. Not only does the independent sector provide its services at a rate which is significantly lower than the NHS’s own tariffs, but it would appear that those tariffs are based only the costs of the actual procedure and don’t include the cost of GP consultations/referrals prior to the abortion, while the independent sector appears to be absorbing the cost of providing their own pre-abortion consultations while still undercutting the NHS tariifs.
None of this fits the distorted picture of an ‘abortion industry’ driven by the desire for profit that the anti-abortion lobby have been heavily promoting over the last year.
It also follows from this, and from the observation that the independent sector already absorb the costs of its pre-abortion consultations, that the efforts of Nadine Dorries and her supporters to propel women into so-called ‘independent’ pre-abortion counselling. much of which would be likely to provided through anti-abortion organisations such as CareConfidental, if Dorries did get her, would only serve to push up the costs of contracting out abortions to the independent sector as one would assume that CareConfidential would expect to paid for its services where, currently, the NHS effectives gets them free of charge from existing providers, relative to their own internal tariffs.
Finally, if a blogger with nothing more than an eye for detail and a few scraps of information gleaned from the public domain, can figure all this out, then why can the Department of Health, with all the people and resources it has at its disposal, not do likewise?