A groundbreaking deal with the private sector to provide millions of patients with information on the best hospitals and GPs in Britain is condemned today by a parliamentary watchdog as poor value for money and breaking almost every rule designed to protect the taxpayer.
The National Audit Office has lambasted the Department for Health for signing an exclusive joint venture with the Dr Foster partnership - the organisation behind the Good Hospital Guide - without putting out the proposal to competitors and paying millions of pounds to the company to develop the ministry's own data.
The scheme, personally endorsed by the health secretary, Patricia Hewitt, and former health minister Lord Warner, could, according to advice taken by the NAO, leave Britain facing a court case for giving illegal aid to a private company.
The new system was seen as essential to Tony Blair's plan for every patient to be offered a choice of four hospitals for operations. The joint venture company, known as Dr Foster Intelligence, would sell the latest data to health trusts so they could help patients make an informed choice.
According to the NAO some £12m of taxpayer's money was sunk into the project with a further £1.7m spent on consultants to evaluate it. This included a £50,000 payment to Dr Foster's partnership, headed by Tim Kelsey and Jake Arnold Foster, to advise them on setting up their own centre. The NAO says the £12m included a strategic premium of up to £4m - which was higher than the financial advisers told the ministry it was worth.
Edward Leigh, chairman of the Commons public accounts committee, said: "Taxpayers should be grateful to the anonymous whistleblower who first alerted the NAO to the Department of Health's hole-and-corner deal with Dr Foster."
"The department simply paid no heed whatsoever to the rules that are set to protect taxpayer's money ... there was an unseemly urgency to complete the deal ... the truth is that the department and its information centre cannot demonstrate how investment in one company, Dr Foster, rather than any other providing similar services, is to the benefit of the NHS."
A spokesman for the Department of Health and the Information Centre defended the deal, saying: "The venture was designed to harness private sector dynamism, efficiency and effectiveness to public sector expertise and ethics in the health informatics field ... Dr Foster Intelligence is key to providing accessible information to healthcare providers, staff and patients to help them to make informed decisions and choices."
"The department and the Information Centre sought appropriate legal and professional advice throughout the planning and negotiation of the joint venture and followed this advice at each stage.
"The Information Centre has, throughout its existence, taken careful steps to seek to ensure that there is equal and fair access to data for all competitors of Dr Foster Intelligence, so as not to afford Dr Foster Intelligence any advantage."
Dr Foster refused to comment, saying the criticism was of the Department for Health, not them.
