Payment by Results

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• Hospitals' results earnings could be capped. Hospitals could lose potential revenue worth millions of pounds under the rollout of a scheme to fund patient care, it has emerged. The Department of Health (DoH) today confirmed that it would consider capping hospitals for surplus earnings gained under payment by results (PBR), the latest piece of government policy to fund patient care. Hélène Mulholland Thursday August 26, 2004
• The health market is back. Monday October 11, 2004 The Guardian
• The government is to set up a monitoring board to oversee the radical new payment system being introduced to fund hospitals, it has emerged. The decision to put in place an overseeing body for payment by results was announced in amended guidance developed from its phased introduction so far. Hélène Mulholland Thursday October 28, 2004
• A key reform to NHS funding is being scaled back amid concerns over "financial volatility", it emerged today. The government is gradually bringing in a system known as Payment by Results (PbR), where NHS funds depend on numbers of patients, with hospitals receiving a set sum for each treatment they carry out. Hélène Mulholland and agencies Tuesday January 11, 2005
• NHS tariff needs to be revised. John Wilkinson Monday January 9, 2006 The Guardian
• A conflict develops over price setting. There is uncertainty about who in the future will set the national tariff that underpins payment by results. The Department of Health may want to keep it as a lever to influence the NHS - the tariff can be used to signal priorities by setting higher prices for procedures the health department wants to encourage and lower prices for treatments it thinks could be provided elsewhere. It may also be used to promote efficiency by annually raising the tariff at a lower rate than expected increases in costs. The private sector favours handing price setting over to an independent body. Regulators doubt whether Whitehall has the skills to set it well or fairly. There is speculation that it could be delegated to an arms length body under the auspices of the financial regulator. It is likely that the tariff will be "unbundled" - currently it is an average payment for complex and simple cases and for all of a treatment. Summary by Keep our NHS Public of Financial Times 23 January 2005
• New incentives to suppress activity. Under payment by results in 2006-7, trusts will only be paid half-rates for emergency admissions beyond current levels to create a sharp incentive for a reduction of emergency activity. Overall PbR will cover £22bn of elective and emergency activity compared with £8bn this year. Treatments in A& E and minor injuries units will receive the same remuneration. Critical care is still excluded from the tariff, but will begin in shadow form. The shadow tariff is to be published for some diagnostics to "unbundle" this cost ready for competing providers. PbR is also to be piloted in mental health trusts in 2007-8. Meanwhile the Business Arrangements 2006-7 rulebook published this week set an "expectation" of universal coverage of practice-based commissioning and 90% coverage of choose and book by December 2006. It also set out three "challenges for the NHS": robust finances, embedding the reform process and service priorities for delivery. There are six priorities: targets associated with health inequalities, the target for cancer treatment to start within 31 days of diagnosis and 62 days of urgent referral, the 18-week total waiting-time target, halving MRSA rates by March 2008, the extension of choice to cover all foundation trusts by April and to give all patients access to sexual health services within 48 hours by 2008. Summary by Keep our NHS Public of  Health Service Journal 26 January 2006
• £1m health bill dispute. Payment by results has brought Walsgrave Hospital and Coventry PCT into conflict. The PCT claims the hospital taken advantage of the new system to overcharge for treatment, while the hospital believes the PCT is trying to claw back £1m of its debt by disputing payments it had originally agreed to. The matter will now have to be decided by West Midlands South SHA. Summary by Keep our NHS Public of Coventry Evening Telegraph 3 February 2006
• Foundations say tariff changes could scupper next applications. Foundation trusts have reacted angrily to the lower-than-expected 1.5% rise in the payment by results tariff, saying it will destabilise their financial planning and leave them with gaping holes in their accounts. Foundation Trust Network director Sue Slipman said she was angry and disappointed with the amount, and questioned whether the current batch of foundation trust applicants, set for authorisation in April and July, would now be viable because "trusts will have assumed a higher uplift and put that in their original business plans". Summary by Keep our NHS Public of Health Service Journal 9 February 2006
• PCT fury over lost millions as PbR compensation withdrawn. Primary care trusts are furious after learning that compensation for those that will see costs rise under payment by results is to be halved next year, before abolition in 2008. The change in policy, announced just two months before the new financial year, will leave black holes in their finances. Coventry PCT will be hit hardest with a £16.2m funding gap, and Huntingdonshire will be left with a £14.9m shortfall. PCTs in West Midlands South strategic health authority area will face a £53.1m gap, PCTs across Essex SHA will have to deal with a cut of £48m, and the four Birmingham PCTs are set to lose £20m. Norfolk, Suffok and Cambridgeshire SHA said its PCTs face a loss of £39m. Summary by Keep our NHS Public of Health Service Journal 16 February 2006
• Payment by results wide open to fraud, say commissioners. 80% of primary care trust and practice-based commissioners surveyed by the NHS Alliance said the current PbR system encouraged "gaming" by providers to "unfairly maximise income". 67% of respondents were currently commissioning under PbR. Of those, 30% said they had concrete evidence of gaming while a further 53% said they were suspicious but could not get the relevant information from providers to investigate their queries. Examples range from outright fraudulent claims, such as a bill for a male patient being coded for a female-only gynaecological procedure, to increases in short-stay emergency admissions which do not appear to be matched by an associated rise in clinical demand. 93% said that the PbR structure is not fit for purpose and needs amending. Already commissioners and providers are coming into conflict, as the NHS Alliance says commissioners need providers to produce clear and accurate information, while the Foundation Trust Network claims that changes to the code conduct mean the "balance has shifted in favour of commissioners". Summary by Keep our NHS Public of Health Service Journal 23 February 2006
• Hospital price guide withdrawn. Hospitals have been told that they can no longer rely on an official treatment price list used to draw up budgets, issued less than a month ago. The tariff, which details what hospitals will be paid for operations, day cases and inpatient procedures from April 1, contained mistakes, the Department of Health admitted. Meanwhile NHS managers have been sent an email from Duncan Selbie, the director of programmes at the NHS, saying that Sir Nigel Crisp, the NHS chief executive, "requires immediate action" to deal with deficits. Selbie orders health authorities to "materially improve the situation by months 11 and 12". One manager said the message was ridiculous, sent as it was three-quarters of the way through month 11. Summary by Keep our NHS Public of Times 24 February 2006
• Foundation Trust Network calls for total overhaul. The existing payment by results system should be completely overhauled to allow an independent agency to set the tariff, according to the Foundation Trust Network, after the tariff for 2006-7 was withdrawn by the DoH due to errors. Summary by Keep our NHS Public of  Health Service Journal 2 March 2006
• 'Anxiety and disbelief' as DoH fiasco scuppers business plans. Managers have reacted with disbelief and fury after the DoH withdrew the national tariff for payment by results and admitted that the sums behind it did not add up. Acute and primary care trusts have been left unable to finalise their business plans just a month before the start of the new financial year. Nineteen foundation trust applications will be delayed. Summary by Keep our NHS Public of  Health Service Journal 2 March 2006
• Centre accused of hypocrisy over PbR errors. Chief executives of acute and primary care trusts have accused the government of hypocrisy after it ordered the NHS to sort out its finances on the same day that it withdrew the national tariff for payment by results after errors were detected. A PCT chief executive said: "It's pretty staggering that the finance team at the DoH should issue something that just doesn't add up. How does that square with the accusations of incompetence they keep throwing at us ? It's a bit bloody staggering." Summary by Keep our NHS Public of  Health Service Journal 2 March 2006
• Panel to tackle PbR gaming. Birmingham and the Black Country SHA has set up a payment by results panel to arbitrate on disputes between primary care and acute trusts. Eastern Birmingham PCT director of finance contracting Mike Bailey said disputes between PCTs and acute trusts had increased, including a trust that charged for activities not previously coded, landing the PCT with an £800,000 bill, and massive increases in clinical codes. In one trust, new patients with co-morbidities rose by 260%. In another, babies with minor diagnoses increased by 540%. He said: "All these attract higher payments. I have not come across any decreases in charges due to coding." Meanwhile the Audit Commission is developing an assurance regime to oversee practice-based commissioning, to prevent gaming. Summary by Keep our NHS Public of  Health Service Journal 9 March 2006
• Funding switch could spark NHS cash crisis. Four north west Labour MPs - Rosie Cooper, Helen Jones, Angela Eagle and Andrew Miller - have joined forces to protest that payment by results will penalise newly built hospitals that currently receive bigger grants because they face higher depreciation costs. Rosie Cooper said: "Hospitals should not be penalised by a mathematical formula simply because they are new facilities. Unless changes are made, debts will continue to rise and draconian measures will result which could have dire consequences." Southport and Ormskirk and North Cheshire trusts are heading for combined debts of £43m next year, partly because of payment by results, according to Cheshire and Merseyside SHA. Already, plans have been drawn up to end emergency admissions at Halton Hospital, in Runcorn, and transfer them to Warrington. The SHA's study also warned that Ormskirk Hospital - currently running a £6.5m loss - would not be able to cover its overhead costs under the new system. Cooper suggested that Royal Liverpool & Broadgreen University Hospitals, the Walton Centre for Neurology and the Countess of Chester Hospital would also lose out, and called on Patricia Hewitt to alter the system. Summary by Keep our NHS Public of  Liverpool Daily Post 5 April 2006
• Fixation on deficits could 'derail' foundation project. The foundation trust programme could be 'derailed' by the government's fixation on NHS deficits, the Foundation Trust Network has warned. A report by the Network highlights several factors contributing to the threat to the foundation trust programme, including the low uplift in this year's tariff for payment by results and 'problems with commitments to private finance initiative projects'. It says the government could fail to reach the minimum target of 65 foundation trusts by next April, and it is unclear where the next phase of applicants will come from. Summary by Keep our NHS Public of  Health Service Journal 6 April 2006
• PbR under the microscope: what the South Yorks boffins found. York University has been running a 'South Yorkshire laboratory', a DoH commissioned study of how payment by results is changing healthcare in South Yorkshire, where all four of the county's acute trusts are foundation hospitals, meaning PbR has been rolled out further than in the rest of the country. The report found that commissioners must ensure that they are getting exactly what they want from their providers, who as foundation trusts now have a very powerful incentive to generate as much income as possible. The report questions whether providers are inducing demand in a system that their commissioning client can currently neither control nor, in many cases, afford. Sheffield PCTs in particular have blamed aggressive foundation trusts for their debt problems. One report interviewee said: "I'm not suggesting at all that the hospitals are gaming on non-elective or elective work: they're maximising as much as they can get away with because everything gets a tariff. Sheffield Teaching Hospitals foundation trust chief executive Andrew Cash.says acute trusts are beginning to stop running certain services because they are not profitable. He warns that the new system is not well suited to emergency non-elective care or to chronic conditions and long-term care pathways. Summary by Keep our NHS Public of  Health Service Journal 6 April 2006
• Hospital denied baby cash. Europe's biggest maternity hospital will lose out on at least £500,000 a year under payment by results, which apportions just £400 for each 'normal' childbirth. Louise Shepherd, chief executive of Liverpool Women's NHS Foundation Hospital wants the Government to increase the tariff price for delivering a baby by at least £200. She said maternity hospitals were facing a huge challenge to balance their books under the new payment by results scheme. Under the system, trusts are paid £900 for a 'normal' delivery, £500 of which is eaten up in standard insurance costs. If the tariff were increased to £1,100, one-to-one midwife care could be provided. Summary by Keep our NHS Public of  Liverpool Daily Post 11 April 2006
• Four children's hospitals have warned health ministers they will have to cut specialist services because of miscalculations in the new payments-by-results system championed by Tony Blair as part of his NHS reforms. The threat to specialist services for children was revealed by the Liberal Democrats, who released papers showing children's trusts have told ministers they will have to cut services because they claim they are facing a £22m shortfall in the new financial year. The letter was sent by the chairs and chief executives of Great Ormond Street, Alder Hey, Birmingham and Sheffield hospitals. Together the four hospitals form the National Children's Health Alliance, and they claim the proposed funding will damage the provision of cardiac surgery, neurosurgery and spinal surgery.  Patrick Wintour, political editor Tuesday April 18, 2006 The Guardian
• Children's hospitals 'at risk' from tariff system. Four children's hospitals have warned health ministers they will have to cut specialist services because of miscalculations in the new payments by results system that will see them face a £22m shortfall in this financial year. The letter to ministers was sent by the chairs and chief executives of Great Ormond Street, Alder Hey, Birmingham and Sheffield hospitals, who together form the National Children's Health Alliance. It says: "We are extremely concerned that vital specialist paediatric capacity, particularly in surgical specialities, will be lost at regional and national level this year, which will lead to public concern. The new opportunities presented by choice and through payment-by-results should be benefiting young people and children, but quite the reverse seems to be the case. Our trusts are increasingly the only place of choice for parents whose children need specialist paediatric care." The trusts blame the "inaccurate and highly insensitive tariff" under payments by results. To make ends meet, they say, they will have to identify those services on which they stand to lose most money and stop providing them. Obvious candidates include heart, brain and spinal surgery. "We are extremely concerned that vital specialist paediatric capacity, particularly in surgical specialties, will be lost at regional and national levels this year, which will lead to public concern."  Summary by Keep our NHS Public of  Times 18 April 2006
• 'Cynical' GPs accused of referral ruse. GPs have cynically increased the number of patients they refer in order to make easy savings when they take over as practice-based commissioners, according to a report from the University of York. Dr Chaand Nagpaul, chair of the GPC's commissioning and service development subcommittee, said the suggestion GPs would increase referrals to boost budgets was illogical. "I don't believe it is happening. The only logical explanation for increased demand is the Government's perverse incentive for secondary care to income generate through Payment by Results." Summary by Keep our NHS Public of Pulse 21 April 2006
• Primary Care Trust chief executives are losing their jobs, accused of mismanagement by the merchants of spin (Leaders, April 25). No doubt some deserve their fate. But some will have gone because the Department of Health has used faith not science to fix the formula that now controls the division of about £60bn between 300 or so PCTs. There is a remarkable dearth of curiosity in all we hear and read about those deficits and in an influential formula that gives favoured PCTs twice as much per head as the less fortunate ones. The formula is nothing other than statistical legerdemain, based on a correlational study of socio-economic proxies rather than on any direct measurement of health need. Go to www.ucl.ac.uk/stats and research report 267 [pdf]. Download and save the Excel file PCTgrapher.xls, and see how your PCT fares in this politically engineered game. Mervyn Stone Department of statistical science, University College London. Wednesday April 26, 2006 The Guardian
• The costs of revolution. Writing in the Guardian, James Johnson, chairman of the BMA, says: "The political need to demonstrate a return on investment has resulted in ever faster reform in order to show results. Each administrative change has a cost that is rarely clawed back through subsequent attempts to create efficiencies, and changes are rarely given time to bed in… What is the financial cost of all this change ? The short answer is that we don't know, exactly: change tends to be introduced without its impact and value for money being rigorously evaluated… A fear for many is that the competitive environment of payment by results will fragment care and damage collaboration. And pressure for structural change such as mergers and closures of institutions will continue while market pressures will increase… Relentless, rapid, poorly coordinated initiatives that fail to involve doctors and patients are damaging and costly." Summary by Keep our NHS Public of  Guardian 27 April 2006
• MPs call for more scrutiny of DoH contracts. The DoH faces pressure to open up its procurement arrangements following concerns that its £4.6bn programme for private treatment centres does not offer good value for money. The calls were made by the Commons health select committee, which accused Patricia Hewitt of being overly secretive about information the department claims is "commercially sensitive". The committee has been unable to conclude its investigations, as the DoH has refused to release the methodology used to evaluate contract bidders, nor the full business cases of the 13 so-far successful bidders. Committee chair Kevin Barron told Hewitt that the DoH's reluctance to release the documents was "preventing us from properly scrutinising the procurements". Concerns over the costs of the ISTC programme stem from the premium paid for operations and the guaranteed revenues given to contractors. Whereas the DoH claims that the centres are paid, on average, only 11.2% above the NHS tariff for the elective treatments they perform, the committee has been told that it is nearer 30%, once the less complicated case mixes of ISTCs is taken into account. Those concerns relate to the first wave of ISTCs. A much larger procurement process was launched in 2005. It follows a revised value for money guidance set out in a review of the first wave, which the DoH has also refused to show the committee. However, a briefing document released to Public Finance under the Freedom of Information Act confirms that the DoH assumes that all successful bidders will continue to receive revenue guarantees. Summary by Keep our NHS Public of  Public Finance 28 April 2006
• The politics column - Allyson Pollock. In the New Statesman's main political column, Allyson Pollock writes: "According to Patricia Hewitt the NHS has had its best year ever. So why is the Royal College of Nursing threatening industrial action over cuts and closures, and why did the annual conference of Unison, traditional Labour supporters, greet the secretary of state with heckling? In her words, "the NHS must modernise or die". So why, from Surrey to Manchester and from Gateshead to Shropshire, are local people banding into hospital action groups and "Keep our NHS public" campaigns in an effort to defend the health service ? The chief targets for cuts are mental health services, palliative care, older people's care and emergency hospital care, yet Hewitt maintains, to general derision, that quality will not be affected… Pay accounts for 60-70 per cent of NHS hospital budgets, but pay awards accounted for less than 30 per cent of the new money and should have been absorbed easily. Nor was greed involved; the increases returned NHS pay to previous levels after years of pay freezes. The hourly rate of the lowest-paid rose initially from £5.16 to £5.67 an hour; medical consultants got increases of 4-5 per cent a year, taking them to averages of between £75,000 and £95,000, while managers - their numbers swollen by the complications of marketisation - got 7.5 per cent more last year. The real reason for the decision to axe in excess of 13,000 clinical staff and 1,000 NHS beds, plus associated services, is market-oriented reforms such as "choose and book", "payment by results" and foundation hospitals. Hospitals and services are required to behave like stand-alone companies, competing with each other and private corporations for income and patients… The government plans to hand over most of the NHS budget to the private sector through "practice-based commissioning". Under this policy, local PCTs will eventually contract with for-profit companies such as the US-owned UnitedHealth Europe to provide GP services… The Prime Minister asserts that the reforms are bearing fruit, and so they are - for "investors" such as the lucky shareholders of Norfolk and Norwich and Bromley PFI hospitals, who received a windfall of more than £500m within months of the new hospitals opening. But the PFI has been less "fruitful" for local people, who have seen a quarter of beds closed and clinical staff and community provision cut. A large part of hospital trust deficits is due to PFI debts, running at £1.5bn a year… And then there are the costs associated with establishing and operating a market - costs the NHS was explicitly designed to avoid: these are for invoicing, marketing, advertising, drawing up hundreds of thousands of contracts, legal disputes with contractors and rival hospitals, and using management consultants… And though NHS hospitals remain responsible for balancing their books, the government has ensured that the only way they can do so is by cuts, closures, the sale of land and buildings - and more privatisation. Some foundation trusts are entering joint ventures with companies such as the Hospital Corporation of America, providing care to private patients in what were previously NHS beds. Others are charging NHS patients for "extra" care: Queen Charlotte's and Chelsea NHS hospital has introduced a fee of £4,000 for one-to-one midwife care - once the NHS standard - and the government is allowing it. The less fortunate hospitals - if that is the right word - are closing services and sacking staff. Is this what the English patient needs or wants ?" Summary by Keep our NHS Public of  New Statesman 2 May 2006
• Alder Hay is spared £11m spending cuts. Merseyside SHA has stepped in to financially support Alder Hay hospital while payment by results in introduced, following pressure from government. The hospital's management say it will lose almost 20% of its income under PbR, resulting in a funding shortfall of £11m. A spokesman for the SHA said: "We have reserves to cover that amount. But it is critical that we continue to work with them and the Department of Health to find a way to resolve the problems with PbR for the future." The Government has admitted the pricing structure does not adequately differentiate between routine work and more specialist care carried out by children's hospitals like Alder Hay. The DoH has agreed to find a way to change the new payment method to prevent the hospital being plunged into debt next year. Summary by Keep our NHS Public of  Liverpool Daily Post 4 May 2006
• Mental health trusts get new status. The first three mental health foundation trusts have been launched following authorisation from regulator Monitor. From May 1, Oxleas Foundation Trust, South Essex Partnership Foundation Trust and South Staffordshire Healthcare Foundation Trust joined 32 acute foundations. The authorisation came a month late because of the complications surrounding the payments by results tariff. Summary by Keep our NHS Public of  Public Finance 5 May 2006
• Ministers' anger derails Blair bid to relaunch government. Jane Kennedy, a long-standing loyalist who was thought to have been sacked from the government in Blair's dramatic reshuffle, disclosed that she left the Department of Health on grounds of conscience following fears about the impact on children's hospitals of changes to NHS finances. She said: "For some time I have had disagreements with the way in which certain aspects of health reforms were being dealt with: and it obviously led to some disputes with fellow ministers and some at Number 10. I had been asked to do a job and bring political judgment to the job. When you try to apply that judgment and you are told you shouldn't be expressing your opinions you realise the government needs to get somebody else." Kennedy's Liverpool constituency includes Alder Hey hospital, one of several children's hospitals which had warned that the new NHS system of payment by results could damage their ability to provide treatment. Kennedy said she had struggled with the "uncomfortable question" about why payment by results had been applied if hospitals were not ready and had also objected to an appointment to her local health authority. Summary by Keep our NHS Public of  Observer 7 May 2006
• DoH sanctions 'rare' part-suspension. The Department of Health will sanction the part-suspension of payment by results in 'special circumstances,' according to a letter sent to the NHS by acting chief executive Sir Ian Carruthers. In it, Carruthers states that strategic health authorities which apply to the DoH to place areas under "special circumstances" could be allowed to set local caps on payments under PbR for specified healthcare resource groups. The advice contrasts with an earlier warning in the letter that "there cannot, under PbR, be caps" although the letter makes it clear that action must be "rare and targeted". Health minister Lord Warner said the apparently conflicting advice was not meant to confuse organisations: "The NHS can't go around simply saying PbR is the cause of all problems or capping whole swathes of activity covered by PbR." Where foundation trusts are included in such an area, decisions on special circumstances would require agreement from foundation trust regulator Monitor. Summary by Keep our NHS Public of  Health Service Journal 18 May 2006
• NHS debts fuel bed-blocking surge. Bed-blocking numbers have increased dramatically in over 10% of England's local authorities with social service responsibilities. Senior NHS and social services sources have said that the cause is a combination of under-funding, primary care trust cuts, and cash-struck hospitals attempting to move patients through their system at a faster pace. By the middle of April, the number of acute beds still blocked by patents aged over 65 despite the NHS declaring them fit for discharge reached two-year highs in eleven areas across England. In each case, the increases began in September 2005 - the month the scale of the projected NHS deficits became clear. Social services and NHS consultant Roger Mortimore said the phenomenon was also due to the introduction of payment by results, as this encourages faster discharge because hospitals are paid per patient, not by length of stay. Summary by Keep our NHS Public of  Public Finance 19 May 2006
• Trusts feel the impact as PFI and payment by results collide. There are increasing concerns about the incompatibility of PFI and payment by results. Payment by results does not recognise the higher costs that PFI hospitals have to face. In Woolwich, Queen Elizabeth Hospital trust chief executive John Pelly says: "The funding mechanism for hospitals does not reflect the cost of PFI. We are left with a huge extra cost and no chance of recovering it." His trust's PFI scheme adds £8-9m to its costs each year compared with the 'average' hospital. Pelly says: "To survive in a world of PbR, irrespective of whether or not the market causes work to move away from us, we need to get ourselves into a position where we are in the upper quartile of all resource usage. On a day-to-day basis in order to achieve break-even it is about driving down all the other costs that we can control." Queen Elizabeth Hospital trust is planning to pull £11m out of its costs in 2006-07 - including the abolition of some posts - but is still heading for a £6.5m deficit. PFI expert and Edinburgh University research fellow Mark Hellowell comments: "PFI puts a hell of a lot of financial pressure on trusts. PbR will exacerbate that - new market entrants will make demand volatile and it is based on a tariff that does not cover your true costs. We now have a mismatch between the way the NHS is funded and the way PFI is funded." Furthermore, PFI payments may affect reconfiguration. Abandoning a PFI site is likely to incur large penalties - so changes may have to focus on non-PFI hospitals. Hellowell says: "It would be disproportionately expensive to close down services at PFI trusts. It would not be that surprising to find that it is the non-PFI trusts close to PFI trusts that get services closed down." The problem is that the national tariff only includes an average payment for capital charges - hospitals which have invested heavily in new buildings either through PFI or other funding will have higher-than-average costs. However, non-PFI projects are shown as a capital charge of 3.5% of the value of the asset whereas PFI projects typically cost around 15% of a trust's income. They are also committed to the payments plus inflation for 25-30 years. Norfolk and Norwich University Hospital trust has also said its costs are higher - by around £6m a year -because it is an early-stage PFI. The trust is trying to head off a £15m deficit in 2006-07 and is considering cutting jobs. A spokesman said that its £38m yearly payment for the building and facilities was fixed so savings would have to be concentrated elsewhere. Summary by Keep our NHS Public of  Health Service Journal 8 June 2006
• Little time to remove large blot. Michael White writes: "Like Unison, many consultants (who have also lost autonomy and scope for over-priced private practice, thanks to Labour's reforms) are under the cosh of quasi-market reforms promoted by Alan Milburn, John Reid and now Ms Hewitt. More patient choice, more competition and no guaranteed hospital income, are proving harder than meeting waiting list targets. But voters' patience is stretched and Guardian/ ICM polls report that the Tories are finally ahead on health… Tory and Lib Dem complaints have some force. Labour's constant structural reforms of the NHS have demoralised staff, not least by ending up suspiciously close to the Thatcher reforms demolished by Labour in 1997. Ms Hewitt has less time than she thinks to get it right and to persuade voters to stay loyal to Labour." Summary by Keep our NHS Public of  Guardian 8 June 2006
• "Supermarket" reforms are tearing the NHS apart. Angry doctors at the BMA's ARM have attacked NHS reforms, which they say are breaking apart the NHS. They also criticised their own leaders for not doing enough to stop it. A multitude of speakers criticised the government on a raft of reforms. They condemned patient choice as a sham and accused the new independent treatment centres of creaming off the easy cases, leaving difficult ones for the NHS. They had particular bile for recently proposed funding changes, criticising payment by results under which hospitals only get money for each patient they treat, as well as expressing complete opposition to plans to allow private companies to commission health services on behalf of patients. James Johnson, Chairman of the BMA, questioned whether the US "supermarket" model of healthcare works in a system where "more 'customers' do not mean more profits". He also argued that payment by results created "perverse incentives to keep patients in hospital". He pointed out that it would not take "a financial wizard" to realise that if a private company ran hospitals as well as commissioning services then it would "add up to a licence to print money". He said that at the BMA's instigation, the Government had agreed to a health summit next week. Dr Chaand Nagpaul attacked the squandering of record investment in the NHS and accused the government of "misappropriating billions away from patients' care". Voicing the concerns of many he stated that "now we have the madness of instituting a market in the NHS, with all the wastage in bureaucracy and transaction costs." Summary by Keep our NHS Public of Telegraph 27 June 2006
• Funding row could see 1,800 patients rejected by foundation. A foundation trust has become the first in the country to turn patients away after the escalation of a public row with its primary care trust over funding. Up to 1,800 patients could be sent back to GPs - the first time a trust has refused to take non-urgent referrals since the introduction of payment by results. Monitor has called Royal Bournemouth and Christchurch Hospitals foundation trust, Bournemouth teaching PCT and their strategic health authority into a crisis meeting. Foundation Trust Network director Sue Slipman told HSJ there were nine other cases in the pipeline, worth £28m, where PCTs and foundation trusts cannot agree funding for activity. RBCH foundation trust accused its PCT of "refraining from funding life-saving drugs and complex heart treatments" and said the PCT had "requested" the stop on non-urgent referrals. But PCT chief executive Debbie Fleming said it had been the foundation trust's decision to stop the non-urgent referrals: "We are very disappointed that the foundation trust has found it necessary to stop accepting routine referrals as we believe this action to be both inappropriate and unnecessary. And it will not stop the problem of over-performance." Foundation trust chief executive Tony Spotswood said that 25 to 40% of elective referrals would have to be turned away. The trust estimated a shortfall in funding for up to 11,000 treatments, which could lead to the closure of some services. Summary by Keep our NHS Public of Health Service Journal 29 June 2006
• Hospitals snub patients in cash row. The Royal Bournemouth and Christchurch Trust, one of the government's flagship foundation trusts, is turning away patients in a funding row that calls into question the governments NHS funding policies. The hospital trust has said that Bournemouth PCT has indicated it wants the hospital to take fewer referrals and as a result will turn away up to 1,800 patients. The PCT attacked the hospital for its behaviour in light of the foundation trust running a £1.5m surplus. Under the payment by results system, hospitals get money for each patient they treat, yet Bournemouth PCT argues that if it were to pay the £6.3m over and above the contract to treat the extra patients, the knock on effects for the area would be detrimental to all. Mr Simon Parvin, the hospital trust's medical director, said that from the hospital's view "it doesn't feel as though the system is working." Chris Ham, professor of health services management at Birmingham University said problems with payment by results "are emerging elsewhere." He added: "This is not an isolated problem." Summary by Keep our NHS Public of Financial Times 30 June 2006
• Fears of more job losses at hospital. West Suffolk Hospital has refused to rule out further job losses after losing £2.3m in funding to a neighbouring hospital, Addenbrooke's in Cambridge, even though the neighbouring trust is in a better financial position due to its foundation status. The trust has stated it will attempt to make savings elsewhere but cannot rule out compulsory redundancies. The funding transfer is due to the payment by results system as GPs refer people to Addenbrooke's even though the cost of treating people in Bury is actually less. Summary by Keep our NHS Public of East Anglian Daily Times 30 June 2006
• The five specialist orthopaedic hospitals in England may have to abandon complex surgery on hips and bones because of a bizarre twist in the government's rules to turn the NHS into a competitive market, chief executives warned last night. In a private briefing paper for MPs, they said patients are set to become the victims of the health secretary Patricia Hewitt's new system of payment by results. They observed that much routine orthopaedic surgery is being diverted into private sector treatment centres, leaving the five NHS centres of excellence to concentrate on more highly skilled work. However, they said the national price list for every type of operation did not recognise the extra costs of more difficult work. The five hospitals are: the Royal National Orthopaedic hospital at Stanmore, Middlesex; the Nuffield Orthopaedic centre in Oxford; Robert Jones and Agnes Hunt hospital in Oswestry, Shropshire; Royal Orthopaedic hospital in Birmingham; and Wrightington hospital in Wigan. John Carvel, social affairs editor Thursday July 6, 2006 The Guardian
• Specialist trusts lobby ministers for change in tariff. Britain's five specialist orthopaedic hospitals say they could be forced to cancel operations and cut services unless the government adjusts the payment by results tariff. A briefing paper provided to MPs by the hospitals says: "The NHS's current financial situation is making financial balance a non-negotiable requirement and if the national tariff is not amended to recognise complex cases some trusts will have no way of avoiding serious financial loss. This situation could result in trusts being forced to end provision of vital specialist services: ones that are not available in normal acute trusts." London Royal National Orthopaedic Hospital chief executive Andrew Woodhead said the tariff system as it stood would mean his trust lost £5m a year: "We would be faced with a position where the only way to balance the books was to stop doing operations that lose us money. We could not continue to operate with a £5m loss of income." Robert Jones and Agnes Hunt Orthopaedic Hospital chief executive Jackie Daniel said the projected losses were hampering specialist trusts' efforts to gain foundation status. Some service cuts may have to take place before 2008 to convince regulator Monitor that the organisation is ready to become a foundation trust. Wrightington, Wigan and Leigh chief executive Sheena Cuminsky blamed independent treatment centres for taking less complex patients: "The more this happens, the more complex cases are left for us which are higher than tariff." Summary by Keep our NHS Public of Health Service Journal 6 July 2006
• Key NHS reform plans put on ice. The expansion of a key NHS reform has been put on ice after specialist services started to suffer. Payment by Results has caused cash problems in specialist children's hospitals due to the complex nature of their work. Ministers said they would get extra money to plug the shortfall and said there was now no timetable to extend it into other services not covered. It was originally envisaged that adult critical care would be incorporated this year. Mental health and other community services were also due to be covered by the funding system by 2008. But Lord Warner said the system would not be expanded at all next year. And he added: "We will not be specific about what comes after that." His announcement comes after the government was criticised for the way the tariff for this year was introduced. A government-commissioned report by John Lawlor, chief executive of the Harrogate and District NHS Foundation Trust, on the handling of the announcement said in the future ministers must publish it earlier, employ more staff to calculate it and even consider contracting out the process. He also agreed it should not be rolled out further in 2007-8 to give the system chance to "bed down". It comes after children's hospitals started to lobby government, warning services may have to be but because they were not receiving enough money under Payment by Results. The Department of Health has agreed to give the Liverpool's Alder Hey Hospital £4.9m this year, London's Great Ormond Street Hospital £3.4m and Sheffield's children hospital £900,000. The payments are likely to be repeated next year, Lord Warner said. The NHS system of Payment by Results has attracted controversy because it goes much further than its continental equivalents which tend to only cover elective operations. Summary by Keep our NHS Public of BBC Online 18 July 2006
• Cash diverted from mental health. Health Minister Rosie Winterton said there was "no evidence" mental health trusts were being affected by the current funding problems. Sainsbury Centre for Mental Health sent surveys to the finance directors of all 76 NHS mental health trusts in England, 32 of which replied. They found the vast majority of the trusts had managed to keep within their budget limits for the period 2005-2006, but three-quarters had had to take special measures, such as recruitment freezes, to achieve this. 83% said the reductions were being sought to deal with the wider heath economy, particularly PCT deficits. 68% of finance directors also said Payment by Results was diverting money away from their trusts. Summary by Keep our NHS Public of BBC Online 20 July 2006
• Trusts' admin bills on the rise. Administrative bills at acute and primary care trusts have risen by £90,000-£190,000 each due to running payment by results, according to a government-commissioned report. The York University report recommends that trusts invest in costing systems so they can avoid building capacity in "unprofitable" areas, and make better use of "resource data" to inform financial planning. Meanwhile, a report from the South Yorkshire PbR laboratory project has claimed that the system can be made to work in the NHS. Summary by Keep our NHS Public of Health Service Journal 20 July 2006
• Contract out tariff sums, DoH told. The Department of Health should look at "contracting out" elements of the tariff-setting process, according to a hard-hitting report commissioned by ministers. The report, commissioned to analyse mistakes in setting the 2006-07 tariff, calls on the DoH to consider bringing in an outside agency to calculate the 2008-09 tariff, but health minister Lord Warner would not say whether the tariff would be set outside the DoH in the future. The study's author, Harrogate and District foundation trust chief executive John Lawlor, criticised the DoH for its "weak communication" in engaging with the NHS is setting and publishing last year's tariff. The report says that the tariff - first issued in January by the DoH before being hastily retracted - was "materially wrong" and "inaccurate" and that the incident identified a "lack of expertise" in the DoH's payment by results team. Summary by Keep our NHS Public of Health Service Journal 20 July 2006
• Tariffs 'unbundled' to beat acute incentives. The Department of Health will separate tariff prices for a selection of clinical operations next year. Health minister Lord Warner said that the DoH would look at 'unbundling' the tariff for some operations in order to get rid of the incentives currently built in the tariff to treat patients in the acute sector. From April next year the DoH will set individual tariff prices for different parts of the patient pathway including areas such as hip operations and stroke services. The DoH is also considering setting different prices for diagnostics in acute hospitals to encourage different providers. Summary by Keep our NHS Public of Health Service Journal 20 July 2006
• Pain experts say tariff guidelines are unsafe. Complex pain management techniques, which experts say must be performed as inpatient procedures, can only be paid for as outpatient cases under the DoH's new payment system. The national tariff does not recognise inpatient pain management. However, the British Pain Society (BPS) says that the aseptic conditions required for epidural steroids, and the need for a resuscitation team, means that they must be performed on inpatients. The underpricing of procedures in the national tariff has led consultants to claim that it is forcing some trusts to 'game' the system. The tariff price for percutaneous cordotomy is £518, though the BPS costs it at £3,219. As a result, a consultant told Hospital Doctor that he knew at least one trust which was reporting the procedure as a stereotactic cordotomy of the spinal cord, which carries a higher tariff. The consultant also said that the underpricing had thwarted attempts to offer the procedure locally. Summary by Keep our NHS Public of Hospital Doctor 20 July 2006
• DoH admits PbR hits care and is costly. The Department of Health has admitted that its payment by results hospital funding scheme has led to a deterioration in care for older people, has 'not worked' for specialist children's hospitals and involves currently unfunded administration costs. the DoH national director for older people, Professor Ian Philp, said it was 'essential' the PbR tariff was reformed. At present, it acts as a 'perverse incentive' for hospitals to discharge patients early to make savings on rehabilitation times, he said. 'There is anecdotal evidence that some rehabilitation services are being scaled back. Certainly, acute hospital provision of rehabilitation services have been. There has been some disinvestment.' The latest DoH statistics reveal that emergency readmission rates have increased by almost a third, from 5.5% of all admissions in April 2003 to 7.1% of all admissions in April 2006. Philp admitted that part of that increase could be due to hospitals attempting to discharge elderly patients too early. Under the current PbR tariff, hospitals receive a lump sum for each procedure which includes funding for both classic 'acute' services, such as operations, and post-operative rehabilitation. Philp said that the DoH was now exploring ways to 'unbundle' the tariffs, so as to ensure that hospitals could 'concentrate on what they are good at - acute care' - and be reimbursed fairly for that work. A proportion of the tariff price would be separated and made available for community services to provide rehabilitative services through care homes and domiciliary care. New 'unbundled' tariffs for four types of common procedure - including elective hip replacements - will be in place from April 2007, said Philp, and would be a 'key driver' in achieving the 5% shift of the hospital budget (£2.4bn) to social care. Philp's comments came as health minister Lord Warner admitted that the tariff had also created problems for children's hospitals, whose specialisms were not fully covered. Three hospitals in Liverpool, London and Sheffield would now receive a supplementary £9m between them this year and next, he said. Warner also said he now accepted that PbR meant extra administration costs for hospitals and primary care trusts. This followed the DoH's publication of an independent study, which found additional costs of between £100,000 and £180,000 for an individual hospital and £90,000 and £190,000 for a PCT. That could add up to between £55.1m and £107.7m in new administration costs per year across England's 279 hospital trusts and 303 old-size PCTs. Summary by Keep our NHS Public of Public Finance 21 July 2006
• 23,000 fight wards closure. Proposals to axe five wards at Halton Hospital in Runcorn have been met with huge local opposition culminating in 23,000 signatures being handed to parliament by Weaver Vale MP Mike Hall. North Cheshire's NHS deficit was expected to grow from a mere £700,000 to £6.8m by the end of the financial year, a hike which has been blamed upon the NHS's new funding formula 'payment-by-results'. The Department of Health has already admitted that the formula ended up short changing Alder Hay Children's Hospital and has bailed the trust out. The closure of the five wards at Halton will move all acute services from the hospital to Warrington General, leaving the Runcorn site to treat only day patients. Summary by Keep our NHS Public of Chester Chronicle 31 July 2006
• Union seek talks with Blair on NHS job cuts. Health unions have sought an urgent meeting with Tony Blair to complain about job cuts and reduced services ahead of a raft of challenges to the government's NHS reform agenda. Unions including Unison, Amicus, the Royal College of Nursing and the British Medical Association have threatened strike action and plan parliamentary lobbying as part of a campaign against "the alarming pace of ill-advised change in the NHS". The Trade Union Congress' annual congress is also likely to cause upset with its preliminary agenda showing more motions opposing public sector reform than on any other issue. Similar issues are likely to dominate the Labour party conference later next month. The unions laid out their joint position yesterday saying: "We do not believe that handing over the provision of services to private providers and allowing individuals and shareholders to make a profit from taxpayers is in the best interests of the NHS or the people who rely on it now and in the future." Unison is already balloting 900 staff in NHS logistics, which delivers medical supplies within the NHS, over their proposed sale to DHL.
  Recently the Department of Health has abandoned plans to extend its payment-by-results schemes due to its "serious consequences to children's hospital services" and the health select committee has said the government has failed to demonstrate the benefits of Independent Sector Treatment Centres: Facts which add credence to the unions' claim that "many reforms are being implemented without being tested or evaluated to assess their effectiveness or otherwise." The unions have demanded that health trusts be given time to balance the books through "managed efficiency savings rather than indiscriminate cuts" and attacked private sector involvement as "allowing private companies to cream off profits while leaving hospitals saddled with high levels of ongoing debts". Summary by Keep our NHS Public of Financial Times 1 August 2006
• Mental health PbR could cover 85 per cent of users. A new system of payment by results for mental health could result in care for 85 per cent of service users being covered by the system. Proposals being tested by the Department of Health would mean trusts were paid for an average treatment package in one of 13 'clusters' of care. The clusters would be designed according to how much care service users require under a needs assessment. The idea is being piloted in seven mental health trusts. Countries such as Australia and the United States have attempted to introduce systems similar to PbR in mental health, but have never succeeded. The wide range of presentations people with mental health can have and the number of intervention options are thought to have made them too complicated to run. Originally the DoH said payment by results would be implemented in mental health in 2008. The project is also exploring whether social care could be included under PbR, and whether this would be best pooled or decoupled from the healthcare costs, as well as how payment would be made for 'one-off' interventions. Summary by Keep our NHS Public of Health Service Journal 10 August 2006
• Loss of services leaves hospital vulnerable. West Middlesex is one of the most vulnerable hospital trusts in the country due to loss of services and cutbacks, a new national survey by the Liberal Democrats has revealed. Despite having new buildings and long term modernisation plans, there is concern that the hospital, which has a history of financial difficulties, will be vulnerable due to a new payment system in which it faces competition from private treatment centres. Summary by Keep our NHS Public of Hounslow Guardian 18 August 2006
• NHS 'needs new cancer care plan'. The NHS needs an updated plan to set out how cancer services should be delivered, the King's Fund has said. It said a new plan is needed now to take into account changes to NHS funding policy and a move to provide more care away from hospitals. The report showed how payments by results could upset the existing "hub and spoke" system of cancer networks, where a specialist hospital assesses what treatment is required and then passes the patient on to a local hospital. Payment by results means there could be an incentive for hospitals to retain patients. Summary by Keep our NHS Public of BBC Online 24 August 2006
• Dermatologists hit by referral management. More than half of England's dermatology departments are facing huge losses of referrals as a result of schemes designed to keep patients in primary care. Of 102 clinical leads questioned by the British Association of Dermatologists (BAD), 56 said their local PCTs were setting up clinical assessment and treatment services (CATS) schemes. These services 'capture' non-urgent referrals into hospital and re-route them into primary care. The respondents said that they expected the schemes to divert away up to half of their departments' patiients. Many dermatologists expect case-loads to become skewed towards complex patients, without increased funding. BAD clinical vice-president Dr David Shuttleworth said departments that were unable to prove their financial viability risked being 'outsourced'. The survey also reveals that GPs are being given financial incentives to refer patients to CATS under almost half of the schemes and referral was compulsory in a further nine per cent. The Skin Care Campaign says its own figures show most CATS are setting targets for the systems, which 'completely remove patient choice'. Summary by Keep our NHS Public of Hospital Doctor 7 September 2006
• Doctors warning over NHS reforms. The move to treat more people outside hospitals will be under threat if 'payment by results' is expanded, doctors have said. The cost of non-emergency hospital surgery is currently fixed across England under a new funding scheme. The NHS Alliance said if the same price structure is introduced as guidance suggests for primary care, there will be no incentive to shift care. In a white paper in January, ministers set out a plan to move care away from hospitals and into the community by encouraging GPs to carry out more specialist services. It was envisaged family doctors would start doing minor surgery, running asthma clinics and providing sexual health services traditionally confined to hospitals. If treatment is carried out in the community GPs and other providers are currently free to negotiate their own prices locally. But the government has yet to unveil exactly what it will do in the future. NHS Alliance Chairman Michael Dixon said: "If primary care trusts have to pay the same price whether it is done in hospitals or in the community, where is the incentive to move care out of the secondary sector ? I don't think a national tariff will be appropriate for primary care." Summary by Keep our NHS Public of BBC Online 11 September 2006
• Hospital facing difficult future. Staff and patients at Norfolk's flagship hospital have been warned that they face a tough time over the next 18 months during a period of significant change for the NHS. They heard that the Norfolk and Norwich University Hospital would have to compete to survive under the new "payment by results" scheme. N& N trust chairman David Prior said: "It would be easy to say that the last six months have been really tough and that all the pain is now behind us. That would not be true. There is no longer any guarantee that this hospital or any hospital will survive and prosper." Dr Prior warned that serious competition, especially for routine elective surgery and diagnostics, would come from other NHS organisations, GPs and the independent sector. He added: "They will try to cherry pick the easy, predictable work leaving us with complex, difficult and less well remunerated work and, of course, with all our emergency work. I have a serious concern that the loss of relatively small numbers of simple elective procedures could destabilise integrated acute hospitals with an adverse impact on both patient care and the teaching and training of new doctors. In theory the government's move from centralised planning to the market as the means of allocating resources is fine but some of the consequences could be very damaging." Summary by Keep our NHS Public of East Anglian Daily Times 29 September 2006
• On red alert. Debt ridden South Tees Hospitals NHS Trust sunk a further £1.8m into debt after its busiest month on record. The trust is fighting to break even by the end of the financial year while carrying an historic debt of £21m, despite £35m in savings last year. The 18% increase in casualty admissions, blamed on changes to GP out-of-hours services, hot weather and the world cup, has hit the trusts budget as it overspent on clinical supplies. A vacancy freeze at the hospital continues and the trust is looking for further savings. However their breaking even depends upon receiving payment for the work they have done under the new Payment by Results structure, under doubt as PCTs are still defining what they can afford. Summary by Keep our NHS Public of Teesside Evening Gazette 9 October 2006
• NHS tariffs promised by Christmas. The payment by results tariff and other information needed to create financial plans for 2007/ 08 will be published before Christmas, according to Richard Douglas, the Department of Health's director general for finance and investment. He added that the health secretary was currently considering the future of resource accounting and budgeting in NHS trusts following this summer's report on NHS finance by former Audit Commission chair Sir Michael Lyons. It is widely believed that the department will accept the commission's recommendation to set up a buffer fund to cover deficits but Douglas said the suggestion had some drawbacks - it would be created by top-slicing PCT allocations, for example. Summary by Keep our NHS Public of Public Finance 13 October 2006
• 'Unbundling' options promised soon. Ministers are to review financial incentives to encourage the NHS to rehabilitate older people in the community, rather than acute settings. Health minister Lord Warner is working with national clinical directors for older people's services and coronary heart disease to see how the tariff system can be 'unbundled' so PCTs are rewarded for moving older patients out of hospitals. He said next year's preliminary tariff system would be published in two weeks, enabling the NHS to 'road test it to death' before its introduction next April. The government this week announced 30 demonstration projects on moving six key areas, including urology and general surgery, out of the acute sector and into community settings. But Lord Warner said the DoH wanted to go further to encourage tariff unbundling and move more rehabilitation of older people out of acute settings, as well as to reward providers offering community diagnostic services. This week Lord Warner called on the NHS and local councils to offer patients access to GPs, health services and social workers under one roof in new 'super-centres'. Summary by Keep our NHS Public of British Medical Journal 19 October 2006
• Efficiency, not cost, could be future of PbR. Payment by results tariffs could be altered to reflect the most efficient ways of working, rather than the average cost of a particular treatment, under changes being discussed by the NHS Institute for Innovation and Improvement and the Department of Health. The institute has produced new guidelines on the most efficient way to provide care across eight of the most common treatment areas in the NHS and is in talks with the DoH on a possible change to the PbR tariff system.  Summary by Keep our NHS Public of Health Service Journal 30 November 2006
• Tariff is still not working properly. The Payment by Results tariff creates 'perverse incentives' and is still not working correctly, the Health Secretary has admitted. Patricia Hewitt told the NHS Alliance conference the Department of Health had been aware of the problems when it made the commitment to the tariff for hospital procedures. She said: 'My view is now that the real benefit of Payment by Results is it enables everybody in the NHS to understand the costs as well as the benefits of what they are doing.' The Health Secretary's comments came after Dr Clare Highton, a GP in east London, and City and Hackney PCT PEC chair, said Payment by Results had disrupted previously good primary care/ secondary care relationships as hospitals drove up activity to plug deficits. 'It's a shame you didn't go for a QOF for hospitals,' she said.  Summary by Keep our NHS Public of Pulse 30 November 2006
• NHS trusts with total £186m deficit could get extra funds. Seventeen indebted NHS trusts whose income was capped under the transition to payment by results are now eligible for additional financial support in 2007/ 08, the Department of Health has said. The trusts reported a combined deficit of more than £186m in 2005/ 06, with over half forecasting a deficit in 2006/ 07, eight of them more than 5% of annual turnover. A further ten trusts whose income was also capped yet who have not experienced a deficit will also be eligible for support from their strategic health authorities. Any support given will have to be approved by the DoH and reported in financial plans. Potential recipient trusts include South Warwickshire General Hospitals Trust, which has a £14m deficit, equivalent to 13% of annual turnover. The trust last year told Public Finance it would not have a deficit at all if it was not capped.  Summary by Keep our NHS Public of Public Finance 5 January 2007
• Government has one year left to save the NHS, warns BMA chief.  Call to look again at competitive market.  Many hospital trusts in 'the worst of all worlds'. The government has only a year to save the NHS and maintain its status as a free service funded by taxation, the leader of Britain's 120,000 doctors warned yesterday. James Johnson, chairman of the British Medical Association, said the period of record growth in the health budget was due to come to an end next year. If Patricia Hewitt, the health secretary, did not correct the "idiocy" of the competitive market she created in the NHS, there would be overwhelming pressure for fundamental reform. John Carvel, social affairs editor Friday January 12, 2007 The Guardian
• PCTs fight UCLH over data validity. Three primary care trusts are disputing the validity of a massive increase in activity at a flagship London hospital. Camden, Westminster and Islington PCTs are working together to challenge increases in activity at University College London Hospitals foundation trust. Camden and Islington have both withheld payment to the value of queried activity for the first three months of the financial year. The information was contained in the PCTs' commissioning performance reports from their last meetings in November. It has been confirmed that the problems have not been resolved. Islington's November board papers state: 'The over-performance at UCLH continues to grow at the same rate and is therefore the most significant risk to the PCT, and the biggest single obstacle to achieving financial balance in 2006-07.' The paper says UCLH is showing an 'over-performance of £1.5m' compared with PCT forecasts, and that 'strong challenges have been made to the validity of much of the increase in activity'. Summary by Keep our NHS Public of Health Service Journal 25 January 2007
• One year to save the NHS - what would you do? The chaos currently engulfing the NHS is due entirely to its "marketisation" by the government and the transfer of up to 50% of public money to the private sector-through contracts for the private finance initiative (PFI); independent sector treatment centres; GP services; IT and other services; billing, invoicing and marketing, and use of management consultants, says Professor Allyson Pollock of the Centre for International Public Health Policy at Edinburgh University. Increasingly, government has given away control of resource allocation and more and more of the NHS's scarce funds are flowing into the pockets of shareholders, bankers, management consultants, and for-profit providers - away from the service. Nothing but a complete reversal of government policy will save the NHS. "What is needed to save the NHS is a total abolition of the market and market mechanisms like payment by results, foundation trusts, and commissioning within healthcare, and the abolition of all contracts with private providers, including the compulsory repurchase of PFI hospitals," says Professor Pollock. Summary by Keep our NHS Public of British Medical Journal 26 January 2007
• PbR to become 'payment for performance' in NHS North West. Payment by results is set to become payment for performance in the North West of England, under a US model that rewards hospitals for the quality of their care. Providers within NHS North West could be paid extra by primary care trusts if they score highly on clinical benchmarks as early as October, if the strategic health authority strikes a deal with a US not-for-profit hospital alliance. NHS North West chief executive Mike Farrar said it was 'a long way down the road' towards signing a deal with US outfit Premier to bring its payment model to the UK. Premier's hospital quality incentive demonstration, which began in 2003, has tested whether financial incentives are effective at improving the quality of inpatient care across 260 hospitals, using metrics to judge performance across five clinical conditions: pneumonia, heart failure, hip and knee replacement, heart bypass, and acute myocardial infarction. The scheme measures the quality of care provided as well as outcomes. The top 10 per cent of hospitals in each clinical area receive a 2 per cent payment bonus, with the next 10 per cent getting 1 per cent extra. NHS North West hopes to introduce the model across part of its area in October, with the whole patch taking it on next year. Summary by Keep our NHS Public of Health Service Journal 2 February 2007
• New model contract threatens survival, foundations warn. Commissioners will not have to pay for any type of hospital treatment they have not authorised, or for activity which exceeds agreed limits, under the new model contract. The final contract, published on Friday, makes no concessions to foundation trusts' fears that it threatens their survival. Primary care leaders have welcomed it as a 'necessary rebalancing' between commissioners and providers. The contract says that from April, acute trusts should foot the bill for activity that breaches locally agreed demand management schemes or where activity has exceeded forecasts. The same document sets out how fines for failure to hit the 18-week referral to treatment target will work. Trusts could lose up to 5 per cent of their elective income if they are not seeing 85 per cent of patients who require admission, and 90 per cent of those who do not, by March 2008. The combination of the two penalties leaves acute trusts steering a tight course. Speeding activity too much in pursuit of the 18-week target could leave them at risk of exceeding activity levels and being forced to pay up. The Foundation Trust Network warned that the contract 'exposes providers to an unacceptable level of risk and therefore leaves them in an untenable position.' One foundation trust chief executive said that he did not expect any trust with a choice to opt in: 'This is a totally biased contract in favour of the commissioners. That and the penalties for failure against 18 weeks leaves us operating within impossible margins.' A chief executive of a non-foundation trust described the model as 'very heavy-handed'. She added: 'This doesn't allow for things like a cancer presenting in the wrong specialty; or an accident and emergency consultant referring to a neurologist; or for a lot of practice that is clinically the right thing to do.' NHS Alliance chair Dr Michael Dixon put it simply: 'Foundation trusts are about making profit, and PCTs are about foundation trusts not making profit.' Summary by Keep our NHS Public of Health Service Journal 2 February 2007
• Health reforms cause financial disarray at top eye hospital. An NHS hospital with an international reputation for medical excellence has been thrown into financial disarray by the government's health service reforms. After overspending by about £900,000 in the first half of the year, Moorfields eye hospital in London got a risk alert from the regulator and had its borrowing limits halved. The hospital is recognised as one of the world's premier centres of ophthalmic expertise. Last week it opened a new children's complex, the largest in the world for paediatric eye care. John Carvel, social affairs editor Monday February 12, 2007 The Guardian
• Why the NHS will never add up. A short letter published in the Telegraph this week highlighted the contradiction inherent in the Government's attempts to improve the cost-effectiveness of the NHS. David Nunn, a consultant orthopaedic surgeon at Guy's and St Thomas' Hospital Trust pointed out that the drive to reduce waiting lists by performing more operations means that hospitals are losing substantial sums for each additional operation carried out. What Mr Nunn was referring to is an accounting error built into the NHS, an error which means that, despite the most drastic measures, such as ward closures, staff cuts and withdrawal of certain treatments and services, the books can never be balanced. The introduction of the NHS tariff in 2002 - a standardised price list for operations and procedures to apply nationally - was intended to reform hospital accounting. It was also seen as crucial to the war on waiting lists, helping to ensure better use of beds and theatre time by allowing patients to travel around the country for their operations with the procedure being paid for by their own primary care trust (PCT)… In practice the tariff has one massive flaw. Every price for every procedure on the list is a guesstimate. No one in the whole system can say for certain that the price hospitals charge a PCT for work has any relation to the real cost of that procedure. In the majority of cases, it is simply wrong. The administrators took a mean figure and decided that was close enough. The price list was fixed. Following the introduction of the tariff, hospitals managed to balance their books by juggling operations. As many as possible of the cheaper, quicker jobs were slotted in around major life-saving procedures that cost tens of thousands of pounds. In effect, the simple operations subsidised the complicated ones. But with the opening of independent sector treatment centres (ISTCs) - privately run clinics endorsed by the Government with the intention of helping to cut NHS waiting lists - there were fewer simple operations for the hospitals to perform. The ISTCs weren't governed by the troublesome tariff system either. The NHS would pay a fixed lump sum, in separately negotiated business contracts, for the procedures to be carried out there... In the longer term, the impact on surgical training is also causing concern. Mr Nunn says that so much work is being performed in ISTCs by non-NHS doctors that there is no work in hospitals for recent surgical graduates, and no jobs for them to go to. "We will have a whole generation of junior doctors who won't be able to do simple operations on their own, let alone complex ones; and in turn they won't be able to train the next generation. It's self-perpetuating. This will destroy the health service." Summary by Keep our NHS Public of Telegraph 26 February 2007
• Health reforms abandoned due to lack of funds, say hospital doctors. Eight out of 10 hospital consultants in England initiated changes aimed at improving patient care during the past year, according to a British Medical Association survey. But six out of 10 (61%) say planned services had been abandoned or delayed, and 41% reported that patients were now waiting longer for some treatments or procedures. More than half (56%) said that they or their colleagues were also having problems because clinically effective treatments or procedures were no longer available or were restricted. More than 260 lead consultants took part in a snapshot survey carried out by the BMA, which is gathering evidence of the effects of government reforms as part of its "Caring for the NHS" campaign. Doctors were asked for views on key government health policies, including patient choice, independent sector provision and Payment by Results. Summary by Keep our NHS Public of British Medical Journal 9 March 2007
• NHS 'reforms' are not helping patients, say hospital doctors. Senior hospital doctors believe that major NHS reforms, such as payment by results and Patient Choice, will fail to improve the service patients receive, according to a British Medical Association survey. The poll of 265 consultants in England will be worrying for the government, coming at a time when ministers hoped to regain clinicians' backing for their reform programme. The survey showed they have much work to do to reduce doctors' scepticism - 53% said PBR would worsen or considerably worsen patient care. Only 11% said choice would improve patient care, while a third believed moving care out of hospitals and into the community would result in better services. Independent sector provision would make patient care poorer, according to 72%, while 58% said they had examples of patients being adversely affected by a national initiative. More than half (56%) said they or their colleagues had experienced problems because clinically effective treatments or procedures were no longer available or restricted. BMA consultants' leader Jonathan Fielden said senior doctors were implementing better services for their patients - 81% of respondents had initiated service improvements in the past year. However, their efforts were being hampered by funding constraints and poorly thought through government policies. 'The government is wasting millions of pounds on health reforms that have not adequately involved senior doctors and consequently fail to benefit patients,' he said. 'Consultants are going the extra mile to bring down waiting lists only to be told to slow down and be less productive. Meanwhile, work continues to be diverted away from NHS hospitals to under-performing independent sector providers at greater cost. Plans to increase recruitment or buy new, modern equipment are being put on hold or abandoned because of a lack of money.' He added that many of the doctors who took part in this survey felt unable to speak out openly. 'There is a culture of fear in the NHS and doctors are under severe pressure to meet targets and keep their mouths shut. Doctors want to be at the forefront of health reforms, both locally and nationally, to ensure government policy has clear benefits for patients.' Summary by Keep our NHS Public of Public Finance 9 March 2007
•  Hospitals told to focus on profit centres. Hospitals are being told to identify the services and treatments on which they turn a profit. In the last resort, that could lead to some ceasing to provide services that do not make money. The move marks a further injection of market disciplines into the National Health Service and is being promoted by Monitor, which regulates quasi-independent foundation trust hospitals. By the end of next year it will expect all NHS hospitals applying for foundation trust status to scrutinise their balance sheets in this way. Basing decisions on the profitability of individual treatments will be seen by some as cutting across the culture of the NHS. But William Moyes, Monitor's chairman, said the approach was a logical outcome of the decision to pay hospitals a set price for most of the treatment they provide. The aim, he said, was to ensure that inefficiency "does not threaten the quality of care, or the hospital's financial viability", he said. Monitor was providing tools to help foundation trusts work out which "service lines" they made money from under the NHS price list or tariff. Where they were making money, they could consider expanding the work to boost surpluses that could be reinvested in services, Mr Moyes said. "Where they have unprofitable lines, they can see whether that is due to staffing levels, or inefficient use of theatres, or other issues they can tackle. If they are being efficient and it is still unprofitable, that may suggest that the tariff [the price the NHS pays] is wrong. "Where that is not the case, they could have a discussion with their primary care trust [which buys the treatments] about whether doing higher volumes - more cases - would make it profitable, or whether they should exit the service and let someone else do it." At present, primary care trusts could require a foundation trust to provide anything that it designated as a core service. "But the time may come when foundation trusts may be able to walk away from a service, provided we are confident that the primary care trust has alternative suppliers." The aim was to "understand profitability, efficiency and quality - and to strike the right balance between the three", he said, with hospitals merely "behaving like any other business" and understanding their profit and loss centres. The approach could also help the NHS to set the right tariff by demonstrating - as was almost certainly the case with specialist orthopaedics - that the price needed adjustment, he said. The NHS inspectorate, the Healthcare Commission, is taking steps to measure the quality of care by the same "service line" approach. Three trusts - Chelsea and Westminster in London, Frimley Park in Surrey, and University College London Hospitals - have piloted the scheme, with others to follow. All foundation trust applicants would be expected in time to have such data - and "once they have the information, they would be pretty stupid not to use it", Mr Moyes added. Summary by Keep our NHS Public of Financial Times 12 March 2007
• Breaking down costs identifies loss-making services. The Eastman Dental Hospital is piloting Monitor's profit and loss approach. Part of University College London Hospitals, it has an international reputation. But it operates in an ageing building and has been struggling financially for years. By breaking down the costs of each type of service, it can identify which are trading at a loss and which make money, says Professor David Fish, UCLH's medical director for specialist hospitals. That was providing opportunities to increase activity in areas that do make money, such as orthodontics. But it was throwing up areas where the NHS was not paying enough to cover unavoidable treatment costs. That would lead to conversations with the hospital's primary care trusts, and with those who set the NHS tariff, in an attempt to secure more accurate prices and payments. Summary by Keep our NHS Public of Financial Times 12 March 2007
• When gold won't buy quiet. A leading article in the Guardian reads: "The chaos facing junior doctors applying for training posts, which is the immediate cause of the weekend protests, is just the latest in a line of difficulties. Deficits requiring cutbacks in parts of the country have been aggravated by an inflexible accounting system. The new GP contract was negotiated with insufficient regard to value for money - as doctors' pay rose, their responsibility for out-of-hours care was actually reduced - and the public accounts committee is expected to conclude tomorrow that the deal has now overshot its planned costs by £300m. The concern in the NHS, however, is that the policies of a government determined to flex muscle and show that it is grappling with reform are aggravating the risks. David Cameron has been quick to pick up on this, highlighting the repeated redrawing of health authority boundaries and responsibilities, which has indeed been an unhelpful distraction. Yet looking ahead, the main driver of instability is set to be the ongoing move to market-based healthcare, to which the Conservatives are every bit as committed as Labour. Hospitals have already started the shift from fixed funding to a system where they are paid for each procedure they perform, and the prime minister is expected to set out plans to involve the likes of Boots and Tesco in running GP surgeries. As the purse strings tighten after 2008, the private sector will increasingly be substituting for, rather than adding to, established NHS provision. At that point - even if, which is not certain, the reforms successfully grind out greater efficiency - they might become unpopular. The change is more rapid than that in any other country. When he takes the reins, Gordon Brown may slow the pace. Medics would welcome that, but it might serve his own interests too." Summary by Keep our NHS Public of Guardian 19 March 2007
• Poor data threatens future of PbR system, warns minister. Trusts must collect better data about patient services and involve clinicians in decisions if payment by results is to expand successfully, health minister Andy Burnham has warned. He spoke as the Department of Health last week published the final version of its consultation Options for the Future of Payment by Results: 2008-09 to 2010-11, in which it outlines plans to further roll out payment by results in the NHS over the next four years. Mr Burnham told NHS managers that it was 'really important' for them to work with clinicians to expand PbR to cover all services, not just elective and emergency care. His comments were backed by Peter Spilsbury, chair of the steering group tasked with writing the DoH paper and director of strategy at NHS West Midlands, who has said that PbR will not be able to be reflect local care priorities unless clinicians are involved. Although Mr Spilsbury described the system as 'well embedded in the NHS' he said PbR needed a 'broader definition' so it was 'not just based on a national currency and national tariff model but also for some services locally defined currencies and tariffs are developed'. It was 'essential that building blocks such as data quality and clinical engagement' were addressed, he added. The consultation paper states that 'outside the acute sector, there is significant variation in the robustness of data collection' which is hindering the process of rolling out the use of PbR to all NHS services. The DoH has said it will 'road-test' the PbR tariff for 2008-09 in September and promised that the tariff will be finalised by December. It also intends to set up PbR 'development sites' to test out proposals to extend the scope of the system. The sites test out 'local currencies for services outside of the national tariff' and 'alternative currencies or funding models for services already covered by the tariff'. However the DoH has delayed plans to roll out a new version of the healthcare resource group tariff which puts prices on different services. The government had signalled that the latest version, known as HRG4, would apply to the national tariff from 2008-09 but has delayed its implementation until 2009-10. The document says the delay is a 'consequence of the earlier timetable for "road-testing" and publishing the tariff that was introduced for 2007-08'. Other DoH proposals include adopting a 'pay for performance' system to operate alongside the national tariff. This would see financial incentives set at contract level between commissioners and providers and offer 'bonus payments' for providers offering patients 'service excellence'. The document also proposes scrapping hosted services - where a 'host' primary care trust provides services to patients regardless of where they live. It says better information flows and the availability of tariffs for accident and emergency and sexual health services - the two most commonly hosted services - mean that they no longer need to be hosted. It adds that hosting may 'limit the potential to realise the benefits of PbR in terms of greater transparency'. Summary by Keep our NHS Public of Health Service Journal 22 March 2007
• Rebuilt hospital opens doors. A patient room which could not fit a bed was just one of the glitches ironed out this week in time for the official opening of the new £42m Nuffield Orthopaedic Centre. Phase two of the five-year redevelopment of the complex, in Headington, Oxford, has now been completed, and 75% of staff and their patients have moved into new facilities. The NOC project was funded using the controversial Private Finance Initiative, with a commercial consortium funding and constructing the buildings, before acting as landlord for 30 years. As a result, the NHS will pay £6m-a-year for the buildings - half of which is a maintenance fee. And Conservative Party leader David Cameron backed the Nuffield Orthopaedic Centre's fight for more funding during a visit to the new buildings. Mr Cameron said he favoured the Payment by Results (PbR) scheme, which has threatened the NOC's future, but added that the Conservatives would improve the system if they won power. Summary by Keep our NHS Public of Oxford Mail 23 March 2007
• How crude tariffs are getting under the skin of specialists. The HSJ says: "Earlier this year the professional and patient lobby on dermatology warned of a threat to their specialty. Given that this was the height of the NHS financial crisis, it was tempting to dismiss their letter to The Times as special pleading, except for one important fact: they appear to be right. The law of unintended consequences from payment by results is making itself felt. At least one hospital trust - Newham University Hospital trust in London - has declared its department financially unviable; others have come close. The Times letter was signed by 350 dermatologists (that is pretty much all of them, by the way), the Skin Care Campaign, the British Journal of Dermatology and the Royal College of Physicians joint specialty committee. NHS deficits and the government's health reforms were damaging the care of people with skin diseases by removing choice, it said. GPs were being forced to treat patients themselves or divert them to services not run by specialists. As a result, specialist teams were being dismantled. The result would be a poorer service for patients who need specialists and a potential increase in undiagnosed skin cancer. In a survey by the British Association of Dermatologists last summer, just over half the 100 consultants surveyed said their primary care trust was setting up a clinical assessment and treatment service for dermatology. These were expected to divert up to 50% of patients; meanwhile PCTs were commissioning fewer referrals from the hospital departments, in some cases slashing the number in half. A third felt this would lead to financial instability and redundancy was under discussion in a quarter of trusts. The tariff is based on an average; divert the simple referrals to a clinical assessment and treatment service or GP with a special interest and it no longer covers the more expensive cases left to the hospital department. Nor is it just dermatology that is threatened in this way. Rheumatology faces the same pressures, says the British Society for Rheumatology. The musculoskeletal service in Stoke on Trent at the Heywood Hospital recently transferred from the acute sector to being run by the PCT, neatly circumnavigating PbR issues. Another option is for acute trusts to bid for the clinical assessment, treatment and support services (CATS). West Hertfordshire PCT expects to sign a contract very soon that would see the West Hertfordshire Hospitals trust provide the dermatology CATS. All referrals will be triaged by consultants but then streamed variously to specialist nurses, special-interest GPs or the hospital as appropriate. Consultant dermatologist at the hospital Julia Schofield is hopeful - although far from certain - that it will save the department. In the last year her department has come back from almost certain closure as a proposed contracted-out CATS threatened to reduce its workload by 60%. 'We will still see our income drop, but if the CATS is successful we hope we will attract work from outside the area under choose and book.' It also answers some of the questions that consultants elsewhere have raised about the safety of CATS. 'It will sit here as part of our department and therefore will be part of our trust governance, training and appraisal.' Summary by Keep our NHS Public of Health Service Journal 19 April 2007
• DoH compiles a hit-list of acute trusts that cannot survive under payment by results. The Department of Health has drawn up a list of acute trusts that will be closed, merged or broken up because they will not survive under payment by results. The list follows health secretary Patricia Hewitt's request earlier this year for strategic health authorities to find ways of salvaging acute trusts struggling under the government's new financial regime for the NHS. A number of the trusts on the draft list are likely to be merged with neighbouring foundation trusts, mirroring the take-over of Good Hope Hospital trust by Heart of England foundation trust last month. A source close to Monitor, the foundation trust regulator, said that Sussex-based Frimley Park foundation trust was exploring whether it could merge with or take over the running of some services from the financially failing Surrey and Sussex Healthcare trust. Other foundation trusts considering mergers include King's College Hospital, and Guy's and St Thomas' in London, which are understood to be examining whether a takeover of Sidcup's struggling Queen Mary's trust is feasible. Summary by Keep our NHS Public of Health Service Journal 19 April 2007
• Competition or Co-operation -  The new Commissioning Dilemma. Practice Based Commissioning (PBC) and Payment by Results (PbR) offer the promise of significant improvement in patient care,