Click here to skip to content

Welfare Reform on the Web (January 2008): National Health Service - funding

Activity based financing in England: the need for continual refinement of payment by results

A. Street and A. Maynard

Health Economics, Policy and Law, vol. 2, 2007, p. 419-427

Under Payment by Results in the English NHS, healthcare purchasers (Primary Care Trusts) pay a fixed price to providers (hospitals) for each patient treated. As income depends on activity, low-cost hospitals have strong incentives to do more work and reduce waiting lists and all providers have an incentive to reduce costs in order to maximise 'profit' from their activity. Primary care trusts have a financial incentive to reduce hospital admissions because they can spend the money saved on community care. However, this payment system could be improved by drawing on lessons learned from similar systems in other countries. In particular, international experience suggests that: 1) rewards should not be based on national average treatment costs but on best practice to stimulate efficient provision; 2) government should provide incentives to improve quality and change the mix of service provision; and 3) better expenditure control is required.

Foundations are breaking the law on private income, says union

S. Gainsbury

Health Service Journal, vol. 117, Dec13th 2007, p. 5

Unison has challenged foundation trusts regulator Monitor over the legality of a loophole that lets the trusts avoid a cap on income from private patients by establishing a separate company or charity to take and make payments. After receiving a formal letter from Unison - interpreted as the first step in a judicial review process - Monitor said it would review its policy on private income.

Hunt on for missing £870m as DoH accused of hoarding cash

S. Gainsbury

Health Service Journal, vol. 117, Dec. 20th 2007, p. 5

The Department of Health appears to be keeping back £870m from the funding it should have allocated to the NHS for 2008/09. The Department announced in December 2007 that primary care trusts would be allocated £8bn in 2008/09, an increase of 5.5% on 2007/08. However, the Comprehensive Spending Review settlement awarded the NHS a 6.7% increase before inflation, implying that there is an additional £870m left in the Departmentís coffers.

Search Welfare Reform on the Web