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

Eyesight drug U-turn by NICE

R. Smith

Daily Telegraph, Aug. 27th 2008, p. 1

In a decision that marks a climb down by the National Institute for Health and Clinical Excellence, the first 14 injections of the sight-saving drug Lucentis will be paid for by the NHS. If the patient needs further treatment, then the manufacturer Novartis will pay for additional doses. The ruling overturns draft guidance that patients would have to go blind in one eye before receiving treatment with Lucentis to save the sight of the other. Top up doses of other new drugs may have to be funded in this way.

Financial risk at the PCT/PBC interface

R. Jones

British Journal of Healthcare Management, vol. 14, 2008, p. 288-293

For practice-based commissioning to work, issues of financial risk management must be addressed. There are a range of financial risk issues at the primary care trust/practice-based commissioning interface to address. Practice-based commissioning operates within the context of a host primary care trust (PCT). Shifting the risk away from the practice-based commissioning groups to the PCT will not work as financial pressures affect all parties within the constraints of the overall PCT capitation allowance. Practice-based commissioning groups need to make savings equivalent to a minimum of 3.3% of the total annual inpatient budget to offset the cumulative effects of adverse financial outcomes as a result of chance. Allocation of budgets on last year's costs is guaranteed to create a situation where >75% of practices will receive a fund which is >+/- 0.5 -standard deviation away from the real average budget. The formation of an inter-PCT financial instrument can be used to limit risk.

The hidden cost of switching medication

J. Cannon

British Journal of Healthcare Management, vol. 14, 2008, p. 324-328

Most primary care trusts overspend on their drugs budget. In response prescribing advisors are encouraging 'switch' programmes and quotas for more expensive medications. 'Switch' programmes can involve moving patients on to cheaper alternative medication with an equivalent effect. Unfortunately there is evidence that switching patients who have suffered heart attacks or with unstable angina to generic simvastatins can lead to more hospital readmissions. The cost of these readmissions would almost certainly exceed the cost of more expensive branded statins.

Kidney cancer drugs judged too costly for 3,000 NHS patients

J. Carvel

The Guardian, Aug. 7th 2008, p. 4

Governmental advisors on the cost-effectiveness of drugs have deemed four new medicines too expensive to be provided to patients through the NHS. The National Institute for Health and Clinical Excellence (NICE) has accepted that the drugs could prolong the lives of patients suffering from kidney cancer by up to six months, but has deemed the costs involved too great to be borne by the NHS. (See also The Times, Aug. 7th 2008, p. 5)

Limitations of the HRG tariff: excess bed days

R. Jones

British Journal of Healthcare Management, vol. 14, 2008, p. 354-355

One factor used in calculating the national HRG (health resource group) tariff is the cost of excess hospital bed days. Each HRG has a maximum expected length of stay (the upper trim point) and any stay in hospital beyond this upper trim point is paid on a per day basis using a tariff specific to excess bed days. This tariff is different for each HRG. In practice it would appear that most trusts cost an excess bed day at speciality level, ie the cost per bed day is the same for every HRG within a speciality. This is a fairly reasonable costing approach, but leads to the generation of nonsensical tariff values at HRG level.

A master class in patient level costing

F. Boyle and D. Beeson

British Journal of Healthcare Management, vol. 14, 2008, p. 356-357

Most spending decisions in hospitals are taken by clinicians who are primarily concerned with health need not cost. However, management and finance staff have to account to the trust board for the financial implications of those decisions. Trusts need a reporting system capable of costing individual patient records across all departments to get a clear picture of its overall financial position and to control excessive spending by individual clinicians.

NHS 1.75bn in surplus as patients fight drug bans

R. Smith

Daily Telegraph, Aug. 28th 2008, p. 2

The NHS is expected to have a 1.75bn surplus in the bank at the end of financial year 2008/09. It is also on course to hit key targets on waiting times, cutting hospital infections and improving access to GPs. Opposition MPs claim that the NHS surplus has only been achieved by cuts to patient care, staff training budgets and public health initiatives.

NHS should not save patients' lives if it costs too much, says watchdog

J. Laurance

The Independent, Aug. 12th 2008, p. 10

Patients cannot rely on the NHS to save their lives if the cost of doing so is too great, the Government's medicines watchdog has ruled for the first time. The National Institute for Clinical Excellence (Nice) has said that the natural impulse to go to the aid of individuals in trouble should not apply to the NHS. The disclosure follows last week's controversial decision by Nice to reject new drugs for kidney cancer even though they have been shown to extend life.

NICE to offer advice on drugs for patients to buy privately

R. Winnett and R. Smith

Daily Telegraph, Aug. 12th 2008, p. 1+2

The National Institute for Clinical Excellence is drawing up plans to provide patients with independent guidance on drugs not approved for NHS use, including those rejected on cost grounds. Patients would be able to compare the benefits of unapproved treatments with those available free on the NHS. They could then decide if they wanted to pay for them or opt for the free drugs. An on-going review of NHS rules is expected to allow patients to top up their NHS treatments by buying extra drugs.

Payment by results as a lever for NHS reforms

R. Dredge

Journal of Management and Marketing in Healthcare, vol. 1, 2008, p. 375-381

Payment by Results (PbR) was introduced in England in response to concerns that hospitals were not being sufficiently incentivised to deliver productivity and efficiency gains. Under PbR, acute hospitals are paid for the number of patients they treat, instead of receiving a block allocation irrespective of how much work they do - the pre-2002 NHS system. The tariff they receive is based on the average cost of all patients in a particular Healthcare Resource Group (HRG), and thus they gain financially on some and lose on others. At the same time, primary care trusts, which commission care, have an incentive to save money by not referring patients to acute hospitals, but finding other methods of caring for them. This paper explores the strengths and limitations of the policy.

Picture of health

J. Appleby

Public Finance, July 4th - 10th 2008, p. 16-19

Since its inception, the cost of running the NHS has been a concern to the Treasury. Its financial sustainability and the control of spending on it have been constant topics of policy debate and tension within government. However in 1999 the New Labour government decided to invest as much money as possible in the NHS, resulting in health spending accounting for a massive 8% of gross domestic product in 2008/09. The author suggests that historical experience indicates that spending on health will continue to rise in the future due to increased public expectations, medical advances and population ageing.

Quality control

N. Plumridge

Public Finance, Aug. 1st-14th 2008, p. 24-26

The Darzi report on the future of the NHS proposes that payments to hospital trusts should be linked to quality of care from as early as 2009. Details of the proposed payment scheme remain scant. However it is known that it will form a 'simple overlay' to payment by results, and will be funded by 'reducing the payment by results tariff uplift from 2009'. Such a scheme will require a defined set of national quality measures and mechanisms for collecting data. Darzi pledges that the Department of Health will announce the first set of quality indicators by the end of 2008.

Unhealthy lifestyles cost NHS 750m

R. Smith

Daily Telegraph, Aug. 1st 2008, p. 1+2

The NHS is spending more than 750m per year on drugs to treat conditions such as Type II diabetes, obesity and alcoholism that are brought on by unhealthy lifestyles. For example, more than 30 million prescriptions were written for diabetes in 2007, at a cost of 594m, and increase of almost 7% on 2006. There is concern that the NHS is spending ever-increasing sums on conditions that could be prevented if people adopted a healthier way of life.

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