Welfare Reform on the Web (January 2009): National Health Service - funding

Costing orthopaedic interventions

R. Jones

British Journal of Healthcare Management, vol. 14, 2008, p. 539-547

Under payment by results (PbR) hospitals receive the bulk of their income from the Health Resource Group (HRG) tariff. A key assumption within the national tariff is that all procedures or admissions with the same clinical codes must cost the same, regardless of the speciality in which the activity occurs. Recent research has challenged the validity of this assumption: cost, length of stay, balance of bed days and cost per bed day for each HRG is highly speciality dependant. This article investigates the effect that an all-speciality average price for each HRG has on the apparent costs for orthopaedic departments of different size and complexity. Results show that orthopaedic departments will in general appear to be less efficient/higher cost due to the way in which the tariff is calculated.

Funding gap puts maternity reform at risk

D. Campbell

The Guardian, Dec. 22nd 2008, p. 1

According to Professor Cathy Warwick, general secretary of the Royal College of Midwives, the government's plans for an overhaul of maternity services are in disarray because hospitals have not received tens of millions of pounds of extra funding for urgently needed improvements. Widespread failure to pass on the money means the NHS will not be able to honour ministerial pledges to give women in England world-class, personalised care - such as a dedicated midwife during pregnancy and labour, and the choice of having their baby at home instead of in a hospital - by the deadline in a year's time.

How will you lead the spending revolution?

S. Gainsbury Health Service Journal, Dec. 18th 2008, p. 12-13

The 2009/10 NHS operating framework:

• Releases £800m of the £1.8bn surplus that the health service has accumulated to be spent over the next two years. This money will be spent on faster implementation of the framework's priorities of patient choice, care closer to home, infection control, and reductions in mixed sex wards. Strategic health authorities will be responsible for spending the money and balancing competing demands.
• Does not spell out the contribution that the NHS will have to make to the £5bn public spending cuts that will have to be made in 2010/11.
• Continues a trend of targeting funding towards wealthier areas with ageing populations
• Introduces a new hospital tariff framework from April 2009.

NHS chief warns on productivity

N. Timmins

Financial Times, Dec. 9th 2008, p. 2

The Health Department's director-general of finance and performance has warned NHS finance chiefs that the service will have to deliver efficiency and productivity gains as 'we have never done before'. His warning came as hospitals were told they will only receive a basic 1.7 per cent increase in the price the NHS pays per treatment next year and no more than 1.2 per cent the year after, in spite of an average 5.5 per cent a year increase that primary care trusts are to be given to buy the care.

NHS well placed to cope with funding squeeze

N. Timmins

Financial Times, Dec. 16th 2008, p. 4

According to a report by the Audit Commission and National Audit Office, the NHS in England is well placed to cope with the 'inevitable' squeeze on future expenditure after recording a surplus of £2.2bn last year. Reviewing the service's accounts and performance last year, the audit bodies said that the NHS delivered more care with the same number of staff in 2007-08, so the surplus on a £90bn budget represented 'good use of resources rather than a failure to deliver'.

NHS told to cap spending as more than half of £1.8bn surplus is lost

S. Gainsbury

Health Service Journal, Dec. 11th 2008, p. 4-5

The dire state of the public finances means that the NHS will be permitted to spend less than half of the surplus it has generated. The operating framework for 2009/10 confirms that the Department of Health will ask the NHS to cap spending of its £1.8bn surplus to just £800m over the next two financial years. At the same time a radical reform of the way funds are allocated to primary care trusts will see funds shifted away from inner city deprived communities towards rural areas with elderly populations.

Stand and deliver

N. Plumridge

Public Finance, Dec. 5th-11th 2008, p. 24-26

By 2007/08 the NHS had improved its financial position and accumulated a surplus of more than £2bn. The author predicts that the Treasury will reclaim some or all of this money to help fill its coffers during the current recession. However, if the money is clawed back, there is a risk that: 1) the NHS will be unable to offer financial incentives for performance improvement; 2) it will not make up as much of the shortfall as hoped through efficiency gains; and 3) the financial freedom of foundation trusts could be compromised.

A tight squeeze for the future

N. Timmins

British Journal of Healthcare Management, vol. 14, 2008, p. 530-531

Due to the credit crunch and subsequent recession, the NHS will probably receive funding increases of about 1% per year or less after 2010. This compares to an average increase of 7% per year for most of the decade 2000-2010. This article assesses the NHS's ability to improve productivity without damaging patient services in the face of such severe financial constraints.

When good times turn bad

A. Cowper

Health Service Journal, Dec. 4th 2008, p. 20-21

This article looks at the lessons the NHS can learn from the impact of recessions in the 1970s, 1980s and 1990s. In all of these periods of economic turbulence, the NHS faced severe cuts in health spending. Managers today are advised to prepare now for lower resources, although improved financial management capability should mean that the NHS is better able to cope than in previous years.