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Welfare Reform on the Web (January 2011): National Health Service - funding

Alzheimer's drugs under threat from NHS reforms

R. Prince

Daily Telegraph, Dec. 2nd 2010, p. 1 + 2

Under NHS reforms, pharmaceutical companies would be paid for drugs according to the benefit to patients and other factors such as whether the medicine is innovative or particularly effective. Firms say that this will remove the incentive for them to invest in research unless they are certain of the product's success. Pharmaceutical companies are also complaining that having to deal with a plethora of GP commissioning consortia will cost far more in time and money than liaising with the 145 primary care trusts that currently control the 100bn annual NHS drugs budget.

The big chill will hit medics too

A. Maynard

Health Service Journal, Dec. 17th 2010, p. 14-15

This article discusses options for the reform of performance-related pay systems for doctors, covering both the Quality and Outcomes Framework for GP practices and the Clinical Excellence Awards made to consultants.

Cameron would alter budget to protect NHS

R. Watson and S. Lister

The Times, Dec. 16th 2010, p. 1

David Cameron vowed to honour his election promise of above-inflation annual rises in health spending and is prepared to rewrite the Government's spending plans in order to do so.

Circle close to Hinchingbroooke deal

B. Clover

Health Service Journal, Dec. 2nd 2010, p. 9

Private provider Circle is the preferred (and only) bidder for the franchise to run Hinchingbrooke Health Care Trust in Cambridgeshire for ten years. The contract to run the hospital (which has a historic debt of 38.8m) is expected to be signed in February 2011. Circle has agreed plans with NHS East of England that would see the debt repaid within ten years.

Clinical responses to the downturn: seven medical specialties address how they can help tackle the NHS financial challenges

NHS Confederation and others


The NHS is struggling to make 20bn of savings over the four years from 2011 as extra government funding dries up while costs continue to rise. In this report doctors make a range of suggestions to improve efficiency, including:

  • Avoiding keeping healthy newborn babies in hospital or in specialist care just because they are under a certain weight
  • Avoiding overuse of MRI scans by junior staff and physiotherapists, who cannot interpret the results
  • Reducing unnecessary operations, such as minor varicose vein surgery and the removal of skin tags and suspect lesions.
  • Concentrating complex and high risk surgery in specialist units
  • Admitting patients on the day of surgery and using operating theatres until 7.00pm instead of 4.00pm

The amount of savings possible if all changes were implemented has not been calculated, but could run into hundreds of millions of pounds without having an adverse impact on patients.

DH figures show pathfinder GPs are set to bust budgets

S. Gainsbury and D. West

Health Service Journal, Dec. 17th 2010, p. 6-7

The Department of Health's fair shares allocation toolkit calculates the indicative commissioning budget each GP practice should receive, based on the needs of its registered patients. The toolkit also projects how much each practice is in effect spending through its referral and prescribing trends. The HSJ has used the data for individual practices to calculate the indicative budgets and projected spending of the pathfinder commissioning consortia. Of the 18 pathfinder commissioning consortia for which data are available, five are projected to overspend their total indicative fair share budgets by an average of 4%. Seven of the 18 consortia are on track to break even and the remaining third are projected to underspend by an average of 1.9%.


A. Moore (editor)

Health Service Journal, Dec. 2nd 2010, supplement, 8p

This special supplement on NHS finance offers articles on:
  1. the benefits of collaboration between clinical and financial staff for service design
  2. the demand for financial management expertise from the new GP commissioning consortia
  3. new opportunities for outsourcing companies arising from NHS reforms
  4. support for financial managers in hard times from their professional association.

Lansley hands 80% of health budget to GPs despite Treasury fears

A. Grice

The Independent, Dec. 7th 2010, p. 6

The Health Secretary Andrew Lansley will press ahead with proposals to hand GPs control of 80bn of the total 100bn health budget despite No. 10 and the Treasury having asked Oliver Letwin, the cabinet office minister responsible for government policy, to review the plans and Lib Dem MPs being said to be shocked and angry at proposals which were not included in the coalition agreement.

Management of NHS hospital productivity

National Audit Office

London: TSO, 2010 (House of Commons papers, session 2010/11, HC491)

Report finds that NHS productivity - the ratio between the volume of resources going into the NHS and the quantity of healthcare provided - has fallen by 14% over the past 10 years, despite significant real growth in investment. It is concluded that most of the extra cash was spent on staff salaries. While hospital activity has increased significantly, it has not kept pace with the extra funding.


New deal will pay dentists for treating more NHS patients

R. Smith

Daily Telegraph, Dec. 16th 2010, p. 1

Reports that current contracts that pay dentists according to the number of procedures they carry out will be scrapped and replaced with a per-patient fee to encourage preventative work and better oral health. The new contract will pay dentists for the number of NHS patients they have on their books and the quality of care they deliver, rather than for the number of treatments they carry out.

NHS faces more cuts to avoid 10bn shortfall, report says

N. Watt

The Guardian, Dec. 27th 2010, p. 1

The Department of Health will face an annual 10bn shortfall unless it speeds up efficiency savings across the NHS and considers cuts to social care and cancer research charities, according to a secret Whitehall report leaked to The Guardian.

(See also The Independent, Dec. 27th 2010, p. 18)

NHS reform will lead to supermarket-style discount surgery deals

J. Laurance

The Independent, Dec. 20th 2010, p. 11

The government is to allow hospitals to compete on price for the first time, raising the prospect of two-for-one deals on surgery and cut-rate consultations for certain specialities. The shift towards a more commercial NHS was announced in a single paragraph in the NHS Operating Framework. Commenting on the proposal, the respected health economist Zack Cooper, author of an influential study showing that competition in health markets increases quality, but only when prices are fixed, has warned that research shows that price competition leads to a drop in the quality of care and an increase in the death rate.

Patients 'feeling the pain of NHS rationing'

R. Smith

Daily Telegraph, Dec. 16th 2010, p. 8

The details of spending on local NHS bodies in 2011/12 published by the Department of Health in December 2010 showed an average increase of 3%. However, it has been argued that this figure includes one-off sums for extra dentistry and pharmacy spending and some cash that will have to be passed on to local councils for social care. Once all that has been stripped out, the increase in funding is reduced to an average of 2.2%, below the 2.5% inflation figure used by the NHS.

PCTs restrict many treatments as overspend looms

A. Moore

Health Service Journal, Dec. 2nd 2010, p. 10-11

In order to avoid large overspends at the end of the 2010/11 financial year, primary care trusts are resorting to demand management techniques such as increasing thresholds for treatment so that fewer patients qualify, stopping some non-urgent procedures until the new financial year, deliberately extending waiting times, and stopping all automatic funding for 'low priority' procedures.

Public expenditure

Health Committee

London: TSO, 2010 (House of Commons papers, session 2010/11; HC512)

In this report the Committee criticises the government for not setting out a clear 'narrative' or plan on how the 15-20bn efficiency savings required of the NHS can be achieved. There is an urgent need for a credible plan to deliver the efficiency gain which is the central requirement of the 2010 spending review settlement for the NHS. There is no guarantee that reductions in the tariff (what hospitals are paid for treatments delivered) will lead to efficiency gains, and a significant risk that service quality will fall. The report also points out that cuts in local government funding will see fewer people eligible for council social care, and will result in a rise in demand for NHS services.

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