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Welfare Reform on the Web (February 2012): National Health Service - funding

Is the health resource group (HRG) tariff fit for purpose?

R. Jones

British Journal of Healthcare Management, vol. 18, 2012, p. 52-53

This article identifies a series of serious deficiencies in the health resource group (HRG) tariffs which form the basis of payments for hospital services. These deficiencies could lead to specialities being deemed grossly inefficient due to what is nothing other than a pure artefact of the tariff. The tariff cannot safely be used as the basis for investment or disinvestment decisions without a financial 'due diligence' check.

NHS paying advisers 7m to teach GPs business skills

D. Campbell

The Guardian, Jan. 13th 2012, p. 2

Doctors condemned health service bosses for giving management consultants such as KPMG and McKinsey 7m to teach business skills to GPs in the latest diversion of NHS funds to private firms. NHS London, which oversaw the health service in the capital, was criticised for paying consultancies up to 1.6m each for training groups of family doctors how to handle budgets when they took over the commissioning of care in 2013. The British Medical Association (BMA) said the money was going 'unnecessarily' to private companies as existing NHS primary care trusts (PCTs) had the same skills and should have been given the job instead, blaming the coalition's NHS shake-up.

NHS plans for credit rating agencies to vet hospitals

R. Ramesh

The Guardian, Jan. 19th 2012, p. 1

Credit rating agencies such as Standard & Poor's and Moody's would be asked to assess whether hospitals were financially robust enough to treat patients under proposals put forward by the government's NHS regulator. The agencies - blamed for failing to spot the credit crunch in 2008 and engaged in a diplomatic row over their downgrade of Euro zone countries - would be required to vet the financial strengths of any provider of NHS services in case they went bust. In a series of papers, Monitor, the NHS regulator, proposed replacing its assessment, which looked at clinical quality and how well hospitals 'co-operated' in the NHS, with a new regime that would ask 'major credit ratings agencies (Standard & Poor's, Moody's and Fitch)' to give 'a clear indication of the financial strength of the [healthcare provider] and the perceived capabilities of its board and executive team'.

Prescription for challenging times

C. Forde

Health Service Journal, Jan. 26th 2012, p. 30-31

This article presents evidence that very large savings could be made within Clinical Commissioning Group prescribing budgets if GPs were well supported. These savings could then be released back into the local health economy.

Private acute providers warned of slowing growth in NHS work

C. Dowler

Health Service Journal, Jan. 26th 2012, p. 10-11

In 2010, the NHS paid private providers 957m to treat NHS patients, up from 867m in 2009, a real terms increase of 5.5%. In 2010, the NHS funded a quarter of all private acute care, up from 10% in 2004. However, growth in NHS spending on private care has started to flatten and by 2012 the value of independent sector treatment centre contracts with central government will have fallen to a third of its 2010 level.

Small guy versus a stacked deck

N. Plumridge

Health Service Journal, Jan. 12th 2012, p. 16-17

In the early 2000s, many social enterprises and mutuals were set up to provide health services. They were often the successors of primary care trust 'provider arms', created under Cabinet Office-backed 'right to provide' arrangements. However, these small organisations tended to lose out when competing for contracts with established hospital trusts and commercial providers. They lacked access to capital to improve premises, and, unlike NHS bodies, had to charge commissioners VAT.

Time to re-evaluate financial risk in GP commissioning

R. Jones

British Journal of Healthcare Management, vol. 18, 2012, p. 39-48

NHS reforms will give groups of GPs control of the budget for their patients using a formula which attempts to calculate their 'fair share' of the national budget allocated by Parliament. However demand for healthcare rises and falls in waves or cycles which appear to be linked to environmental factors such as regional weather types, temperature, barometric pressure, humidity, rainfall, hours of sunlight, air quality and viral outbreaks. The formula for resource allocation does not take into account these cycles, thus exposing GPs to financial risk in the shape of insufficient funds to meet demand. This article uses a long time series of English NHS hospital activity and case mix data to investigate the level of year to year volatility associated with groups of diagnoses and to see how both total occupied bed days and costs behave over time.

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