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

Acute hospitals in London: sustainable and financially effective

NHS London, 2012

The report used modelling from consultants McKinsey to predict that only six of London's 18 non-foundation hospital trusts would be financially viable by 2014/15. The analysis showed that only St George's Healthcare, the Royal Free, Kingston Hospital, Corydon Health Services, Lewisham Healthcare and Barnet and Chase Farm Hospitals trusts could avoid going into deficit by that year, even if all the trusts achieved 18-20% savings. The other 12 trusts either needed longer to become viable or had no hope of doing so without changing form or getting outside support.

Baseline spending estimates for the new NHS and public health commissioning architecture

Department of Health


This document provides a fairly detailed breakdown of how health funding will be split after the NHS reorganisation introduced by the coalition government. About 64.7bn will be allocated to clinical commissioning groups (CCGs) and 23.4bn to the NHS Commissioning Board, which will have responsibility for specialist and family health services. Some 210m will go to Public Health England and 2.2bn to local authorities which will assuming responsibility for public health. The indications are based on data collected from primary care trusts about how they spent their budgets in 2010/11. The document says that some areas have underestimated spending on specialised services, meaning that CCGs are likely to have smaller, and the Commissioning Board larger budgets than initially indicated. However the indicative CCG budgets do not include funding for their 'geographical responsibilities', for example for prisoners and people not registered with a GP. This is likely to boost CCG budgets.

(For analysis see Health Service Journal, Feb. 9th 2012, p. 4-5)

Breast cancer drugs 'too costly for the NHS'

R. Smith

Daily Telegraph, Feb. 14th 2012, p. 8

Draft guidance from the National Institute for Health and Clinical Excellence issued in Feb. 2012 stated that women with metastatic breast cancer should not be treated with two drugs, Tyverb and Herceptin, because the benefits they offered were too small to justify the cost of 50,000 per patient per year.

Council could loan trust 100m to buy out PFIs

C. Dowler

Health Service Journal, Feb. 23rd 2012, p. 4-5

A local authority was in negotiation to lend up to 100m to a foundation trust seeking to buy out its private finance initiative contracts. The prospective loan to Northumbria Healthcare Foundation Trust was one of several potentially cheaper alternatives to PFI being pursued by NHS hospitals. Other options included securing funding from private equity, pension funds and the bond markets.

Debt cap planned for 'essential' providers

C. Dowler

Health Service Journal, Feb. 16th 2012, p. 10-11

Any organisation providing essential healthcare services to the NHS could have its debt level capped by Monitor. The debt ceiling would require providers to keep loans and debt instruments below a certain percentage of total funding. Monitor floated the plan in a wave of consultations on how it might apply the powers ascribed to it in the Health Bill.

No blacklisting costly drugs, trusts told

S. Adams and R. Mason

Daily Telegraph, Feb. 21st 2012, p. 10

The National Institute for Health and Clinical Excellence produced a 'best practice guide' stating that medicines should be automatically incorporated into lists of available drugs within 90 days of approval. The guidance was intended to prevent NHS trusts from blacklisting expensive branded drugs and using cheaper generic versions.

Patient satisfaction will dictate hospital funding

C. Dowler

Health Service Journal, Feb. 23rd 2012, p. 13

A system for ranking NHS trusts by patient satisfaction will be introduced across a quarter of English hospitals in 2012/13, with part of their funding dependent on league table performance. The NHS Midlands and East strategic health authority cluster will require all acute NHS providers in its region to collect data on how likely their patients would be to recommend their hospitals to friends and family. The SHA cluster plans to collect hospital data monthly and publish a league table based on the responses. It will also make payments to trusts under the commissioning for quality and innovation scheme if they keep their scores in the top 25% during 2012/13, or show a 10 point improvement in the course of the year.

Private providers rail against bankruptcy regime

C. Dowler

Health Service Journal, Feb. 2nd 2012, p. 10-11

Under the government's NHS reforms, insolvent providers of NHS services would be subject to a special form of administration, intended to ensure uninterrupted access to patient care. Private mental health firms lobbied against the proposed failure regime, saying that rules putting patients ahead of creditors would prevent them from borrowing from the banks. They argued that the government needed to put alternative funding in place or require banks to lend to NHS providers.

Public expenditure

Health Committee London: TSO, 2012 (House of Commons papers, session 2010/12; HC 1499)

This report assesses how the National Health Service and social care system are coping with financial stringency and public spending cuts. The key priority was to examine the extent to which health and social care authorities have been able to do more with the same level of real resources or whether they have had to reduce the quality of services provided in order to make ends meet.

The NHS needs to deliver efficiency gains of 4% per annum over four consecutive years if it is to continue to provide a good quality, comprehensive service and meet the increases in demand coming from demographic and other pressures. This challenge, the so-called Nicholson challenge, can only be achieved by making fundamental changes to the way care is delivered. The Nicholson Challenge can only be achieved through a wide process of service redesign on both a small and large scale. These changes should not be deferred until later in the Spending Review period: they must happen early in the process if they are to release the recurring savings that will be vital in meeting the challenge. In the meantime, there is concern that savings are being made through 'salami-slicing' existing processes instead of rethinking and redesigning the way services are delivered. The government's radical reorganisation of the NHS continues to complicate the push for efficiency gains. Although it may have facilitated savings in some cases, it more often creates disruption and distraction that hinders the ability of organisations to consider truly effective ways of reforming service delivery and releasing savings.

The overall picture of social care is of a service that is continuing to function by restricting eligibility, by making greater savings on other local authority functions and by forcing down the price it pays to contractors for services. In each case, the scope for further efficiencies is severely limited.

Quality standards hit by spending squeeze

S. Calkin

Health Service Journal, Feb. 16th 2012, p. 4-5

Government spending restrictions in 2011/12 delayed key reform programmes and were expected to lead to an underspend of 40m across the Department of Health's 15 arm's length bodies. Under government restrictions, organisations had to receive Department of Health approval for spending on recruitment of non-frontline staff, marketing or consultancy. As a result, the National Institute for Health and Clinical Excellence slowed the output of its quality standards programme, the central plank of the proposed commissioning outcomes framework which would be used to measure commissioners' performance. Moreover, the NHS Information Centre had to revise delivery timetables for a number of projects, including plans to make hospital data more secure.

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