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Welfare Reform on the Web (December 2006): National Health Service - funding

A formula for unfairness

S. Asthana and A. Gibson

Health Service Journal, vol.116, Nov.16th 2006, p.18-19

The Department of Health claims that overspending by NHS organisations is due to poor financial management and poor organisation of clinical services. However, this article presents evidence that the government’s resource allocation formula is to blame. It favours younger deprived urban communities over those with more affluent populations and rural areas. It ignores the fact that affluent and rural areas often have ageing populations and a high demand for expensive healthcare.

From feast to famine

N. Plumridge

Public Finance, Nov. 3rd-9th 2006, p.28-30

Public spending on healthcare in England has grown substantially in the past five years, but this trend will cease in 2008. This article examines options for NHS financial mangers faced with impending funding constraints. Available options are: 1) find other sources of funding through, for example, co-payments; 2) reduce demand, through, for example, disease prevention and effective self-management of long-term illness; and 3) achieve efficiency gains.

Hewitt insists Labour areas deserve extra NHS funding

T. Helm

The Daily Telegraph, Nov.22nd 2006, p.12

This Telegraph piece on Patricia Hewitt’s cross examination by the Health Select Committee, focuses on the controversy sparked by her claim that Labour areas need to have spending per head at least 35 times more than wealthier Tory areas. Hewitt said that people in more prosperous areas were healthier therefore needed less care allocated to them. Her comments follow claims by the opposition and medical professionals of political meddling in NHS affairs. The Department of Health insisted that lower funding for affluent areas did not mean people in wealthy areas would be deprived of care when they needed it.

Hewitt vows to quit if NHS fails to stay within budget

J. Carvel

The Guardian, Nov. 22nd, 2006, p.13

Health Secretary Patricia Hewitt told members of the Health Select Committee that she will quit her job if the NHS in England doesn’t break even by March 2007.  This promise was made in the face of half-year accounts forecasting deficits totalling almost £1.2bn.  The bulk of the net deficit of £512m was blamed on trusts overshooting their recruitment objectives. Hewitt predicts improvement in the next half of the year and highlights the £350m in NHS reserves and the likely total surplus of £736m forecast by 136 trusts.

(See also The Guardian, Nov. 10th 2006, p.11)

Minister puts onus on trusts to negotiate unbundled tariff

N. Edwards and H. Mooney

Health Service Journal, vol.116, Nov. 2nd 2006, p.5

The payment by results tariff for 2007/08 encourages organisations to negotiate ways of unbundling it locally, so that payment for different parts of the care pathway goes to different providers, whether in the hospital or in the community. The tariff for next year sets a price uplift of 2.5%, net of 2.5% efficiency savings. This compares with a lower uplift of 1.5% in 2006/07.

The new economics

B. Moyes

Health Service Journal, vol.116, Nov.16th 2006, p.23-24

Current NHS finance mechanisms use activity-based models that do not measure individual services. Economic policies that measure profitability of different services can drive improvement and efficiency. The foundation trusts regulator Monitor is looking at the introduction of a requirement for these organisations to implement such policies, and will be consulting shortly on the processes involved.

Passing the buck

P. Lobb and T. Startup

Public Finance, Oct. 20th-26th 2006, p.22-23

The ongoing costs to the NHS of hospitals built under the private finance initiative (PFI) are being blamed for at least partly causing the current financial crisis. The authors argue that a more flexible approach to PFI contracts is needed. At the specification stage, trusts could build in alternative uses for facilities in the event of future changes in demand. At the contract stage, trusts could introduce greater scope for variation in the services provided by the private partner. In general, trusts should approach their developments more incrementally, avoiding making large commitments that could later prove unsuited to clinical demands or the financial environment.

Sharing the burden

A. Rossiter

Public Finance, Nov. 3rd-9th 2006, p.24-25

It will not be feasible to adhere to the principle that NHS treatment should be free at the point of use indefinitely in the face of rising demand for healthcare and a surge in new and expensive medical treatments. The author proposes the introduction of a system of co-payments, with built-in protection for the poor, long-term sick and vulnerable, to curb demand.

Turnaround help for a third of acutes as deficits start to climb

D. Martin

Health Service Journal, vol.116, Nov. 16th 2006, p.5

The Department of Health’s latest forecast revealed that 175 NHS organisations are expected to have overspent by the end of financial year 2006/07, reporting a combined gross deficit of £1.2bn. The costs of primary care trust reorganisation and new age discrimination legislation are being blamed for the shortfall. Money will be clawed back through surpluses at high-performing trusts and by pruning more from training and public health budgets.

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