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Payment by results: what this means for you

Marilyn Eveleigh
Consultant Editor

It seems amazing that the NHS is only just establishing set prices for medical services and procedures. Who would set up a business without first determining the cost of an item or service and all overheads? Having a set price allows the commissioner and provider to see exactly what they get for the money.
Well, the NHS has now determined a national tariff price for medical procedures. This will be introduced in secondary care from April 2006 and is known as Payment by Results (PBR). Before this, only elective care was priced this way; generally block contracts for a whole year's activity were given to hospitals by PCTs for, say, 700 hip replacements or episodes of respiratory care. Now they will only be paid for what is undertaken. First attendance, hospital stays and follow up care will all be given a national price tag, as well as day cases and A&E attendances.
The government believes this will improve patient services as hospitals compete for patients. This also allows private providers to offer the same service for the tariff: the money will follow the patient. As patients have a choice, they will look for quality and high standards in their care; PCTs will be searching for efficiency as well. Furthermore, if PCTs can secure or provide the procedure at a cheaper price, they are entitled to keep the savings to plough back into patient services.
However, in July the DH made an announcement that PCTs should look to reduce their provider role and encourage private, charity, not-for-profit organisations, GP partnerships and nurses to become service providers. There may be many new providers - the theory is that the competition will push prices down and/or standards up.
But there is a problem - unlike hospital procedures, tariffs for primary care and community-based procedures have not been made. So setting up new and alternative community providers will be hampered by this element as every provider needs to know their income will exceed the costs of their overheads. Nurses have been encouraged to set up private businesses, but until there is some clarity on pricing, this appears too risky.
There will be some tariffs established, you can be sure. But it begs a bigger question - is competition a good thing in healthcare? Private companies think so and are very experienced in setting up services that include a profit for shareholders. But will they only be attracted to the most profitable and least risky procedures, leaving the NHS to manage the difficult and complicated elements? Will the NHS have the skills and staff to provide what is left? Every doctor, nurse and professional allied to medicine is trained by the NHS - will this new model attract them to a private provider, possibly at a premium rate? Will their politics and beliefs allow them to be employed by a private company? Will it spur traditional public servants to become independent providers of services?
Lots of questions, scant on answers. Look out in January 2006 for the new white paper on primary care, Health Outside Hospitals - outlining the government's intentions after their public consultation. The public said unequivocally they like nursing services and they wanted out-of-hours provision. So I am certain it will have an impact on YOU!