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The News Line: Feature ‘PAYMENT BY RESULTS’ DEVASTATING NHS A letter from the Chairman of the Professional Executive Committee, High Peak and Dales Primary Care Trust (PCT) to clinicians reveals the devastating impact on NHS budgets and patient care of the government’s new Payment by Results system.

The letter from Doctor Mike Chadwick outlines a proposal to suspend all elective surgery for six months throughout the trust in order to save £1.5 million and reduce the PCT’s overall deficit, currently estimated to be £2.3 million.

The Professional Executive Committee Chairman, based at Newholme Hospital in Bakewell, Derbyshire, explicitly states that cutbacks are required as a direct result of the impact of Payment by Results.

Chadwick wrote to clinicians: ‘Following discussions with the Strategic Health Authority we are required to submit a balanced budget for 2006/07.

‘This requires the recurrent deficit is eliminated, and brokerage or slippage must be modest and achievable.

‘In addition they require 0.5 per cent of our budget to be established as a contingency reserve that will remain under their control.’

He added: ‘The task of achieving balance has been made enormously difficult by the impact of the payment by results rebasing exercise, giving us an increased liability of almost £2.3 million.’

Signalling the extent of the problem for doctors and patients, as well as his anger at the government’s attack on healthcare, Dr Chadwick continued: ‘This is a complex readjustment exercise to take account of the different tariff rates charged by Acute Trust hospitals and I will be pleased to give you more information concerning this, if you wish to learn more.

‘Suffice to say that it is totally beyond our control and we are making the appropriate protests.’

In response to the reduction in income as a result of Payment by Results charge per procedure rates, he stressed: ‘The rebasing exercise has increased our commissioning costs and we think it is appropriate to re-examine this budget for significant savings.’

Chadwick also declared that as many patients as possible should be kept out of hospital.

And if patients, apart from emergency patients, really do have to have hospital treatment, they will have to wait half a year for it.

He continued: ‘In addition to our well publicised measures to reduce demand through long term condition management and incentives to reduce referrals to secondary care, the Trust is proposing to hold all elective waiting lists at six months.

‘This could save £1.5 million, whilst still achieving the national target that no patient should wait longer than six months for elective treatment.

‘This decision will require support from the Strategic Health Authority.’

Complaining that actual patient care is being hardest hit under the government’s health market system, Chadwick wrote: ‘In times of financial difficulty the provider side of the organisation has always suffered the most because of vacancy controls and consequent service reductions.’

In other words trusts are faced with less staff and cutting services.

He added that in the case of the High Peak and Dales PCT: ‘The proposed cost reduction of £415,000 on the provider side is relatively modest but will undoubtedly delay the re-opening of Rowsley Ward at Newholme (Hospital) and will continue to exert pressure on front line services through vacancy control.’

In an attachment to his letter, Chadwick outlines the main features of the ‘funding position going forward into 2006/07’.

This lists ‘recurrent additional funding of £9.473 million.

However ‘funds topsliced’ from that include ‘deficit 2005/06’ of £2.976 million; an ‘interest charge at 10 per cent on the deficit’ of £298,000; Trent Strategic Health Authority ‘contingency reserve’ of £628,000; and the ‘impact of Payment by Results rebasing’ of £2.276 million.

This leaves ‘Additional Funding available for the PCT 2006/07’ of £3.294 million.

Chadwick commented on the above figures and the funding squeeze from the government, saying the trust is being penalised because of the size of its ‘distance from equity position’ (size of deficit - News Line).

He wrote: ‘This recurrent funding increase represents an increase of 8.1 per cent on the closing recurrent baseline at March 2005.

‘Whilst it is a significant gross increase, it represents one of the smallest percentage increases of any PCT in the country due to our distance from equity position.’

Secondly, ‘The deficit deduction reflects that we overspent last year. This is therefore clawed back from overspending PCTs in 2006/07.’

He said Trent Strategic Health Authority’s deduction of 0.5 per cent ‘from our recurrent funding to establish a contingency reserve’ will be repeated in 2007/08 to ‘establish a funding reserve’ ready for when NHS spending ‘slows’ in 2008/09.

Finally, Chadwick noted: ‘The national exercise of the Transitional Relief for Payment by Results has not balanced back to zero.

‘The Department of Health has decided to reflect distance from equity in allocating the shortfall.
‘As a consequence, this PCT will only receive half of the funding necessary to maintain its purchasing parity.

‘This will lead to shortfall in funding of some £2,276,000.’

Chadwick’s letter is an indication of the plight of NHS trusts up and down the country.

The government is clearly bankrupting the NHS to provide a lucrative health market for privateers like the giant US company United Health, whose European arm has just got contracts to run GP practices in Derby and nearby Crestwell.

The British Medical Association and the other health unions must act to stop this destruction of one of the greatest gains of the working class.

And the TUC must tell the Blair government either restore a fully funded, state-run NHS free at the point of use for all, or face a political general strike to remove the Labour government and replace it with a workers government that will carry out socialist policies.

First off, to nationalise the banks, drug and giant medical equipment companies to provide the resources for such an NHS.


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