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NHS Alliance calls for radical revamp of Payment by Results

Payment by Results must be radically overhauled to drive down unnecessary costs and stop acute trusts from racking up huge profits, the NHS Alliance has claimed.

The Alliance is demanding that PBR be regarded as maximum price rather than absolute price in order to deliver savings and benefit patients and taxpayers.

It said its call was supported by a recent Audit Commission report which suggested that errors in estimating PBR costs may vary by up to 10%.

Although the organisation supported the move from ‘average cost' to ‘best value cost' when pricing PBR, it said it was now time for PBR to be regarded as maximum price.

The Alliance said the changes would allow PCTs to tender according to best value when purchasing primary care services, and would enable commissioners to have more strength ‘in terms of providing the best possible service for patients as well as taking advantage of any substantial savings that might be made.'

Caveats to the proposal are that PCTs and practices will need to ensure that commissioners do not fall victim to market tactics such as loss leading or skimming, and that contracts should only be moved on the basis of price where ‘substantial savings' can be made.

The organisation also acknowledged that primary care providers may themselves face the risk of competition, where acute hospitals can undercut them.

Dr Michael Dixon, chairman of NHS Alliance, said: ‘These risks must be faced if the NHS is to keep within budget. If last year the focus was on quality, then the focus for the future must equally be on cost.

‘Cost has now become the business of every clinician and manager seeking to provide the best value in health and care for patients. Freezing costs, as PBR has, is no longer appropriate at a time when every part of the NHS will be financially stretched.'

The Alliance said high fixed tariffs for different hospital procedures had inflated NHS costs, and cited a recent Nuffield Trust report which suggested that PBR has encouraged Acute Trusts to increase the volume of activity regardless of benefit, becoming in effect ‘profit centres'.

Dr Dixon added: ‘It is time to redress the balance and give commissioners the power to choose and the ability to save money. It's a no-brainer really.'

The NHS Alliance is demanding an overhaul of Payment by Results Dr Michael Dixon

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