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Savvy consortia to spend all budget without going into red

GP consortia will be incentivised to stay within budget but will also strive to show a maximum spend to ensure their budgets are not cut in the next budget year, say experts.

The Health and Social Care Bill makes it clear that consortia will receive extra payments from the National Commissioning Board for performing well and staying within budget.

The payments will be made at the end of each financial year – or in advance if the consortium is thought likely to perform well by the end of the year. Consortia will be free to distribute these payments among their members as they see fit, the Bill says.

The extra payments will reward good financial management as well as patient care but lawyers reading through the Bill for Practical Commissioning have pointed out that there will also be an incentive for consortia to spend as much of their budgets as they can within the financial year.

Oliver Pritchard, head of the commercial health team at Browne Jacobson solicitors said: ‘The Bill mentions that one factor which can be considered when a consortia’s commissioning budget is being calculated is the level of spending in the previous year.

‘There must be a risk with this approach that some consortia will rush to spend all of their budget at the end of the financial year to make sure they don´t lose it. Some GPs will feel that if they demonstrate too many savings, they´ll only lose out next year.

‘There will be competing tensions because there is also provision in the Bill for additional payments to consortia if they show a continuing improvement in quality and in patient outcomes and demonstrate good financial performance. So there´s an incentive too to stay within budget.’

Dr David Jenner, NHS Alliance senior policy adviser said: ‘There is talk that the extra payments could be 15% or even 40%. I would say realistically 10-15%. But I would see this as hugely at-risk income and plan to manage without them.

‘We still don´t know if they can be spent on patient services or taken as income. It appears from the wording of the Bill that it will reflect both quality of care and the ability to stay within budget. And I think its fine to take them as pay if they are related to quality. There´s a clear precedent for that with QOF. But I have trouble with taking them if they are for financial management as I don´t think that´would be ethical.’

Dr Johnny Marshall, chair of the NAPC said it still wasn´t clear exactly how the incentives would work but said it was important that they incentivised both quality and value for money: ‘You need to ensure that you have balanced incentives. They can´t just be financial. Its about how to get the best quality of service and value for money for patients not just regulating

Dr Johnny Marshall