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Health reforms will cost £1.5bn

By Lilian Anekwe

The reforms of the NHS outlined in today's health and social care bill will cost up to £1.5bn, with much of that total due to redundancy costs at PCTs, the Government has revealed.

In an impact assessment published alongside the Bill, the Department of Health estimates the true cost of the transfer of responsibility for commissioning from PCTs and SHAs to GP consortia and the NHS Commissioning Board at a maximum of £1.45bn.

The costs will be incurred mostly from ‘the redundancy and non-redundancy costs associated with the abolition of PCTs and SHAs. The costs vary according to the number of staff that transfer from PCTs and SHAs to GP consortia and the NHS Commissioning Board', the document states.

The ‘best estimate' of the cost is £1.14bn, including transitional costs of £1.2bn and, crucially, assuming that there are no further running costs incurred in subsequent years.

But ministers estimate the benefits at £8.8bn gained from the reduction in the costs of commissioning, as well as additional ‘non-monetised benefits from improved clinical engagement, improved outcomes and more responsive and co-ordinated care.'

‘There are additional financial benefits from GP commissioning that arise from the alignment of clinical and financial incentives arise from savings in terms of reduced variation and level of outpatient referrals and elective activity, improved care of patients with long term conditions, reductions in growth and level of urgent and emergency admissions, and improved prescribing.'

It also identified several potential risks associated with the new level of responsibility given to GPs, including potential conflicts of interest, GP consortia not having the capacity and capability to engage with and deliver clinical commissioning, and the ability of GP consortia to manage risk and also deliver the potential financial savings outlined above.

‘The Department believes that the new structure of the system offers additional opportunities to improve productivity… through improvements in demand management, long-term conditions and primary care prescribing.

‘The main benefit of the changes to commissioning, other than the potential cost-savings, is around better commissioning. GP consortia, supported by the NHS Commissioning Board, are likely to be better at commissioning healthcare than PCTs and SHAs are at present.

‘This would lead directly to an increase in health outcomes. As with the potential cost-savings, it is very difficult to state with any certainty the improvement in health outcomes that will be achieved.'

Health secretary Andrew Lansley said: 'This legislation will deliver changes that will improve outcomes for patients and save the NHS £1.7 billion every year - money that will be reinvested into services for patients.'

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