Darzi quality incentive puts £1bn at stake

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Up to £1bn - or 3 per cent - of annual hospital trust income will be contingent on meeting service quality requirements by 2010-11.

NHS chief executive David Nicholson revealed the figure when estimating the impact of two pay-for-quality initiatives announced in Lord Darzi's next stage review.

The first, the commissioning for quality and innovation scheme - trailed in this year's NHS operating framework - will link hospital tariff payments to patient-reported outcome measures (PROM), as well as their ability to reduce hospital acquired infection rates.

Bonuses earned by good performers will be paid for by reducing the annual inflationary increases in the tariff (2.3 per cent in 2008-09). Hospitals will start providing the relevant data next year and the system starts in earnest from 2010-11.

A separate initiative will see the DH publish a "best practice tariff", fulfilling its long-stated ambition to give hospitals a financial incentive to provide the best and most efficient, rather than simply average, care. New tariff prices will be introduced from 2010-11 for four high-volume areas that the Darzi report says have "significant unexplained variation in practice". These are: cataracts, fractured neck of femur, cholecystectomy (gall bladder removal) and stroke care.

The report does not say whether the new tariff will involve paying hospitals more - for example to help introduce better technologies - or paying them less to encourage efficiency. More details will be published this year.

From April 2010, providers treating NHS patients will have to publish "quality accounts" alongside financial reports. These are intended to provide patients with easy-to-use information about health outcomes, - but will not identify the performance of individual clinicians.

Andrew Vallance-Owen, group medical director at BUPA, which has pioneered collection of PROM data, said that was understandable. There was a need to "build up confidence" among clinicians that quality data would fairly reflect different patient demographics and risks. But he said it was "inevitable" that patients would eventually demand more specific data about individual surgeons.

Even if patients were able to assess the relative merits of individual surgeons, they would not be able to choose them, Lord Darzi said. The new constitution gives them a right to choose a hospital but not a surgeon. "It is very important to recognise that [surgery] is no longer a one-man show," he said. "[The surgeon] is part of a team."

A National Quality Board is one of several new bodies being set up. It will report to the health secretary and be chaired by the NHS chief executive. DH permanent secretary Hugh Taylor said it would "effectively ensure Ara [Darzi's] report is delivered". But Nuffield Trust director Jennifer Dixon said the board introduced a further "blurring" and confusion over the remit of regulators - specifically Monitor and the Care Quality Commission - and performance management.