The strategic direction of tariff funding used to be steady expansion of scope and steady growth in sophistication. In time, it was understood, payment by results would cover virtually the entire English NHS.

Recent Department of Health guidance arguably perpetuates this strategy. Payment by Results in 2012-13 outlines a major expansion of the system into mental health services, and many new or refined best practice tariffs. They include tariffs for ambulatory emergency care, major trauma centres and renal dialysis at home.

There’s also a planned year-of-care cystic fibrosis tariff: potentially a major step towards meaningful tariffs for long term conditions. And other items suggest business as usual, including a further reduction (from 60 per cent to 50 per cent) in the ever-sensitive specialist top-up for children’s services.

Business as usual? Not quite. Tariff funding, introduced during more affluent times to encourage extra hospital episodes, continues to find itself at odds with a trading environment that demands serious savings. Many of 2011’s payment by result innovations, including the handling of readmissions and the reduced funding of “extra” hospital spells, were meant to reduce commissioners’ financial exposure. Amid widespread commissioner disintegration, two new developments point in the same direction.

One is “bundling”. In north London the Whittington Hospital Trust, which recently took over ex-primary care trust community services in Islington and Haringey, proposes to offer all health services across the two boroughs for a flat fee next year, in what would be a major lurch back towards the big block contract.

The combination of secure income for the trust and avoidance of risk for the PCTs must be tempting. No more illusory income-led hospital growth strategies; or delusions of PCT-led demand management.

But it leaves the tariff as irrelevant as it is in Swansea or Inverness.

The second point is the broader phenomenon of “integration”, of which the Whittington’s recent growth by acquisition is but one example. Management of the boundary between hospital and community health services has a tangled history, and the pendulum is now swinging back towards union. Its swing could leave some of the recent refinements of payment by results looking rather irrelevant.

Topics