Of the 16 pages of last week’s Managing the Transition letter from Richmond House, the provider side of the NHS occupies a mere three paragraphs. One about the foundation trust “pipeline”, one on separating primary care trusts from their former provider arms and one on encouraging the independent sector.
But then 2011-12’s biggest challenge is restructuring commissioning once again, rather than the tedious NHS provider goal of somehow saving billions, yet keeping the patient satisfied.
Nor does the confirmed tariff for 2011-12, also published last week, offer much tangible support for providers. The policy of no reimbursement for readmissions within 30 days stands pretty much intact. The NHS Confederation estimates this rule change alone will cost hospitals £790m in 2011-12.
“We will only do at national level what needs to be done at national level”, pledges Managing the Transition. Excellent news. A useful start might be some practical support for NHS providers burdened with private finance initiative schemes.
PFI contracts commit hospitals to fixed charges: commonly up to 15-20 per cent of total operating costs, sometimes more. With between 60 and 70 per cent of their budget already tied up in salaries, many PFI hospitals are trapped. The combination of fixed costs and falling income is ruinous. Many will never become foundation trusts.
Neither Managing the Transition nor David Flory’s letter confirming the 2011-12 tariff even mention PFI. Yet in numerous parts of England it determines whether efficiency gain is possible.
Recognising how significant an issue this has become, the Treasury is pressing PFI investors to moderate their profits, starting with the £835m contract at Queen’s Hospital, Romford. The financiers are stubborn - the sanctity of contract law and the interests of the pension funds have each raised their ugly heads - but the Treasury has muscle, and patience.
Hospitals, at least for the time being, are run by the government. An intervention rebalancing tariff funding to acknowledge the scale of PFI costs, perhaps via the “market forces factor”, would show Richmond House is not entirely preoccupied with commissioning.