HSJ EXCLUSIVE NHS moves to bolster flagship policies with new rules of engagement

Published: 10/02/2005, Volume II5, No. 5942 Page 5

A tough new NHS constitution is being drawn-up to prevent health economies sliding into bitter 'Bradford-style' warfare in an era of foundation trusts and payment by results.

Policy makers have given a group of senior managers, including South Yorkshire strategic health authority chief executive Mike Farrar and Birmingham and the Black Country SHA chief executive David Nicholson, a remit to draw-up hard-nosed rules of engagement as part of a package of measures designed to rescue the delayed policies.

Mr Nicholson, chair of the systems reform leadership group, told HSJ that he expects to deliver the 'code of conduct' - which would 'apply equally to independent treatment centres' - by the summer. Mr Nicholson first suggested the measure in his analysis of payment by results for the Department of Health last year (news, page 5, 26 August).

The move comes as audit chiefs warned that, unless handled properly, payment by results could 'destroy' key parallel policies such as practice-based commissioning.

Audit Commission managing director health Andy McKeon told delegates at an HSJ conference last week of the dangers posed by payment by results, which he described as 'inherently adversarial'.

He said that had this year's increase in short-stay admissions from accident and emergency to meet the four-hour waiting time target happened when payment by results was implemented across the NHS instead of being restricted to foundation trusts, 'it would have proved deadly for NHS finances.' The combination of a 'powerful incentive' and payment by results made it easy to 'see how the pounds signs can ratchet up', according to Mr McKeon.

He also warned that cost escalation under payment by results could 'destroy the way practice-based commissioning could work' by making the budgets given to practices irrelevant.

DoH head of payment by results Chris Watson revealed at HSJ's conference that the DoH is prepared to approve sweeping new measures to ensure the new financial regime is built on firm foundations.

'The ground rules need to be clear. What are the rules of engagement in primary care trusts and providers? How do we define what acceptable behaviours are? Is it acceptable for a PCT to query one line on a payment based on activity and therefore hold up the whole of the payment?' he said.

He added that any 'rules' needed to be 'backed up by strong policing arrangements' to 'capture some of the gaming that may be going on, and to ensure that in other contexts there is no out-and-out fraud'.

Mr Watson also told delegates that technical guidance from the DoH was due to go to ministers later this month. This would spell out how the NHS must tackle the 'imbalance' between projections and actual cost of emergency care under payment by results.

The Audit Commission is bidding to 'police' the new system. In this week's HSJ interview, chief executive Steve Bundred warned that the government 'will not be able to avoid for much longer having some system in place to prevent abuse'.

'In every other jurisdiction where there are similar systems to payment by results they have had to find some mechanism for policing it. It will undoubtedly be necessary here, too.

It is a job which I think the Audit Commission are well placed to do, ' he said.

'It does need to have teeth to be effective'

DoH systems reform leadership group chair David Nicholson says the code of conduct the toplevel DoH and NHS team is drawing-up must have regulatory teeth to be worthwhile.

'The way I would see it is you have a code of conduct that the Healthcare Commission, when it does its [ratings], takes into account whether they've abided by the code of conduct or not, ' he told HSJ.

'Similarly, when [Monitor chair] Bill Moyes does his compliance ratings on foundation trusts, he can take into account whether they've adhered to the code.

'It is important that It is bought into by people, and it needs to have teeth to be effective.' Mr Nicholson said the code should include behavioural checks such as 'negative marketing' practices and a commitment to putting patients' treatment before 'arguing about money', and should apply equally to independent treatment centres.