Published: 26/05/2005, Volume II5, No. 5957 Page 6

The Department of Health is to switch to a 'pay as you go' model for independent sector provision after admitting to getting its fingers burnt by the old 'take or pay' policy.

Head of access policy development and capacity Bob Ricketts told an HSJ conference on Tuesday that the DoH is making some fundamental changes to the financial management of independent provision. The move comes as it finalises procurement for wave two of the elective programme and the£1bn, five-year diagnostics programme.

He confirmed that primary care trusts would no longer have their central allocations top sliced. Instead, they will pay only for what they use, with the DoH underwriting any unused capacity. He said they felt top slicing 'was totally inappropriate'.

He admitted: 'We had our fingers burnt over take or pay.' PCTs had been left feeling aggrieved by their lack of choice or control.

With 'pay as you go' there would be no compulsion on anyone to use independent sector provision, he added. 'The DoH carries the risk, although we think it will be fairly minimal because there is not enough capacity out there without the independent sector provision.' The DoH is considering how to deal with the financial arrangements for existing wave-one independent sector programmes, he said. 'But the principle stands. We are not into heavily top slicing PCTs and telling you where you should go.' Mr Ricketts also stressed that the lion's share of investment in diagnostics will be in the NHS.

Achieving the 18-week waiting time by the end of 2008 would require a huge increase in diagnostics capacity and service redesign, he said. 'The key issue and the key concern in my mind is whether the NHS will deliver. We have put [most] of our investment in the NHS and if we do not see rapid change then we will have a real problem on 18 weeks.'