HSJ EXCLUSIVE Adjustments are a 'fudge' warns architect of payment by results policy

Published: 24/03/2005, Volume II5, No. 5947 Page 5

Political manoeuvring could wreck the government's flagship NHS finance reform, a chief architect of the policy has broken cover to warn.

Former Department of Health head of financial flows Bob Dredge said political pressure from 'powerful teaching hospitals' was behind the government's decision in June to halt plans for 'fairer re-distribution' of training and research and development monies worth£5bn among acute trusts.

Mr Dredge went on to describe the DoH's decision in December to allow health economies to 'unbundle the tariff ' to reflect local patient flows and to make adjustments to the short-stay tariff as a 'political fudge' designed to 'show the NHS it was being listened to'. And he said that continued unbundling of the tariff undermined the reform and ran the risk of leaving finance systems 'back where we started'.

Speaking publicly for the first time since leaving his post in December, Mr Dredge outlined his fears that the government could 'lose its nerve' and delay PbR for a second time. Full PbR was due to be introduced next month, but in January the government announced its decision to delay total implementation by one year.

Mr Dredge told a Chartered Institute of Public Finance and Accountancy conference: 'The party line is that PbR will be rolled out for emergency and outpatients next year, but I question if they will hold their nerve now they've managed to delay it once fairly easily.' He said his 'worry' is that the DoH now has a few 'intellectually credible get-out-of-jail-free cards' that they can deploy if they 'lose their nerve' again next year.

Mr Dredge said that fixing the system for full introduction for next year would 'take a lot of work' and suggested the DoH might use the risk of a possible imbalance across the NHS as an excuse for further delay as April 2006 approaches.

The DoH halted an April PbR start for emergency and outpatients care at the eleventh hour because of a£500m 'imbalance' across the NHS (news, page 5, 13 January).

Mr Dredge, now a senior fellow in financial management at Keele University's Health Planning Centre, said he decided to speak out now to inspire informed public debate about the government's policy direction.

'PbR was designed to be a 'destabaliser' - a policy that would rock the system, which it is starting to do, ' he said. 'There is nowhere to hide under PbR, and it is challenging. However the question is: can we overcome the influence of certain powerbases and hierarchies to gain the real, evidence based cash benefits?' he added.

Mr Dredge saved his fiercest fire for the move to allow health economies to unbundle the tariff - which he described as a 'messy response' to pressure from parts of the NHS.

'If you allow a whole load of unbundling - where you pay for little bits of the healthcare resource froup here and there - you destroy the principles, do not achieve the benefits, and end up with locally based recovery systems, which is back to where we started with this reform.

'There is a view from parts of the NHS that wants lots of local systems and local rules, which is completely contradictory to a national system.

Either you have a system or you do not.'

Dredge judges: the key dangers

Emergency payment by results: the risks of imbalance will still be great next year and the government could 'lose its nerve'. The Department of Health is likely to halt further introduction to mental health and community care, which could lead to one set of rules for powerful foundation trusts and another set for other providers.

Short-stay tariff adjustments: the DoH's response to PCT fears that trusts would collect a tariff for a long stay when the patient discharged after two nights is a 'political fudge'.

Unbundling the tariff: allowing tariffs to be split locally according to care pathways threatens to undermine the foundations of PbR.

Hierarchies forced this 'messy response' against the spirit of reform.

Research and development and training: the government made a U-turn last June on plans to balance£5bn allocations for training and research and development more fairly across the NHS due to 'pressure from the powerful London teaching hospitals'.

The market forces factor (MFF): there are too many different zones now that each PCT has been given its own MFF.

It is too complex and the system can be simplified.