Published: 13/05/2004, Volume II4, No. 5905 Page 3 4

The government's ambitions for a primary care-led NHS could be put at risk unless ministers make fundamental changes to the payment by results policy, NHS managers have warned.

Primary care trust senior managers have told HSJ that the fixedtariff system will simply encourage acute trusts to admit more patients and treat them in more complex environments.

Concerns are also growing that the government response to payment by results does not address many of the other broader worries about the reforms. Senior managers used a meeting called by ministers to meet PCT chief executives to alert the government to their concerns.

Havering PCT chief executive Ralph McCormack said senior managers had told ministers there was a lot of anxiety about the policy's effect: 'The aspiration was clear that [the policy direction] was about moving work away from the acute sector, and then here is something that will encourage the acute sector to do more work.'

Rotherham PCT commissioning and change manager Philip Watson said: 'We are working with our local acute trust and looking at redesigning outpatients. The aim is to reduce the number of admissions by 50 per cent, but we are beginning to wonder what is in it for the acute trust'.

He said he hoped common sense would prevail, and added that it was in no-one's interest to destabilise local health economies.

Another PCT chief executive, who did not wish to be named, said national guidance was needed, instructing acute trusts that they must not treat payment by results simply as a way to increase their income: 'PCTs have to be in a position where they do not just pay invoices, but also challenge them.

'As it stands, payment by results could destabilise whole health economies.'

Stockport PCT director of finance and estates Alison Tonge, whose PCT commissions roughly half of its services from Stockport foundation trust, said the system could upset the local health economy.

She warned that although acute trusts might not soak up more work intentionally, it would be 'almost easier' for acute trusts to admit patients and collect the tariff they would be due.

She said her PCT had lobbied the Department of Health, arguing that PCTs need greater help in implementing payment by results. She expressed concern that because the number of PCTs using the system so far was small, their collective voice might not be loud enough.

Exeter PCT finance director John Dowell said that although his PCT had a good relationship with Royal Devon and Exeter Healthcare foundation trust - where the PCT spends around half its budget - colleagues around the country feared that acute trusts in major cities, where the relationship with commissioners was less tight, could use the system to attract more work and therefore more money.

He said: 'One of the threats is that there is no incentive for the service provider to help manage demand.'

Mr Dowell added that new foundation trusts' priority would be to establish financial stability. This would mean ensuring they received enough work at tariff price to maintain their income stream.

And he warned that it would be up to PCTs to introduce demand management measures to try to reduce the risk of extra work, which would previously have been carried out at a negotiated - rather than fixed - price.

HSJ understands that growing concerns have yet to be addressed either by ministers or DoH officials. Consultation on the policy closed six months ago, but the DoH has yet to publish its response.

As HSJ went to press, it understood that although a draft response is circulating Richmond House it had yet to be seen by ministers, with central questions about the policy apparently unanswered.

One source, who has seen a draft, said: 'It looks like the DoH has simply responded to the questions it raised in its own consultation. The draft may change, but looking at it that simply means there has not been scope to discuss the broader principles of this policy that cause the real headaches. Unless there is a rethink, the consultation response will set the limited terms of the debate in stone.'

He said particular concerns which were not addressed in the draft response were the scale of the reforms within a three-year framework, and the lack of incentives it provided for commissioners to tackle chronic disease.

One acute trust finance director said: 'There is no panic yet but there is a real danger of serious financial imbalance. There hasn't been enough investment in leadership within the DoH. The team working on payment by results is relatively small - certainly dwarfed by that for foundation trusts - and that is wrong given the enormous scale of change.

'The one light on the horizon is that apparently the DoH has woken up and is going to make extra investment available [for the central team]. It is certainly needed.'

The NHS Confederation described delays publishing the response as 'deeply worrying'.

Health minister John Hutton has cancelled a scheduled meeting to discuss the policy with the confederation's policy team three times.

Policy director Nigel Edwards said he was concerned about the policy and had picked up a growing level of 'serious disquiet' within the service about how the policy will play out.

He said: 'We believe payment by results is a good policy in principle, but we have growing concerns about its practical implementation. We have raised these in our response to the consultation, and have sought a meeting with ministers. The lack of response from the department is deeply worrying.

'I understand a draft response has been in circulation for some time, but we have yet to see it. If all it does is deal with the questions in the consultation this may not be adequate, as a number of significant technical, policy and issues about perverse incentives remain unresolved.

'My conversations with members indicate a growing level of serious disquiet about how this policy will play out, even though most people are still supportive.'