Spent forces: who pulls the levers on local funding

The King's Fund report on variations in primary care trust spending demonstrates that the 'postcode lottery' stretches far beyond the availability of drugs. But are PCT priorities really at the heart of decision making? Tash Shifrin reports


It is the headline that won't go away. 'Patients denied drugs in NHS postcode lottery,' the Daily Mailscreamed last week. It is a story that has come up again and again - in rows over cancer drug Herceptin, access to in vitrofertilisation or treatments for Alzheimer's disease. Whenever a specific drug or treatment appears to be available to NHS patients in one local area, but not in another, the postcode lottery tag is applied.

It is a sensitive matter, enough for health secretary Patricia Hewitt to wade into the Herceptin debate and order primary care trusts not to withhold the drug on cost grounds.

But last week was a rollover week for the postcode lottery. A report from the King's Fund revealed stark variations not in the availability of a single drug or treatment, but in levels of spending right across major disease areas - 'a much more fundamental postcode issue' than the availability of Herceptin, according to King's Fund chief economist Professor John Appleby.

And the variation in spending is huge. The report shows a seven-fold difference in spending on mental health services between Islington PCT in north London and Berkshire's Bracknell Forest PCT in 2004-05, noting: 'Such differences are evident across England in all disease areas. Spending on cancer varies four-fold, on circulatory diseases twofold, and on musculoskeletal problems 13-fold.'

The analysis, Local Variations in NHS Spending Priorities, is based on Department of Health data from 2003-04 and 2004-05, when PCTs were first required to report their levels of spending in 21 different disease areas under the national programme budget project. It is the first time PCTs have been presented with the evidence of just how wildly their spending varies.

The report says some of this difference is to be expected: differing levels of need, the age profile of the local population and varying costs all affect the amount PCTs spend. 'However, once the effects of these are taken into account, some stark differences remain in the amount of resources different PCTs spend on different diseases,' it explains.

The analysis shows that even with figures weighted to take account of need and other factors there is still a four-fold difference in mental health spending between Islington and Bracknell Forrest.

Weighted figures also demonstrate that Daventry and South Northants PCT spent£132 per head on cancer and tumour care - nearly four times as much as Heart of Birmingham PCT, which spent just£35 a head. Wyre PCT, Lancashire, spent£173 a head on circulatory diseases, including coronary heart disease, compared with just£68 in London?s City and Hackney PCT.

Alarm call

Charities and patient groups are alarmed at the apparent inequity. Macmillan Cancer adviser for nursing and allied health professionals Gill Oliver says: 'People who have cancer, who could be in Glasgow, Liverpool or Birmingham, need to be sure they can access the same standard and levels of service wherever they are.'

Mental health charity Mind policy director Sophie Corlett says: 'Any sort of differential is very concerning. I hope people at the top of the spending table are getting a Rolls-Royce service, but I know the people at the bottom are getting a very poor service.'

But senior NHS managers and clinicians point out that the spending league analysis - widely welcomed as useful new information - does not necessarily indicate better or worse services for patients.

NHS Alliance chair Dr Michael Dixon says the data is very useful and it is 'shocking' that PCTs have not had access to it before. 'What we don't know is what it means. How much you spend doesn't mean that is how good your services or outcomes are. Perhaps [low spenders] are cutting hospital admissions and doing it more cost effectively.'

Health minister Lord Warner maintains that the variations have been produced by PCTs making decisions based on local needs. 'This is not about a postcode lottery because money is allocated to PCTs on the basis of health need,' he says. 'Some variations in spending across the country are to be expected as people respond to the different needs of local communities.'

A similar point is made by NHS Confederation policy director Nigel Edwards: 'The healthcare priorities of the people of Brighton will be different to the priorities of those living in Bradford.

'It is right that local health services meet the needs of local patients and therefore important to understand that a consequence of this will always be variations in spending.'

But Professor Appleby questions how far PCTs are actually able to control spending. 'Nigel is implying PCTs make these rational evidence-based decisions,' he says. 'That is just not the case in my experience.'

He suggests spending patterns may instead be largely governed by variable cost effectiveness among providers, historic spending patterns and the behaviour of clinicians.

'We know there are different prescribing rates that are not explained by differences in need, differences in the thresholds for admission to hospital and differences in when to take patients off the waiting list.

'I'd like to see PCTs stand up and say how they arrived at their judgements.'

Stark differences

Dr Dixon, who is a practising GP, bears out Professor Appleby's argument that clinicians' actions rather than PCT decisions may lie behind the variation. 'It's all very well for PCTs to prioritise, but actual spending is going to be related to the decisions people like me are making on the front line.'

He adds that with national service frameworks and guidance from the National Institute for Health and Clinical Excellence, 'there shouldn't be a great deal of difference'.

In fact Mr Edwards agrees that while differences in spending do 'partly' reflect varying PCT priorities, 'history and other factors' also contribute to spending patterns. 'The level of variation is too high to be explained simply by different needs and decision-making. People need to ask why.'

PCTs need to pick apart what is happening in their areas, says Mr Edwards. 'The variation is only OK if you can explain it. If you can't explain it, it's a lottery.'

At the PCTs that have found themselves in the spotlight this week, managers have had to find the explanations quickly. Islington PCT senior commissioning manager for mental health Kath McClinton points out that Islington faces 'much higher rates of mental health problems amongst poorer households, certain ethnic groups and the prison population - Holloway and Pentonville prisons are within our catchment area'.

'Islington has the highest need for mental health services in London, 22 per cent above the England average,' she says.

But despite this, the PCT's mental health spend for 2005-06 was£49.8m - or 17 per cent of the total PCT budget, 'in line with 90 per cent of PCTs spending 9-18 per cent of their budgets on mental health'.

She adds: 'Although providing good mental health services is a challenge, our performance is good, reflecting levels of investment. Islington emerged as the leading London authority in delivering the services and standards required through the mental health national service framework.'

'Investment in mental health services is not just about the amount of money spent, but how well it is used,' argues Bracknell Forest chief executive Diane Hedges. 'Although we are spending less, we in Berkshire are in the top 10 in the country on efficiency measures in mental health.'

Despite being at the opposite end of the spending table, Ms Hedges says her PCT, too, is providing good services. 'Independent assessments have consistently shown us to offer good-quality mental health services.'

Ms Hedges concedes that financial pressures have played a part, too. 'We have to balance our books and deliver all the major national targets. We then have to make difficult decisions around where to invest any remaining resources.'

One of the most striking differences in spending was revealed in one county, where Derbyshire Dales and South Derbyshire PCT spent more than four times as much on mental health as near neighbour North Eastern Derbyshire PCT.

The discrepancy is highlighted further by the fact that the two PCTs are about to join forces in one PCT covering the entire county.

East Midlands strategic health authority points out that North Eastern Derbyshire has 'increased its spending significantly since the period covered by this report, by 12 per cent in 2005-06 and by a further 8 per cent in 2006-07'.

It adds: 'All of the national priorities in mental health have been achieved. This achievement is reflected in clinical outcomes, which are at least in line with, and in some cases better than, published national benchmark averages.'

Value of benchmarking

Mr Edwards says PCTs should use the data 'to benchmark with peers'. He would also like to see an analysis that puts the spending patterns next to outcome data to show whether or not high spending and positive outcomes are linked.

He suggests the DoH compiles a toolkit and models the effect of marginal adjustments to spending in different areas. But he concedes that neither historic spending patterns nor clinicians' behaviour can be easily changed overnight.

Dr Dixon says the King's Fund analysis shows the need for clinicians and managers to work much more tightly together if the variation is to be reduced. 'We need to align clinicians' actions with managers' aspirations so clinicians don't hijack the priorities of managers and PCTs and so that they aren't left out of those decisions.'