New GP role may create deficit

The finding has come to light after questions were raised over how spending would be controlled under health secretary Andrew Lansley’s flagship policy.

HSJ has derived the deficit estimate from Nuffield Trust research undertaken for the Department of Health as part of a project to establish a robust allocation formula for GP commissioners.

It also compared the notional spending patterns of 8,238 GP practices with their target indicative practice based commissioning budgets. It found that at least 53 per cent of practices under- or overspent their budgets by at least 5 per cent and 26 per cent under- or overspent by 10 per cent or more.

HSJ has been told the proportions under- and overspending are broadly the same. That would imply practices that are busting their budgets would generate a gross overspend of at least £1.2bn a year, assuming GPs became responsible for a total commissioning budget of £60bn.

There would also be a gross underspend of £1.2bn. But there are concerns that because Mr Lansley plans to allow underspenders to retain and control their surpluses they will not be available to balance out overspends.

At present, practices underspending can only apply to take back 30 per cent of their surpluses for reinvestment, which must be agreed through formal business plans with primary care trusts.

But Mr Lansley has suggested GPs will be able to keep hold of all their surpluses and will have much greater freedom to determine what they are spent on.

This is a concern for the Treasury, as it could mean gross surpluses will not necessarily be available to balance out gross underspends from one year to another.

A similar problem exists with foundation trusts, which are also able to accumulate surpluses for spending as they wish.

At present surges in foundation trust spending risk breaching the DH overall NHS spending limit - leading to calls for foundation trusts to be removed from the public sector balance sheet.

The Nuffield research compared GP spending on hospital activity with their “fair shares” based on their patients’ needs under a range of new formulas under development.

Senior sources have told HSJ the Treasury’s concern about controlling deficits has also impinged on plans to give GPs flexibility over who they form consortia with. The government may want to prevent all the surplus-generating GPs joining consortia together and shunning those who run up deficits.

Last week, health minister Earl Howe said the government was committed to giving practices their fair shares - something which could imply a redistribution of resources because many budgets are aligned with activity rates, not need.