12 October 2007
Payment by results might help hospital managers and clinicians to understand their costs better, but it comes with significant costs of its own, the CIPFA health finance conference heard.
Jane Tomkinson, director of finance and deputy chief executive at the Countess of Chester NHS foundation trust, told the October 5 conference in London: 'There has been a bit of an industry in just sustaining the machinations of PBR. I have to pay a significant market premium just to stop other providers poaching our skilled and experienced coding staff.'
The basis for the PBR tariff of prices has been much criticised over the years, with claims that it is based on faulty estimates of the real costs of each procedure. But Tomkinson pleaded with the Department of Health to settle on a method for calculating the tariff and then to leave it be.
'Four years ago we had a £14m gain from PBR. Now that's moved to just a £2m gain. That volatility is horrendous,' she said. 'Parts of the tariff are poor and incorrect, but at least you can plan on the basis of what you know.'
Tomkinson's comments came as the DoH published the draft PBR tariff for 2008/09, which will be 'road-tested' over the next month.
Michael Dixon, the chair of NHS Alliance, told Public Finance that changes in the tariff prices would be relatively uncontroversial as they mainly applied to highly complex and rare procedures. He also welcomed the DoH's decision to keep the so-called '50% rule', under which hospitals are paid only half of the value of admissions above the local plan, while primary care trusts must compensate their local hospitals if 'demand management' leads to admissions falling below the plan.
The rule was a temporary measure designed to mitigate the effects of the extra financial incentive that PBR brings, as opposed to the block grant system, said Dixon.
He added there was evidence that some trusts distorted the size of their accident and emergency admissions, and mis-recorded routine antenatal visits as more expensive inpatient episodes.
'That seems to be very creative accounting,' said Dixon. 'But once we've introduced benchmarking we'll very quickly be able to see which trusts are pulling the wool and which are bona fide.'
PFoct2007
