By David Williams
25 January 2011
The head of the NHS has refuted suggestions that the health service tariff – the basis for paying hospitals for treatments – will be brought below average treatment costs.
He admitted that this would make it harder for the service to hit its £20bn efficiency target over the next four years.
Sir David Nicholson, chief executive of the NHS, made the admission this morning while giving evidence to the Commons Public Accounts Committee.
The committee is conducting an inquiry into the National Audit Office’s NHSLandscape Review. The document, released last week, states that under reforms being introduced by Health Secretary Andrew Lansley, the tariff paid to foundation trusts will be brought into line with the costs of the most efficient providers. At the moment, it is based on average costs.
Under rigorous questioning from MPs over whether that system would be adopted, Nicholson would only say: ‘I think we would like to.’
Pressed on whether the tariff would come down to the level of the most efficient, Nicholson said it would not happen until NHS bosses were assured that the move would not impact negatively on the ability of most hospitals to continue providing services.
Committee chair Margaret Hodge continued: ‘Even though that might impact on your ability to deliver the [£20bn] efficiency gains you need?’
Nicholson replied: ‘Yes.’
The NHS chief also explained that a GP commissioning group would be able to buy services at a lower price than the national tariff only if they could demonstrate that quality would not suffer, that they could measure quality effectively and that patients were well-informed.
But, he added: ‘We’ve yet to come across any services that have done that, but it seems to us that to leave that open would be a sensible way of taking this forward.’
Nicholson added that his expectation was that in most NHS activities, commissioners would pay the maximum.
He and Una O’Brien, permanent secretary at the Department of Health, also came under fire over accountability in the newly restructured NHS, which Hodge repeatedly described as ‘muddled’.
Asked what would happen if a foundation trust went bust, O’Brien responded: ‘We’re not planning for failure.’
Committee member Richard Bacon told her: ‘You absolutely should be planning for failure. Part of your job is to design a failure regime. Things will go wrong. If you don’t think things will go wrong, you shouldn’t be doing your job.
‘I don’t know what will go wrong, but that something will go wrong somewhere in this enormous organisation is as near to a certainty we will get.’
