03 February 2006
Health economists have called into doubt the government's presumption that its planned transfer of 5% of current hospital activity – £2.4bn in budget terms – to primary and social care will be cost-neutral.
The white paper Our health, our care, our say: a new direction for community services, published on January 30, outlines the government's aspirations to introduce more patient choice into primary care and to move services currently provided in hospitals into GP surgeries, walk-in centres, community hospitals and new privately run clinics.
Health Secretary Patricia Hewitt described it as marking a 'major strategic shift in the way our care services work'.
But Professor John Appleby, chief economist at the King's Fund told Public Finance: 'It's unlikely to be cost-neutral, although that's the way they present it. With all the structural changes going on, as well in terms of primary care trust reconfiguration, that makes it even more unlikely. 'When you have that sort of management upheaval, there's often a kind of paralysis.'
King's Fund chief executive Niall Dickson also warned that the changes might not happen without a significant new injection of funds. 'Keeping the whole system going while encouraging local organisations to change the way they operate will not be easy,' he said.
But Hewitt told PF that the vast majority of the changes would have to happen over the two next years, and would need to be cost-neutral. 'What we're looking to do here is make better and more modern use of the enormous sums of money that have gone into the NHS already. By the end of 2008, we will have trebled NHS funding and, particularly over the next two years, we expect more of that growth money to be invested into community services rather than acute services.'
Hewitt added that 'modest amounts' of extra funding would be available from the Department of Health's central budget – primarily to fund new respite and advice services for carers. Capital funding would also be announced in the spring to finance new community hospitals and renovate existing ones. PCT funding will be increased by £5.4bn next year. However, DoH technical guidance published on January 26 advised that £3.8bn of that would be absorbed through NHS-specific inflation, such as pay awards and drug costs.
In addition to the changes in the white paper, the remaining £1.6bn will need to fund 'legacy issues' – PCTs' forecast £348m gross deficit and the estimated £600m unfunded additional costs of the new GP contract.
PFfeb2006
