21 July 2006
The Department of Health has admitted that its payment by results hospital funding scheme has led to a deterioration in care for older people, has 'not worked' for specialist children's hospitals and involves currently unfunded administration costs.
Speaking to Public Finance, the DoH national director for older people, Professor Ian Philp, said it was 'essential' the PbR tariff was reformed. At present, it acts as a 'perverse incentive' for hospitals to discharge patients early to make savings on rehabilitation times, he said.
'There is anecdotal evidence that some rehabilitation services are being scaled back. Certainly, acute hospital provision of rehabilitation services have been. There has been some disinvestment,' he said.
The latest DoH statistics reveal that emergency readmission rates have increased by almost a third, from 5.5% of all admissions in April 2003 to 7.1% of all admissions in April 2006. Philp admitted that part of that increase could be due to hospitals attempting to discharge elderly patients too early.
Under the current PbR tariff, hospitals receive a lump sum for each procedure which includes funding for both classic 'acute' services, such as operations, and post-operative rehabilitation.
Philp said that the DoH was now exploring ways to 'unbundle' the tariffs, so as to ensure that hospitals could 'concentrate on what they are good at – acute care' – and be reimbursed fairly for that work. A proportion of the tariff price would be separated and made available for community services to provide rehabilitative services through care homes and domiciliary care.
New 'unbundled' tariffs for four types of common procedure – including elective hip replacements – will be in place from April 2007, said Philp, and would be a 'key driver' in achieving the 5% shift of the hospital budget (£2.4bn) to social care that Health Secretary Patricia Hewitt is seeking.
Philp's comments came as health minister Lord Warner admitted that the tariff had also created problems for children's hospitals, whose specialisms were not fully covered. Three hospitals in Liverpool, London and Sheffield would now receive a supplementary £9m between them this year and next, he said.
Warner also said he now accepted that PbR meant extra administration costs for hospitals and primary care trusts.
This followed the DoH's publication of an independent study, which found additional costs of between £100,000 and £180,000 for an individual hospital and £90,000 and £190,000 for a PCT. That could add up to between £55.1m and £107.7m in new administration costs per year across England's 279 hospital trusts and 303 old-size PCTs.
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