NHS hospitals face four year spending squeeze after labour’s cuts

NHS hospitals are to face a four year spending squeeze in an attempt to drive up their productivity.

The so called tariff, or price paid per treatment, which covers about 70 per cent of the income of a typical NHS hospital as well as private ones that take NHS patients, is to be frozen for the next year. It will go up by a “maximum” of zero per cent for the subsequent three years – implying that it could actually be cut.

NHS hospitals will also have to make efficiency savings of 3.5 per cent next year. Where they treat more unplanned admissions than in 2008 they will be paid only 30 per cent of the tariff price – a move aimed at getting them to work with their primary care trusts to prevent unnecessary unplanned admissions.

The moves “will drive all providers to become as efficient as the highest performers”, Andy Burnham, health secretary, said in a document that sets out how he believes the NHS needs to change over the next five years.

Family doctors, who face a pay freeze next year, will also be told they have to hand back at least 1 per cent of their expenditure to primary care trusts in ­cash-releasing efficiency savings.

The strong pressure on prices will either help drive the productivity improvements that the NHS needs to achieve savings of £15bn to £20bn over the next few years, or plunge hospitals that fail to adapt into financial crisis.

Mr Burnham denied that this could mean hospital closures, but said “that hospitals will have to change” with more patients treated in the community.

The best Foundation Trusts were to be allowed to take over community services in an attempt to provide more integrated care, possibly including GP services. And over the next few years up to 10 per cent of the treatment price would depend on surveys of patient satisfaction, the aim being to create “a people-centred service”, Mr Burnham said.

The NHS was to be protected from inflation after 2011, meaning the big spending rises of recent years were being “locked in”, he added.

The Conservatives, however, pointed out that NHS employers would have to pay more than £400m in higher national insurance contributions from that year, creating “a real terms cut” in NHS spending.

Across the country, it will raise more than £9bn, while the Treasury says the inflation protection the NHS is being offered will add about £3.7bn to spending by 2012-13.


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