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Health Secretary Andrew Lansley Sets Out Next Steps for the NHS

In December, Secretary of State for Health Andrew Lansley published a paper that details the Coalition Government's long-term plans for the National Health Service (NHS). A follow-up to last July's "Equity and Excellence: Liberating the NHS," the new document, "Liberating the NHS: Legislative Framework and Next Steps," paved the way for the Health and Social Care Bill, which was introduced in Parliament in January.

The plan involves broad decentralization of the English NHS, including phasing out England's government-run Primary Care Trusts and strategic health authorities, and giving newly created general practitioner (GP) commissioning consortia—overseen by a new NHS Commissioning Board—80 percent of the NHS budget to directly commission (or contract out) health care, including hospital and specialist care, for their patients. The NHS Commissioning Board would also be responsible for issuing guidance to GP commissioning consortia.

The proposed reforms allow private companies to compete with the NHS. The bill proposes that Monitor, the independent body that currently authorizes and regulates only NHS Foundation Trusts, become a full-blown economic regulator responsible for managing competition and regulating the entire NHS marketplace.

The government consulted on its health reform plans from July until October of last year, during which time it received over 6,000 responses. "Liberating the NHS" includes modifications to the original proposal based on this feedback, such as creating a GP consortia pathfinder program to phase in the introduction of GP commissioning. The revised plans also broadly require Monitor and the NHS Commissioning Board to set prices together, whereas the original plans proposed that Monitor set prices, and the board have the ability to appeal. In addition, the latest document detailed a reversal of previously proposed plans for price competition: the plan no longer proposes differential pricing for different classes of providers in the NHS. The introduction of price competition in the NHS had been met with concern that competition on price would lead to a fall in quality.

"Liberating the NHS" was published in tandem with the NHS Operating Framework for 2011–12, which sets out what NHS organizations must do in the next year to prepare for the reforms. Notably, the Framework will expand the best-practice pricing for secondary care (hospital care and specialists) and the first value-based pricing in England. Value-based pricing is designed to pay more for approved clinical pathways and thereby encourage the use of cost-effective, peer-reviewed pathways to reduce variations, improve outcomes, and achieve long-term savings. Currently, the Department of Health fixes prices of hospital services based on diagnosis-related groups (DRGs), and hospitals' trusts can only compete on quality. The new best-practice pricing would be set higher than current DRG payment levels, but would effectively serve as a cap, below which hospitals could compete on price, if the new GP consortia agree. Payment levels of the best-practice tariffs would rely on meeting quality standards aligned with National Institute for Health and Clinical Excellence guidelines.

The Operating Framework also sets out the Primary Care Trust allocations which directly grants the trusts £89 billion to commission frontline services, including money for commissioning pharmacy services, dental and eye services, and, for the first time, to support social care, or care for vulnerable populations, including mental health services as well as social services such as education and housing. This funding represents an increase of £2.6 billion (US$4.3 billion) from the 2010–11 year, a roughly 3 percent increase.


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