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NHS hospital cuts that undermine Cameron’s claims

While Cameron claims he isn't cutting the NHS, the Department of Health admits it is cutting payments to hospitals.

While Cameron claims he isn't cutting the NHS, the Department of Health admits it is cutting payments to hospitals. Richard Blogger explains.

The NHS Operating Framework is the plan for the forthcoming financial year. It is used to announce the new working practices that trusts will have to follow and the details from the Department of Health of how the NHS budget should be spent.

The Operating Framework 2011/12, the document that covers the current financial year, says:

'Taking both the 2 per cent efficiency requirement embedded in the tariff design and the 2 per cent general efficiency deflator, off-setting pay and prices uplifts, results in an overall tariff reduction between 2010/11 and 2011/12 of 1.5 per cent. This 1.5 per cent reduction will apply to non-tariff services and is consistent with the current NHS Operating Framework statement that over the next three years tariff adjustments will not be better than 0 per cent.'

‘Tariff’ is the fixed payment that covers roughly half of all hospital treatments. It covers the common treatments like hip, knee and cataract operations, so depending on the range of treatments a hospital provides, tariff may provide the bulk of the income for a hospital. The Operating Framework says that every hospital has to make 4% “savings” every year. The NHS inflationary terms are assumed to be 2.5%, so taking this into account, the statement above says that hospitals will be paid 1.5% less (than the previous year) on everything it does (tariff and non-tariff services).

The Operating Framework 2012/13 covering the next financial year, was published last week. This document says:

'The national efficiency requirement for 2012/13 is 4 per cent. This will be offset by pay and price inflation. The tariff price adjuster will be a reduction of at least 1.5 per cent, and this will also be applied to non-tariff services. This will be confirmed in the 2012/13 PbR Guidance following allocations.'

(PbR stands for Payment by Results, the general name of the mechanism of paying a fixed tariff price per treatment.) Again, this states that hospitals have to make a 4% “efficiency saving” and that this will be achieved by cutting tariff (and non-tariff) payments by at least 1.5%.

At the NHS Chief Executives Conference last week, the Director General of NHS Finance, David Flory, said that the actual cut would depend on figures to be released by the OBR this week and that the cut could be as high as 1.9%. So, from April this year, NHS hospitals have suffered a cut of 1.5% on the payments received for care, and from April next year, NHS hospitals will suffer another cut of at least another 1.5%.

At the last election we were told by David Cameron that he would not cut the NHS, yet the Operating Frameworks for this year and next year both say that tariff and non-tariff prices will be cut by at least 1.5%. When is the Prime Minister going to live up to his election pledge?

Richard Blogger writes about the NHS and social policy at NHS Vault.

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