Sally Gainsbury: the mutating baseline

His department have done it over the years on management costs; innumerable times on services devolved from the centre to regions; on the specialist acute budget; and will doubtless do it again when the time comes to count up the “£20bn” saved through the quality, innovation, productivity and prevention programme.

And now poor Jeremy Hunt has discovered NHS commissioners and hospitals have taken a leaf from the department’s own book when it comes to implementing the marginal 30 per cent tariff for emergency admissions.

‘The intention of the policy was to coerce commissioners and providers into conversations about reducing demand for emergency services’

This policy − first introduced for 2010-11 − established that hospital trusts should only be paid 30 per cent of the tariff rate on emergency admissions which exceeded their 2008-09 volumes.

Although seemingly designed to siphon surpluses out of evil hospitals for deigning to treat sick patients, the stated intention of the policy was to coerce commissioners and providers into conversations about reducing the demand for emergency services.

The theory went that commissioners, having failed up to then to address the shoddy primary care that often fuels rising emergency admissions, would suddenly feel incentivised to do so if the financial cost of that failure fell on hospitals, not them.

Sleight of hand

Perhaps unsurprisingly, the policy was not properly implemented, because NHS managers do just what civil servants do when faced with an illogical policy or unworkable budget: they fiddle it.

In practice this has meant hospital trusts and commissioners up and down the country have come to their own agreements over what precisely the baseline should be for determining when the punitive 30 per cent rate should kick in.

For some this has been the prior year’s volume, for a few it has even been 2008-09, but for most it has been whatever number commissioners and providers agree through their annual contract negotiations, based on a more or less realistic analysis of the state of services and population health – and then divided, of course, by the available budget.

‘The downside for the health secretary is he is still missing the £400m he thought he had’

This is frustrating for the secretary of state, but makes sense for local NHS organisations, where the real life business of running a health service – such as dealing with increased numbers of emergency patients after the downgrade of a neighbouring hospital – has got in the way of Whitehall theorising.

The downside for the health secretary is he is still missing the £400m he thought he had, but the lesson in the realities of NHS management could be, as they say, priceless.

Sally Gainsbury is a news reporter for the Financial Times