National Health Service (Licensing and Pricing) (Amendment) Regulations 2015

Lord Kakkar Excerpts

Tuesday 1st December 2015 Lords Chamber

[Lord Turnberg (Lab)]

My Lords, I must first apologise to the Minister for not appearing at his briefing yesterday and for coming late to his initial remarks. That will not stop me speaking, if I may.

The regulations are clearly designed to save money. They have little to do with correcting what is a major underlying defect in the tariff system: the perverse incentives that tariffs have introduced. My noble friend Lord Hunt has dealt pretty well with how the regulations were aimed at raising the threshold at which objections can be raised and, equally importantly, levelling the playing field to allow small providers with limited budgets to have the same voting power as very large teaching hospitals with billion-pound budgets, which provide more than 95% of the service. It is rather like non-league football clubs and those in the Premier League having the same voice in their commercial activities. The problem is that, to get 66% of all organisations, including all the small ones, puts those trusts that provide more than 90% of the service in hock to those who provide less than 10%. So it is not much wonder that the highly specialised hospitals—the Marsden and Great Ormond Street, the Institute of Neurology, the Christie hospital and so on—are voicing strong concerns about the impact on them. Of course, that is why the Government want to shackle them—to keep costs down—but that is at the risk of denying high-quality specialised care to those who need it.

All that has been well rehearsed by my noble friend Lord Hunt and other noble Lords. I really wanted to point out that the regulations do nothing to get round the unintended consequences and perverse incentives of the tariff system, which I raised with the Minister in a previous debate. That system encourages trusts to go down the route of using devices to gain higher incomes and discourages cross-referral between specialists within a hospital when a trust can gain two fees for two referrals from general practice. It discourages consultants from using phone-in follow-up out-patient clinics to save patients the need to travel in to be seen, as a visit to a hospital incurs a higher fee on the tariff. I agree with the noble Lord, Lord Warner, as he rails against the acute hospitals, but I do not necessarily agree with all his solutions.

I support my noble friend’s amendment. The regulations are unwarranted and damage those who provide the vast majority of the service, while doing nothing to get at one of the major defects in the tariff system.

[Lord Kakkar (CB)]

My Lords, I declare my interest as chairman of University College London Partners, an academic health science centre which has a number of important providers. The Minister made a very important point about the five-year forward view and the need to encourage new models of care working that ensure collaboration beyond institutional boundaries —and, indeed, to go further and look at new models of funding, including those of accountable care organisations. With a view to a potential journey towards more effective commissioning, and therefore more intuitive constructing of a tariff to support general acute services and more specialised services, will the proposals that the Minister brings to the House today aid that journey? Will looking at these regulations in the way proposed help institutions to work more effectively together, recognising the opportunity to look at tariffs that focus on pathways of care rather than individual segments of care, so ensuring the Government’s objective to ensure that valuable resources committed to the provision of healthcare are used most efficiently? There is a recognition that there will have to be greater attention to these matters as we go forward, and every opportunity should be used to ensure that that objective is achieved. One of the most important is the approach to setting the tariff and, therefore, these regulations.

[Lord Prior of Brampton]

My Lords, as always in these debates, we have had some pertinent and useful contributions. I shall take some of the points raised in reverse order. On the very important point raised by the noble Lord, Lord Kakkar, a profound change is happening in how we will deliver care over the next five years, which will be very much more based around a system rather than the institution. I think that the noble Lord, Lord Hunt, would agree with that; we will move from a payment-by-results system that has been very much based around individual pieces of care delivered in acute hospitals, to other payments systems, such as a capitation system or a whole pathway system. That is going to happen.