Select Committee on Health Memoranda


MEMORANDUM

Memorandum by the Department of Health

Table 4.8g 2:  Year on year comparison 1996-97 and 1997-98

DONATED CAPITAL ADDITIONS


Land
Buildings,
Installations
&
fittings
Assets
under
Construction
Equipment
Totals
1996-97
1997-98
1996-97
1997-98
1996-97
1997-98
1996-97
1997-98
1996-97
1997-98
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s

Northern & Yorkshire
0
0
1,278
2,392
284
594
4,976
4,731
6,538
7,717
Trent
0
0
1,122
1,864
28
420
3,648
3,304
4,798
5,588
Anglia & Oxford
0
0
1,990
2,302
490
1,874
3,786
4,016
6,266
8,192
North Thames
1,040
0
14,420
2,811
10,911
7,892
9,473
6,481
35,844
17,184
South Thames
0
78
6,543
6,668
6,206
7,937
8,211
7,034
20,960
21,717
South & West
0
0
2,312
3,364
924
2,234
5,403
4,552
8,639
10,150
West Midlands
0
54
858
3,038
575
609
4,182
4,907
5,615
8,608
North West
0
0
2,211
1,616
5,558
5,152
6,035
5,615
13,804
12,383
Total
1,040
132
30,734
24,055
24,976
26,712
45,714
40,640
102,464
91,539


4.8h  Could the Department list, by scheme, the amounts of monies allocated for the payment of external advisors to PFI schemes

Table 4.8h

PFI SCHEMES: PAYMENTS BY NHS TRUSTS TO EXTERNAL ADVISORS1

£'000s

NHS Trust
Total

Carlisle Hospitals NHS Trust
2,075
North Durham Health Care NHS Trust
1,701
Calderdale Healthcare NHS Trust
2,403
Norfolk and Norwich NHS Trust
4,429
Bromley Healthcare NHS Trust
4,241
Greenwich Healthcare NHS Trust
1,885
Wellhouse NHS Trust
4,400
Oxleas NHS Trust
778
Dartford & Gravesham NHS Trust
2,355
South Buckinghamshire NHS Trust
2,602
Worcester Royal Infirmary NHS Trust
2,417
South Manchester University Hospitals NHS Trust
2,766

1.  PFI schemes over 10 million that have reached FC by 31 March 1999


4.9  FHS EXPENDITURE ON PRESCRIBING

Could the Department provide information on (i) total FHS expenditure on prescribing for each year from 1992-93 to 1998-99, (ii) the average expenditure per capita, (iii) the total number of items prescribed and average number per capita, and (iv) the average cost per prescription? The Committee would also like to receive this information, for appropriate years, by non-fundholders and fundholders. Any commentary which the Department would wish to append would be welcome, including an assessment of progress in meeting its stated target of restraining "the growth in the drugs bill to sustainable and affordable limits".

Could the Department identify the expenditure on drugs described by the BNF as of doubtful value?

  1.  The information requested is shown in tables 4.9.1 and 4.9.2. While every effort has been made to ensure that as far as possible the information is provided on a consistent basis in all tables, for example in the use of population data, the basic source of the data is slightly different. Tables 4.9.1 is based on all prescription items dispensed in England, including a small number written by persons other than GPs and some written outside England, whereas Table 4.9.2 is based on items prescribed by GPs and practices in England which have been dispensed in Great Britain.

  2.  From 1999-2000, resources for prescribing form one part of health authority and primary care group unified budgets. This means that, for the first time, clinical and financial responsibility for prescribing will be aligned within the wider unified budget, giving greater freedom to choose the most appropriate form of treatment. To support this change primary care groups will be provided with regular management information on the prescribing patterns of their practices, and will implement local prescribing incentive schemes to encourage cost-effective prescribing at practice level. Additionally, the use of a prescribing formulary or increases in generic prescribing will be necessary for GPs to gain access to funds under the new quality payments scheme.

  3.  There is increasing non-compliance by a limited number of companies with the current voluntary PPRS agreement, which controls profits from the sales of branded medicines to the NHS. This is adding around £30 million per year to the NHS drugs bill at the expense of other NHS treatment and care. The Government concluded that to ensure full compliance with a new agreement reserve powers should be taken in the Health Bill. A new agreement is currently being negotiated with the Industry.

  4.  Progress continues to be made on other key initiatives. The successful outcome of Phases 1 and 2 of the "PRODIGY" research project, which tested the acceptability of computerised decision support to GPs, has meant that a first version will soon be made available to all GPs. A roll out of the current nurse prescribing scheme, which has been piloted for the last four years, has now begun. Suitably qualified nurses working in the community will be able to prescribe from a formulary suited to their patients' needs. The National Prescribing Centre (NPC) and the Prescribing Support Unit (PSU) have continued to provide support to medical and pharmaceutical advisors via bulletins and through the provision of analytical services.

  5.  The rate of generic prescribing in 1998-99 increased to 63.3 per cent (provisional estimate based on 11 months data), as against 60.7 per cent in 1997-98. The Service has been set a two-pronged target for the end of 2001-02; the generic prescribing rate is to rise to at least 72 per cent and half of all practices with a rate below 40 per cent in 1998-99 are expected to move above this.

  6.  Community pharmacies dispense around 90 per cent of prescription items. A deduction is made from the Net Ingredient Cost of these items to allow for the discounts that the pharmacies obtain when they purchase the items. These discounts are assessed on the basis of an annual discount inquiry. Recent inquiries have revealed additional discount enabling the discount deducted from qualifying items to be increased from 8.03 per cent in 1995-96 to 8.37 per cent in 1996-97, 9.31 per cent in 1997-98 and 11.01 per cent in 1998-99. Increased deductions have also been made from dispensing doctors, who dispense most of the remaining items.

  7.  The final outturn (cash) for 1998-99 is not yet available, but provisional returns indicate that the drugs bill increased by around 6.2 per cent, compared with 8.5 per cent in 1997-98. If this forecast is accurate then this will be the lowest growth in the Drugs Bill since 1984-85.

Table 4.9.1

PRESCRIPTION ITEMS AND EXPENDITURE 1992-93 TO 1998-99

England


Expenditure
Prescription Items
Financial
NIC
NIC/Head
Items
Items/
Head
NIC/Item
Year
£m
£
M
£

1992-93
2,926
60
430
8.9
6.81
1993-94
3,221
66
447
9.2
7.20
1994-95
3,488
72
462
9.5
7.54
1995-96
3,739
76
474
9.7
7.88
1996-97
4,072
83
487
9.9
8.37
1997-98
4,465
91
505
10.2
8.85
1998-99
4,799
97
516
10.4
9.30


Footnotes:

  1.  Source: PCA, PPA, England. Figures include all prescription items dispensed by community pharmacists, appliance contractors and dispensing doctors as well as items personally administered in England, for financial years April to March. Note that that in addition to prescriptions written by GPs in England, this includes those written by dentists, hospital doctors, (and, up to March 1994, armed services doctors and dentists) provided they were dispensed in the community. Also included are prescriptions written in Wales, Scotland, Northern Ireland and the Isle of Man but dispensed in England. The data do not cover drugs dispensed in hospital or private prescriptions.

  2.  The net ingredient cost (NIC) is the basic cost of a drug. This cost does not take account of discounts, dispensing costs, fees or prescription charge income. All figures are expressed at outturn prices.

  3.  Items refer to the number of prescription items, not prescription forms.

  4.  Population estimates are based on ONS mid-year estimates of the resident England population.

Table 4.9.2

PRESCRIBING DATA FOR GP FUNDHOLDERS AND OTHER GPS: 1992-93 TO 1998-99

Expenditure
Prescription Items
Year
£M NIC
£ NIC/head
Items (M)
Items/
head
£NIC/item

1992-93GPFH
356
56
51
8.1
6.93
Non-FH
2,545
61
372
8.9
6.84
Total
2,902
60
423
8.8
6.85
1993-94GPFH
741
61
102
8.4
7.29
Non-FH
2,451
67
339
9.3
7.22
Total
3,192
66
441
9.1
7.24
1994-95GPFH
1,155
68
151
8.9
7.65
Non-FH
2,313
74
306
9.8
7.56
Total
3,468
72
457
9.5
7.59
1995-96GPFH
1,442
72
182
9.1
7.93
Non-FH
2,263
79
286
10.0
7.91
Total
3,706
76
468
9.6
7.92
1996-97GPFH
2,017
79
242
9.5
8.33
Non-FH
2,005
85
237
10.1
8.45
Total
4,022
82
480
9.8
8.39
1997-98GPFH
2,416
89
275
10.2
8.77
Non-FH
1,998
91
222
10.1
9.00
Total
4,415
90
497
10.2
8.87
1998-99GPFH
2,811
93
300
10.0
9.38
Non-FH
1,927
100
209
10.9
9.20
Total
4,738
96
509
10.3
9.31


Footnotes:

  1.  Source: PACT/PACTLINE data, PPA. Figures are for items prescribed by GPs in England and dispensed during the months April-March.

  2.  Expenditure is quoted throughout in Net Ingredient Cost (NIC) terms for comparison purposes.

  3.  Items refer to the number of prescribed items, not prescription forms.

  4.  Population estimates are based on the ONS mid-year estimates of the resident England population.

  5.  The cost per head figures assume the following fundholder population coverage:

    1992-93 13 per cent

    1993-94 25 per cent

    1994-95 35 per cent

    1995-96 41 per cent

    1996-97 52 per cent

    1997-98 56 per cent

    1998-99 61 per cent

DRUGS HIGHLIGHTED IN THE BRITISH NATIONAL FORMULARY

  7.  Drugs which the Joint Formulary Committee (JFC) consider to be less suitable for prescribing are included in the British Formulary. Up until last year, such preparations were shown on small type. They are now shown in normal typeface and highlighted with a flag symbol.

  8.  Parties outside the Department have described these preparations as "drugs of doubtful value" which is incorrect. The latest version of the BNF (March 1999: No 37) states that although such preparations may not be considered as drugs of first choice, their use may be justifiable in certain circumstances.

  9.  Reasons for considering the preparations as less suitable include:

    —  A view against the general principles of combination preparations ie those products which within the same solid dose, liquid or inhaler formulation contain two or more drugs. The dose ration being fixed may be inappropriate as it does not allow the dose of one component being altered without similarly altering the other or it may not always be appropriate, even to the same patient, to give the component drugs at the same dosing intervals.

    —  alternative drugs (often newer drugs) are available which have a better risk/benefit ratio accepting at the same time that GPs should not change patients from preparations on which they are well controlled.

    —  such drugs should only be used in limited circumstances ie when other treatments have failed or are unsuitable for the individual patient.

  10.  In other words JFC's view is that while GPs should consider prescribing alternative drugs to those flagged, there may be reasons why the flagged drug should be prescribed after such considerations. The alternative drugs may or may not be cheaper.

Expenditure

  11.  In 1998, around 30 million items of highlighted drugs were dispensed in the community in England. The net ingredient cost of these drugs was in the region of £107 million. The net ingredient cost is the cost of a drug before discounts and does not include any dispensing costs or fees.

  12.  The information is based on an analysis of all prescriptions dispensed by community pharmacists, appliance contractors and dispensing doctors, as well as items personally administered in England. Total prescriptions include not only prescriptions originating from general medical practitioners in England but also from dentists and hospital doctors provided they were dispensed in the community. Also included are prescriptions written in Wales, Scotland, Northern Ireland and the Isle of Man but dispensed in England. The data do not cover drugs dispensed in hospital or private prescriptions.

  4.10  Allocations to National Specialist Services

  What was the total allocation in 1997-98 and 1998-99 to each of the supra regional services and what is the planned allocation for 1999-00; and what significant changes have there been in the overall pattern of expenditure?

  1.  The expenditure on each of the supra regional/national specialist services in 1997-98, 1998-99 and the service agreement value for 1999-2000 is given in Table 4.10.1.

    2.  The National Specialist Commissioning Advisory Group (NSCAG) was established in April 1996 to advise Ministers on the identification and funding of services where central intervention into local commissioning of patient services was necessary for reasons of clinical effectiveness, equity of access, and/or economic viability. NSCAG superseded the Supra Regional Services Advisory Group.

    3.  One new national service is to be centrally funded from 1 October 1999:—

    Amyloidosis

    A diagnostic, assessment and management advisory service for Amyloidosis, to provide specialised investigations and advice to patients and clinicians on the appropriate management of the disease. One centre, The Royal Free NHS Trust has been designated to provide the service.

  4.  There have been no other significant changes to the overall pattern of expenditure.

  5.  In 1999-2000 the NHS Executive holds service agreements with 41 individual national specialist units.

Table 4.10.1

SUPRA REGIONAL SERVICES AND CENTRALLY COMMISSIONED SERVICES 1997-98, 1998-99 AND 1999-2000

£'000s

Total Expenditure
£
Service Agreement
£

Service Unit
1997-98
1998-99
1999-2000
UnitTotal UnitTotal UnitTotal

Choriocarcinoma
Weston Park, Sheffield436 440444
Charing Cross, London930 1,3669501,390 9781,422

Craniofacial
Radcliffe, Oxford 745 830944
Great Ormond Street, London910 965 1,087
Birmingham Children's Hospital701 783 819
Alder Hey, Liverpool 715 3,0716773,255 7113,561

Inpatient Psychiatric Service
for Deaf Children and Adolescents
The Springfield Hospital 636636 823823

ECMO
Freeman, Newcastle585 552570
Glenfield1,744 1,5761,731
Great Ormond Street 1,822 4,1511,5773,705 1,7164,017

Gaucher's Disease
Addenbrooke's Cambridge416 421 410
Great Ormond Street, London157 160 164
Manchester Children's Hospital157 97 99
The Royal Free Hospital 730225903 230903

Gynaecological Reconstruction
Hammersmith Hospitals 266266272 272

Heart Transplantation
Northern General, Sheffield38 38*
*Due to PGO payment error in 1996-97

Treatment of Established Intestinal Failure
The Hope Hospital 4,1344,275
Northwick Park 2,8827,0153,075 7,351

Liver Transplantation
Addenbrooke's Cambridge3,770 3,820 4,060
King's College, London7,030 7,321 7,775
Queen Elizabeth, Birmingham5,637 5,571 5,918
Birmingham Children's Hospital1,724 2,156 2,356
St James's University Hospital3,455 3,646 4,001
Royal Free Hospital, London2,472 2,334 2,643
Freeman Hospital, Newcastle2,479 26,567 2,55927,408 2,75429,509

Ocular Oncology
Royal Liverpool466 507514
Moorfields & St. Bartholomew's, London 1,1591,294 1,306
Royal Hallamshire5302,155 5672,368595 2,416

Paediatric Liver
King's College, London2,740 2,927 3,217
Birmingham Children's Hospital1,345 4,0851,3824,309 1,4484,665

Endoprosthetic Replacement for Primary Bone Tumour
University College, London1,520 1,625 1,745
Royal National Orthopaedic, London1,854 2,156 2,099
Royal Orthopaedic, London2,012 5,3862,2165,998 2,3126,155

Retinoblastoma
St Bartholomew's Hospital1,062 1,0621,2711,271 1,2841,284

Severe Combined Immunodeficiency and Related Disorders
Royal Victoria Infirmary, Newcastle1,751 2,255 2,309
Great Ormond Street, London1,203 2,9531,7644,019 1,6403,949

Severe Personality Disorder Service 2,7062,706 4,8394,839

Total Anorectal Reconstruction (procedure evaluation)
Royal London484484 435435551 551

Small Bowel Transplant )
(procedure evaluation) )
Addenbrooke's Cambridge78 68) 1,074
Birmingham Children's Hospital133 485 )
St James's62272 10563)
* Payments will be
made as and when
transplants or
assessments in
transplant occur

Amyloidosis
Royal Free, London 410 410

TOTAL52,321 66,249 73,201


4.11  MANAGEMENT AND ADMINISTRATION COSTSCould the Department report on work to develop a single measurement of management costs for PCGS and health authorities? Has the Department finished its review of the basis for measuring NHS trust management costs? Could the Department provide a commentary on this? Could the Department update Table 4.11.1? What progress is being made to reduce management/administration costs in line with the Government's commitment?

  1.  In March 1999 integrated guidance on definitions for HAs and PCGs for 1999-2000 was issued. From 1 April 1999 HA costs ceilings were raised to allow for the inclusion of PCG management costs, and PCG management costs are reported within their host HA's return.

  2.  The definition for PCG management costs draws a distinction between the activities that are primarily concerned with the management and administration of the PCG's budget and its responsibilities as a commissioning body and those activities that are the clinical responsibilities of PCG members.

  3.  For instance, PCG members' involvement in clinical development activities and which relate to their clinical expertise and responsibilities are not classed as management and, in common with the Trust definition, the costs of support staff which directly contribute to the clinical processes and arrangements for patients are not considered to be part of PCG management costs.

  4.  A review of the definition of Trust management costs was conducted during 1997-98. In the light of this, a number of changes were made to improve comparability and provide a fairer basis for setting targets. This new definition was implemented to support target setting for 1998-99.

  5.  The new definition is a much more robust measure of Trust management costs and incorporates managerial costs which escaped inclusion under the old definition in particular contracted out services and consortia arrangements. It also allows nurse managers to apportion their time between clinical and managerial responsibilities and increases the salary threshold for identifying managers. These changes mean that clinical duties are not counted towards management costs.

  6.  The net effect of these changes is an increase in recorded Trusts management costs of £100 million.

  7.  Table 4.11.1 shows trends in NHS management costs since 1995-96, including planned NHS management costs for 1998-99 on the current definition. Reductions implemented by this Government will be demonstrated against the 1996-97 baseline of £1,838 million.

Table 4.11.1

NHS MANAGEMENT COSTS 1997-98 TO 1998-99

£ million

1996-97
plan
1997-98
plan
1997-98
(rebased)
1998-99
plan

HA
451
4391
4102
408
NHS Trusts
1,233
1,211
1,3202
1,315
GPFH
154
150
150
135
Total
1,838
1,800
1,879
1,858


Footnotes:

1  Definition of HA costs changed slightly for 1997-98. Under the previous definition, this plan would have been £444 million.

2  1997-98 plans were "rebased" to set fair management cost targets for 1998-99, in light of changes of definition of HA and NHS Trust management costs. (Refer para 7 for changes to HA definition, and para 9 for changes to definition of NHS Trust management costs.

  8.  A series of actions have been taken to reduce NHS management costs. On the back of this, we estimate that by the end of 1999-00, nearly £1/2 billion that would otherwise have been spent on bureaucracy, will have been released for direct patient care.

  9.  This has been achieved through targeting reductions in NHS management costs of £84 million in 1997-98, £73 million in 1998-99 and £40 million in 1999-00.

  10.  Savings have been, and will be, achieved through a range of actions including replacing the annual contracting round with long-term agreements, abolishing ECRs and cost-per-case contracts and moving from GP fundholding to inclusive Primary Care Groups, thereby reducing the number of commissioning bodies.

  11.  In addition to these changes, action will continue to reduce management costs in "outlier" NHS trusts and there will be greater emphasis on the importance of sharing corporate services in order to achieve economies of scale.

  12.  There is no accepted definition of NHS administration costs. We have in recent years used NHS management costs figures, available from audited accounts of HAs and NHS Trusts, in reply to questions about NHS administration.

4.12  Activity Data

Could the Department update the information given in Tables 4.12 showing activity data by region for 1997-98 and 1998-99, including: total activity, with trends; activity by In, Day-Case and Outpatient; maternity and simple access data? Could the Department provide figures for the ratio of Finished Consultant Episodes (FCEs) to hospital spells by Region for the same period? To what extent do a relatively small number of providers depart from the overall pattern? What value does the Department place on the collection of data on FCEs?

  1.  The updated activity data are shown in the tables 4.12.1 to 4.12.11. The new Regional structures became effective from 1 April 1999 and it has not been possible to map back the historical data to reflect the changes that took place. All data is therefore based on the eight Regional Offices that existed before the changes.

Notes on Table 4.12.1

  2.  Data for 1996-97 and 1997-98 have not yet been adjusted for shortfalls in data. However, they are on the same basis so are therefore comparable. The 1996-97 HES data differs slightly from that provided in last year's submission because, unlike last year, it has not been adjusted for shortfalls. Last year a crude method was applied to uprate 1996-97 data used in the table for comparison with finalised 1995-96 data. Adjustments for shortfalls in data, using a complex methodology, are applied to the full dataset only when the data is considered to be final.

DATA Quality

  3.  HES data have been affected by the change to data flows through the NHS Wide Clearing Service (NWCS) in 1996-97, through which all HES data now flows. This was a major technical change for the NHS and it particularly affects 1996-97 HES. Consequently provisional HES data for 1996-97 is less complete for some Regional Office areas than others. However cross checks suggest the figures are representative enough for the purposes of the tables. By 1997-98, many of the problems with the quality of the data flowing through the NWCS had been resolved but there are still some outstanding issues locally. A more complete, revised, dataset for 1996-97 and 1997-98 will be made available shortly.


 
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