House of Commons - Public Accounts

Select Committee on Public Accounts Sixteenth Report

3 The costs of the new out-of-hours service

THE NEW GENERAL MEDICAL SERVICES CONTRACT NEGOTIATIONS

17. The new General Medical Services contract was negotiated during 2002 and 2003. The formal negotiations were conducted between the NHS Confederation, the NHS employers' organisation, and the GP Committee of the British Medical Association. In conducting the negotiations on behalf of the Department, the NHS Confederation received a mandate from the Government setting out parameters for the negotiation, in terms including outcomes or services to be provided, and resources. The actual outcomes of the negotiations came from the ebb and flow of discussions between the parties. However, the Department was an observer to the negotiations and approved the outcome reached.[21]

18. The new contract allowed GPs to opt out of responsibility for the out-of-hours service, at an average cost to them of £6,000 a year. The figure of £6,000 came from the negotiations and was not designed to reflect the full cost of providing the service. Since 1995 out-of-hours services have received additional central funding from an out-of-hours development fund, which in 2005-06 totalled £92 million. During 2005-06 the Department augmented its initial out-of-hours funding of an average of £9,500 per GP, including the £6,000 forgone by GPs, to an average of £10,700 after introducing new arrangements for commissioning NHS Direct.[22]

19. The Department believed that new arrangements were good value for money because the contract was designed to secure better recruitment, retention and working arrangements for doctors. In the past three years GP numbers have increased by 3,000.[23]

BREAKDOWN OF ACTUAL COSTS FOR THE NEW SERVICE

20. The Department's allocation of funds to Primary Care Trusts for the new out-of-hours service took into account both the £6,000 forgone by GPs and the development funds previously provided to Primary Care Trusts. The figure of £6,000 for the opt-out sum had been widely used in the media and some Primary Care Trusts did not understand the difference between this amount and the initial out-of-hours funding sum of £9,500, despite the Department's programme to educate them.[24]

21. The total allocated by the Department to Primary Care Trusts for out-of-hours in 2005-06 was £322 million. However, the National Audit Office's survey of Primary Care Trusts in September and October 2005 showed likely actual spending in 2005-06 of £392 million, £70 million over the allocated amount.[25]

22. The Department told us that Primary Care Trusts' outturn spending on out-of-hours services in 2004-05 was around £100 million more than allocated, and that in addition Primary Care Trusts spent around £150 million more than allocated on paying GPs under the new Quality and Outcomes Framework. The Department expected the outturn for 2005-06 to be broadly similar. However, increased allocations to Primary Care Trusts meant that the shortfall in funding that Primary Care Trusts needed to manage in 2004-05 was limited to £155 million. Altogether, spending was forecast to have risen by between 40 and 50% over the three years 2002-03 to 2005-6.[26]

THE PROSPECTS FOR MAKING SAVINGS

23. The amount Primary Care Trusts reported that they spend per head of population on out-of-hours services varied widely between Primary Care Trusts. There was no correlation between cost and the quality of the service but some link to how rural or urban the Primary Care Trust was. If all Primary Care Trusts with a cost above the median for their type of area could reduce their cost per head to that of the median the result would be a reduction in total cost of some £53 million a year.[27]

24. The Department intended to ask each Primary Care Trust to look at its costs in the light of best practices, using cost benchmarks. It was up to individual Primary Care Trusts to find these efficiencies and it was therefore not possible to put a precise figure on what savings could be made, but if Primary Care Trusts matched their benchmarks it would make a big difference. One important factor was the rates of pay agreed locally for GPs working in the out-of-hours service. For example, for one type of shift these varied between £19 and £114, and it was evident that in some cases GPs had driven a hard bargain. To support Primary Care Trusts in realising savings, the Department wrote to Primary Care Trusts on the day of publication of the National Audit Office report asking them each to review their position relative to others. Subsequently, the Department also reviewed its guidance on commissioning with the help of the National Audit Office, and hosted a conference with the National Audit Office for Primary Care Trusts and providers.[28] Looking forward, the forthcoming White Paper on urgent care represents one of many opportunities the Department has to make practical improvements to the out-of-hours service by implementing some of the Committee's recommendations.



© Parliamentary copyright 2007	Prepared 14 March 2007