www.nhsexpose.co.uk

Reply From James Robertson Of The National Audit Office

Dear Mr Perkin

Thank you again for the information about this, which you forwarded to me in our exchange of emails on 8 January.

The cost of hip replacements and the range in the cost figures is an important issue.  As Sir Nigel said at the PAC Hearing, there may be accounting issues and there will of course be some variation to reflect case mix and other genuine cost factors.  The move to the national tariff will no doubt bring some of these points into greater relief.

The broader questions about the National Tariff, which you raised, are interesting ones.  It was helpful to see them set out so clearly.  As you may know, the Department of Health has now announced the roll-out of financial flows to NHS Foundation Trusts for additional activity from April 2004 and to all NHS Trusts from April 2005.  In August 2003 it issued a consultation paper Payments by Results Consultation: Preparing for 2005 . The consultation paper recognised that there are still a number of unresolved issues in the effective application of payment by results and sought responses on these issues by 31 October 2003.

On the specific points raised on your website,

•       the Department has proposed that the tariff for 2005-06 will be based on spells, rather than Finished Consultant Episodes as at present; and

•       on the application of the Market Forces Factor, the consultation paper noted that “adjusting the tariff of individual providers means that we are using the Market Forces Factor for something that it has never been used before” and that “further work is needed, therefore, to ensure that the Market Forces Factor is the most appropriate mechanism for setting prices”.   Further details are available at http://www.doh.gov.uk/nhsfinancialreforms/consultation03/index.htm

Thank you again for raising the issue of the costs of hip replacements with us.  The more general issues are certainly important too.

James Robertson