NHS Funding - a brief overview

Breakdown the Funding:

• The source of the NHS's income is general taxation as determined by government. The maximum rate is currently 40% and the main rate is about 23%.
  
• This is then split between the various areas of government expenditure as determined by government policy and the ability of the various spending ministers to argue their case.
  
• Once the overall level of funding is determined, the NHS split this between the various Health Authorities in accordance with a rather complex formulae, which basically looked at population levels and the type of population within the area - e.g. the number of elderly in the area. Before the 1991 reorganisation, this split was based on RHAs, using a formula called RAWP, which then performed a similar analysis on the areas. The RHAs covering the London region were given a higher weighting which is historically because they used to contain the nationally recognised hospitals. Naturally other Regions might dispute this :-). It has had a detrimental effect on primary care within the Capital as well with most of the money heading to the well known Teaching Hospitals.
  
• Since 1991, the re-organisation of the NHS lead to a greater degree of local autonomy with the receipt of moneys at the Health Authority (HA) level rather at the RHA level. Now that the HAs have their own budgets, they can look at their needs on a more local basis and use these needs to buy the health care they require from local hospitals. They will usually buy from the hospitals that the HA once ran, but there is no requirement for them to do so. They do not even need to buy their beds from NHS hospitals - a local HA actually used a local private hospital in order to ease bed shortages. Not a particularly popular move though!
  
• Hospital Trusts are then contracted to provide a certain number of beds and other resources over the year and if the HAs send more patients than they contracted for, they are liable for the additional costs. I have heard it said that the various Health Authorities did not used to bill each each other for this sort of work. Although technically true (i.e. an HA did not actually raise a bill) it is, of course, a load of baloney! The only thing that has really changed is that a charge is now raised against an annually agreed contract unless that particular procedure is not covered by the contract either by not being a service covered by the contract or by exceeding the number of procedures in the contract. In that case a bill was raised at the time. Prior to the 1991 re-organisation, the amount of work was calculated at the end of the year and 'billed' as an adjustment to the next year's budget figures. This was bad enough where the two HAs were within the same region. It was shear madness when they were of two different regions as well!

  Post 1997 and the election of the Labour Government the basic mechanism has changed again. The idea is that rather than running for a single year they will run for a three year period thereby giving the Health Authorities a greater degree of stability.

Glossary:

RAWP - Regional Allocations Working Party. The original committee that came up with the method of funding the various RHAs.

RHA - Regional Health Authority. The second level tier of NHS bureaucracy. A number of HAs were assigned to an RHA but it was not unknown for a single HA to be contiguous to it's RHA (i.e. one-on-one), usually in very rural areas.

HA - Health Authority. These are the people actually responsible for the provision of health care within a particular locality and are thus what people usually mean by 'the NHS'. Prior to 1991 they controlled all aspects of health provision within their area - deciding (within limits) what health care was required, what sort of primary care would be provided, then what sort of secondary care would be available at the hospitals. Now, after deciding what sorts of care are required, they will look at the hospitals in their area (usually) and at the specialties they supply along with the cost and buy in a number of beds at the start of a year. If they go over target, or require services they have not contracted for, they then pay on a per patient basis.

Hospital Trust - this is is the organisation tasked with actually running a group of hospitals. It is up to the management of these Trusts to decide what services they offer and how much they will charge the various HAs who wish to buy services from them.

Primary care - this is when you visit your local GP i.e. your first contact with the NHS. It is generally expected that you start off here. You can, of course, still just turn up at Accident & Emergency, though this is generally discouraged. There are trials afoot that allow GP services to offer small day-case surgery on-site and somewhat further down the road, the closer integration of hospitals within GP services.

Secondary care - the local hospital. You would generally be referred to hospital if your GP can not diagnose your complaint, or you require specialist care. Most hospitals will offer a basic core of specialties but many will also tend to find areas where they can specialise - a nearby hospital does nothing but study and treat cancer patients. The Trust for which I work is a recognised centre for Renal Transplants and Artificial Insemination. Indeed, the world's first test tube baby was conceived at Saint Mary's Hospital, part of the Central Manchester Healthcare NHS Trust. If you need really specialist care, for example a heart transplant or oncology (cancer), treatment you would get refered to one of these specialist units - tertiary care!

Most hospitals will only offer a limited range of services - they will not see enough cases of a particular type of case to make it worthwhile having that specialty in the unit, though someone suffering from that illness may, understandably, disagree with this policy. Teaching hospitals on the other hand are supposed to have as wide a range of specialties as possible whilst having a large number of beds for general surgery and medicine. Balancing these needs can prove... interesting <G>.

Order The National Health Service which discusses the history of the NHS

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