By Henry Featherstone, Head of Policy Exchange’s Health and Social Care Unit
The NHS was created so that there would be equal access to healthcare based on need, not ability to pay. But after 12 years of huge spending increases for the NHS there are still not enough GPs where they are needed most: the fifth most deprived Primary Care Trusts (PCTs) in England have an average of 54 GPs per 100,000 population on a needs-weighted basis compared to the fifth least deprived PCTs which have 65 GPs per 100,000 population.
Policy Exchange’s recent report, Which Doctor?, suggests the principal cause of this mismatch is the overly complex and ineffective system of NHS resource allocation. NHS funds are first allocated by the Department of Health to PCTs through an unpublished resource allocation formula, but even then these allocations do not match the amounts actually given. For example, Department of Health tables show that Richmond & Twickenham PCT is over funded by 23.8% according to the needs of its population, yet it is one of the fifth least deprived PCTs; while Leicester City, one of the fifth most deprived PCTs receives 7.5% too little funding. Second, funding for primary care services is then distributed from PCTs to GP practices by a different funding formula, but again distributions are unpublished and exactly how the funds are spent in each area are decided by the unaccountable PCT. So for example, two identical GP practices in different parts of the country could receive very different amounts of funding, despite having identical population needs.
But any benefit of distributing funds according to need is then masked by a number of additional fixed payments to GP practices which distort the market in primary care: the Minimum Practice Income Guarantee and Seniority Payments to GPs. These payments cost over £420 million annually – about 5% of the total for primary care services - and merely reward and entrench the existing inequitable provision of services because they are not linked to patient need. We suggest that these fixed payments should be abolished, along with the prohibition of the sale of GP lists, which further adds to market distortion by preventing the sale GPs practices at true and fair value.
However, we should also be clear that strengthening primary care – having more GPs - holds many answers for a cash strapped NHS: 76% of all activity takes place in primary care, but for just 11% of total NHS costs. And a wealth of evidence says that health systems that are oriented towards primary health care are more likely to deliver better health outcomes and greater public satisfaction at lower costs. For example, increasing the number of GPs by 10 per 100,000 population reduces all-cause mortality by 5.3%. Achieving this in the fifth most deprived PCTs in England could prevent over 1,300 deaths per year.
Our report proposes that resource allocation in the NHS should be distributed by the Department of Health, or by any new independent NHS board, to a much more granular level - down to individual postcode level of just 15 households - and that the second resource allocation process performed by PCTs should be abolished. The NHS resource allocation formula should be weighted on a capitation basis with just three elements: age, postcode and an additional ‘patient premium’ to act as an incentive to GPs to provide healthcare to patients in deprived areas with the worst health.
