The NHS – Regulating the accounts

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Clearly, the next Government must address the issue of NHS expenditure – £102 billion has been allocated to the NHS in England for 2010 - and the priority is to maximize returns from such a vast annual outlay. With a work-force in excess of 1 million, it is simply not credible to argue that there is minimal scope for savings. But, assuming – in line with the opinion polls - that Andrew Lansley becomes the next Secretary of State for Health, how should he proceed?

Whilst clinical matters will obviously be handled by doctors and nurses, financial issues should be the priority for Lansley, especially as UK public finances are so dire. In particular, he needs to set common – and unambiguous - accounting criteria for each hospital. By doing so - and by using Monitor as the Financial Regulator - it will become abundantly clear where the most serious inefficiencies lie. Of course, in some cases, there will be valid reasons for above average expenditure. But there is clear evidence that some Foundation Hospitals – certainly not all – have outperformed those lacking this status.

Furthermore, the separation of accounts will enable particular activities within hospitals to become progressively more subject to competition. Within that grouping are both imaging and pathology, both of which have historically been under-funded. Whilst undoubted progress has been made in reducing the imaging backlog, there is a strong case for establishing a genuine competitive market in imaging - with the latest expensive radiography equipment being funded by the private sector on the basis of projected long-term revenues. Investment in pathology is also desperately inadequate. Similar efforts should be made to set up a competitive – and modernized - pathology market.

In time, a few key players should emerge, who hopefully would establish the UK’s leading role in these fields.

These proposals may sound radical – but are they?