Andrew Lansley: competition, NICE and payment reform

Blog post

Published: 14/04/2011

Andrew Lansley, the Secretary of State for Health, arrived at the Nuffield Trust summit intending to announce some new developments in Payment by Results.  But the questions and debate following his speech came to be dominated with other questions, including whether the government really plans to introduce competition on price and abolish mandatory NICE guidance in the future.

The audience was rewarded with clarity on the first question. There would be no competition on price, he explained. There will be either a national tariff (most of the time) or a locally determined tariff.

The use of the term ‘maximum tariff’ in the White Paper and subsequent Bill, which had triggered alarm bells about the Governments’ intention to allow competition on price below this maximum was “simply about setting local tariffs where it makes sense. The NHS sets the tariff and gets competition against this price”.

In response to those hoping for a steer on whether NICE guidance would still be mandatory beyond 2014 when the government plans to switch to value based pricing, the Secretary of State would only say that the current system was not satisfactory: NICE makes rationing decisions using a “threshold methodology that has no objective basis…and you’ve got Primary Care Trusts who are exercising a whole process of their own in addition to that”. 

The shift to value based pricing would mean that: “We, nationally, through the Department of Health, have relieved people of that responsibility, of having to say no, we don’t want that new medicine, because it costs too much in relation to the benefits”.  If a medicine has a benefit, it shouldn’t cost too much under the new system, explained Mr Lansley.

The speech itself offered a detailed exposition of the latest developments in the Payment by Results reimbursement system: more best practice tariffs and more opportunities to both bundle and unbundle tariffs to support care that is delivered in the right place and to shift NHS trusts away from a fee for service, volume-focused mentality.

Mr Lansley has come under fire for failing to provide a compelling, overarching narrative for his reforms.  However his response to a question on the repeated failures to provide humane care to older people in hospital did give some insight into his motivations.

In relation to Mid Staffs he asked a question that has crossed many people’s minds: where were the GPs? “The GPs were there, they sent the patients to the hospital” said Mr Lansley. One GP told him how he had written to the Chief Executive and Medical Director with his concerns about a patient who had died. There was no response.

It is this that the reforms are designed to change, explained Mr Lansley: no more “refer and forget” but GPs acting as “constant advocates” for better quality care.

Suggested citation

Thorlby R (2011) ‘Andrew Lansley: competition, NICE and payment reform’. Nuffield Trust comment, 14 April 2011.