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Implementation of unified, cash limited budgets for health services means that resource decisions taken by any one practice in a primary care group will impact directly on others
General practitioners will have to take responsibility for limiting the growth in prescribing costs and hospital budgets
To manage their unified budgets effectively, general practitioners will have to work collaboratively with other practices in their group
Primary care groups will have to establish integrated information systems that include utilisation and expenditure data for all practices
Experience from New Zealand shows that professional leadership and a minimum of bureaucratic control are the key factors in success
In April 1999 major changes will start to take place in the organisation and delivery of health services in England.[1 2] For general practitioners, the most important changes will be the formation of primary care groups and the implementation of unified, cash limited budgets for health services. How will current methods of allocating NHS budgets in England change, and what can be learnt from experience in New Zealand and from total purchasing pilots?
Health authority budgets
Health authority budgets are largely used to pay for hospital and community health services, community prescribing, and the services supplied by general practitioners (general medical services). Health authorities are unable to transfer money from one budget to another and cannot use one budget to make up for a shortfall in another. For example, they could not use an "underspend" on the community prescribing budget to cut hospital waiting lists. However, general practice fundholders have had limited ability to move funds between different budgets. Unified budgets for health services will increase this ability to transfer funds between budgets and will extend it to all general practitioners.
Unified budgets in the new NHS
The new primary care groups in England will comprise about 50 general practitioners from all practices in a locality of around 100 000 patients. Although primary care groups will have differing levels of responsibility, all groups will have a unified budget for hospital and community health services, community prescribing costs, and general medical services infrastructure costs (used to reimburse general practices for their practice staff, premises, and computing costs). There will be no immediate changes to the national general practitioner contract, and general practices will continue to receive directly the various fees and allowances for providing general medical services that make up the bulk of their earnings.
The New NHS, published at the end of 1997, did not discuss unified budgets in great detail (see box), and it took some time for general practitioners to become aware of the implications. The main factor behind the introduction of unified budgets is the belief that making general practitioners accountable for the cost as well as the quality of health care will prove to be an effective method of tackling many of the problems facing the NHS.
Before a budget is allocated to a primary care group, some funds will be "top sliced" by the regional office from health authority allocations to pay for specialist services and other levies such as NHS research and development (see figure). Some funds will, in turn, be retained by the health authority to fund its own activities, to cover any overspending by primary care groups, and to act as a contingency reserve. The bulk of the remaining funds will then be allocated to primary care groups (figure). Primary care groups will have differing degrees of control over these funds depending on which of the four levels of responsibility they have achieved.
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A striking feature of primary care is the wide variation between practices in the use of resources; and to many managers, these variations suggest that resources are being used inappropriately by some …