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21.08.15

Prices for private providers to drop by 7% under new NHS price structure

Proposed NHS price changes outlined in Monitor’s impact assessment for 2016-17 will cut nationally priced income of private providers by 7%, making them amongst the hardest hit by the new tariff.

The revenue reduction is largely caused by the cuts in orthopaedics prices, which have mostly fallen by more than 10%.

Orthopaedic services are responsible for a dramatic amount of the independent sector revenue within the state service, making up around 40% of the total private profit from NHS patients.

Providers of these services will be hit even harder, set to see a steep reduction in their operating revenue – which will drop by more than 7%.

The report said: “The large price changes in orthopaedics are similar to price changes we observed in our draft prices last year, but eventually decided not to implement due to stakeholder concerns.

“Last year the expert working group that advises us on orthopaedics prices, and other stakeholders, did not think those drafts prices accurately reflected the cost of these services.

“We are working to understand the underlying reasons for orthopaedics price changes, including considering whether further adjustments would be appropriate. These price changes may also influence our approach to price smoothing.”

Monitor and NHS England use the nation tariff to set national prices, as well as to establish rules that commissioners and healthcare providers must use to agree locally determined prices.

Given that current established prices are based on data from 2010-11 or 2011-12, the document also outlined proposed changes to start using data from 2013-14.

This will mean that new tariff will be calculated based on the average cost to NHS providers of delivering services in 2013-14.

According to Monitor’s 2016-17 national tariff proposals document, the payment system can help support the financial challenges in the NHS by “reimbursing efficiently incurred costs, incentivising behaviour change and aligning payment to new models of care”.

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