The public spending watchdog has concluded that fundholding lacks accountability and threatens to undermine the Government's national strategy on health promotion, and disease-prevention targets.
Under the scheme, which now covers one in four of the population, GPs can set their own spending priorities, and 'shop around' for the best deals in hospital treatment.
But the Audit Commission believes the pendulum has swung too far in favour of those GPs who wish to pursue their own interests, sometimes at the expense of national objectives.
In reports published yesterday on the operation of NHS purchasing bodies, the commission suggests an alternative that could mean fundholding 'withering on the vine', or being phased out. It proposes that community and hospital services could be organised far more cost-effectively if district and family health service authorities carried out joint commissioning, giving GPs a big say in decision-making. David Browning, an associate director of the commission, told the Independent: 'The trouble with fundholding is that it is separate from the rest of healthcare commissioning. Also, how can one ensure that fundholders can deliver the Government's Health of the Nation (White Paper) targets?
'We need more co-operative arrangements. Fundholding was probably a pretty good idea to free things up, but as commissioning rolls forward, we may find that it is not a once-and-for-all policy. It becomes unnecessary.'
The Audit Commission report on family health service authorities (FHSAs), which supervise and monitor GPs, pharmacists, dentists and opticians, reveals that of the first wave of fundholders, 40 practices ended the year with surpluses in excess of pounds 100,000. Five had surpluses of pounds 200,000. Earlier this year, the Department of Health urged doctors to repay these surpluses to FHSAs, but they cannot compel them to do so.
The auditors cited 27 cases of family doctor fundholding practices setting unrealistic budgets. In March, the Far Lane Medical Centre in Sheffield was stripped of its fundholding status after running up a pounds 100,000
deficit and placing a block on the referral of patients with non-urgent conditions.
The Trent Regional Health Authority said it had failed to manage the fund 'effectively and efficiently'.
The Audit Commission reports state that with some exceptions, the purchasing of primary and secondary health services remains unsophisticated, partly because of the shortage of good information on which to base decisions.
But the better commissioning procedures are, the less relevant fundholding will become. 'Local agreements between commissioning authorities and GPs could start to blur the distinction between fundholding and non-fundholding status, while ensuring the activities of GPs are consistent with overall policy . . .
'The interests of patients are unlikely to be served if different bodies develop separate and independent strategies.'
Practices Make Perfect; The Role of the Family Health Services Authority and Their Health, Your Business; HMSO; each pounds 9.Reuse content