Cost of red tape strangling NHS

THE cost of red tape in the market-driven NHS is indicated by new figures from a London teaching hospital, which is sending out 2,000 bills a month to GP fundholders and health authorities, with a handling cost of each invoice up to pounds 25.

In some cases at St George's Hospital, the administrative costs surrounding the form-filling approach the value of the bill, according to Dr Barbara Ghodse, service contracts manager with St George's Healthcare.

The bureaucracy surrounding the internal NHS market has grown dramatically since reforms began four years ago, and will continue to enlarge as more GPs become fundholders and buy services for their patients. In the purchaser- provider split, hospitals, usually the NHS trusts, bill the health authorities for treating people from each authority's area. The hospitals also bill GP fundholders.

Dr Ghodse said: "We are handling more than 2,000 invoices a month, two thirds of which relate to GP fundholders, and the vast majority of which are for single outpatient appointments worth an average of pounds 50. The remainder relate to so-called extra-contractual referrals, bills sent to health authorities for the cost of treating people from their area.

"The Audit Commission has estimated that the average staff cost for an extra contractual referral, which is similar to a GP fundholding invoice procedure, is about pounds 25. Before the NHS reforms, there were no bills such as this because health authorities ran the hospitals. There were no purchasers or providers.

"The transaction costs are very high. It's not simply sending out an invoice, there are queries, non-payment has to be chased up, and other factors. If a patient comes here on three separate occasions, it means three invoices.

Dr Ghodse also carried out research this year on one health authority in London and estimated it was spending pounds 300,000 a year on handling extra- contractual referrals.

In a report in the British Medical Journal, she said: "The implications are considerable. The most important concern relates to the administrative paperchase after each extra-contractual referral."