Exclusive: CCGs can save £750m on tests

Huge variation in the cost of pathology tests in England is wasting millions of pounds in NHS funding and could put unfair pressure on GPs, official figures suggest.

Blood samples: data show cost of tests varies significantly
Blood samples: data show cost of tests varies significantly

Common pathology services used by GPs cost dozens of times more when provided by some hospital laboratories than others, 2011/12 data show.

The figures suggest efforts to address historical differences in provider costs have had little success.

Pathology in figures
  • 2m tests per day
  • £3bn cost to NHS each year
  • £750m savings possible

Source: DH

Meanwhile, GPs have faced PCT pressure to limit their use of the tests as the NHS looks to make savings.

GP leaders said the cost differences must be explained while the DH said the level of variation was 'unacceptable'.

Labour peer and former health minister Lord Warner criticised the 'painfully slow' progress on modernising NHS pathology. He said CCGs could save up to £750m to reinvest in primary care by changing how pathology services were commissioned.

Two million tests per day
Primary care accounts for 35-45% of the two million pathology tests conducted in the NHS each day. GPs have faced scrutiny over their use of these tests, including schemes in recent years to benchmark rates of inappropriate requests.

In 2008, a review by Lord Carter, also a Labour peer, found 'wide variation' in the costs of pathology tests between laboratories in England. He said the NHS could save £500m and improve quality by rationalising services. Last year, the DH published guidance to help commissioners enact Lord Carter's plan.

But data for 2011/12, published in December, suggest that large differences in costs still exist between providers. The average costs of common biochemical tests vary from 25p to £10.87 per test and blood tests from 24p to £13.28. Histology tests cost from £1.44 to £229.81 between hospitals and immunology from 65p to £31.91.

These costs include the price charged to commissioners as well as hospital overheads and other indirect expenses. They exclude hospitals conducting very small numbers of tests. Some laboratories incur higher costs as they provide specialist tests. But this does not fully explain the variation.

Speaking exclusively to GP, Lord Warner, who commissioned the Carter report as health minister, said the 'very considerable' differences persist because some laboratories are too small to offer cost-effective services. He said some hospitals may also be using pathology to cross- subsidise other services.

Lord Warner (pictured right) called on CCGs to 'bite the bullet' and band together to commission larger-volume contracts to save money and boost standards. In doing so, GP commissioners could make savings of up to £750m on the £3bn annual cost of pathology tests to reinvest in primary care, he said.

'They've got their commissioning budget and no one will take savings away. If they can save 20-25% on pathology, it can go into whatever they think is a higher priority,' he said. 'In the current state of public finances, that's quite a big prize.'

GPC prescribing lead Dr Bill Beeby said: 'Someone has to justify these costs. The variation is a lot.'

Unintended consequences
But Dr Beeby warned of unintended consequences from more competitive tendering of pathology. 'If it means the laboratory services for patients at the local hospital become more expensive as the contract goes somewhere else, how does that help the NHS overall?'

A DH spokesman said: 'Variations of this size are unacceptable. We expect the NHS to offer high-quality services that offer the best value for taxpayers. That is why we published guidance this year to support commissioners in their decision making.'

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