GPs in England will be allowed to keep 50% of savings they make for the NHS by sending fewer patients for expensive hospital care, the government promised yesterday.
John Hutton, the health minister, said family doctors would not be allowed to put the surplus into their personal bank accounts. But the money would be regarded as a bonus for the practice, to be used to develop facilities for patients.
The proposal in effect reintroduces GP fundholding, a regime pioneered by the last Conservative government. Labour scrapped it soon after coming to power in 1997, because it disapproved of competition within the NHS.
Mr Hutton said the new approach - practice-based commissioning - would not repeat the mistake of Tory ministers of giving bigger budgets to fundholding GPs. There would be "no bungs and no two-tier system" allowing the patients of fundholders to queue-jump at the expense of others, he said.
Instead, practices will be given an "indicative budget", based on the number of patients on their lists and their health needs. The practice would benefit financially if it sent fewer patients to hospital for x-rays, tests and outpatient consultations that could be conducted within the practice or in the private sector.
For several years, hospital services in England have been commissioned by more than 300 primary care trusts.
Under the new system, the PCTs will retain responsibility for specialist commissioning of about 10% of the most complex conditions. They will also manage the invoicing and contract management for GPs.
But family doctors will be put back in the driving seat for decisions about the majority of medical services.
Initially, practice-based commissioning will be voluntary and GPs will continue to be allowed to use NHS services commissioned by the PCT. But the new system is expected rapidly to become the norm.
The move will alarm PCTs after signals from Downing Street that Tony Blair is disappointed with their performance. But Mr Hutton denied that they might not survive a third Labour term.
He said there was no danger of GPs choosing a cheaper, but shoddier, service for their patients.
From April, NHS hospitals would compete with each other for patients, but at a standard national price for each medical procedure.
"So there will not be local haggling or competition based on bargain basement-style rules. The issue will be quality, not cost," he said.
David Colin-Thome, the Department of Health's clinical director for primary care, said NHS hospitals provided 45m outpatient appointments a year, of which two-thirds were follow-ups. There were opportunities for GPs to perform some of this work in their surgeries.
For example, a patient with back pain who needed an MRI scan could be scanned using equipment in the local health centre and diagnosed without having to be referred to hospital.
Dr Colin-Thome, a GP whose Runcorn practice was a fundholder during the last Conservative government, said about 20% of x-rays were unnecessary.
Mr Hutton said: "GPs are not motivated to get out of bed in the morning by profit in their pocket. We are not offering them a Saab or plasma TV."
Hamish Meldrum, the chairman of the British Medical Association's GPs committee, described the plans as "interesting and potentially very far-reaching".
"We welcome the fact that there will be a right for all practices to have an indicative budget and that PCTs must work with practices to help them develop procedures for implementing this," he said.
"There are concerns about the absence of clear national guidelines and because of this we will want to issue detailed guidance to practices...
"If it is to be successful, this scheme must ensure both equity of access and quality of service for all patients and fair rewards for the practices that will take responsibility for managing these complex processes."
