The commissioning systemThe principal fundholders in the NHS system are the NHS Primary Care Trusts (PCTs), that commission healthcare from hospitals, GPs and others. PCTs disburse funds to them on an agreed tariff or contract basis, on guidelines set out by the Department of Health. The PCTs receive a budget from the Department of Health on a formula basis relating to population and specific local needs. They are required to "break even" - that is, they must not show a deficit on their budgets at the end of the financial year, although in recent years cost and demand pressures have made this objective impossible for some Trusts. Failure to meet financial objectives can result in the dismissal and replacement of a Trust's Board of Directors, although such dismissals are enormously expensive for the NHS.[17>
