Finance and Funding in an NHS Organisation

Emma Partridge – NHS Capital Manager

and

Louise Stead – NHS Contracts Manager

Agenda

• Background of NHS and HEFT• How the NHS is funded• Performance targets• Current issues within the NHS• Working for the NHS/Finance

Background of the NHS and HEFT

Background of the NHS

• Britain pre-war• Labour Gov’t 1945• Launched in 1948 budget £437m• 2011/12 budget of £106bn• Serves population of 61m people• Employs 1.7m people (4th largest employer in

the world)

Structure of the NHS

Foundation Trust Status

Means the freedom to make decisions

- Manage own budgets- Manage operational services- Tailored to meet needs of local population- Regulated by Monitor

Structure

Background of HEFT

• Originated as a small fever hospital• Number of mergers took place• One of the largest Trusts in the UK• Based over 3 main sites and many satellite

units• Gained Foundation Trust status in 2005• 2nd largest employer in Birmingham (over 11,000 employees)

Clinical Activity at HEFT

Also Birmingham Chest Clinic. We also have a number of smaller satellite units so people can be treated as close to home as possible.

618 Acute Beds39 Paediatric Beds64 Maternity Beds

17 ITU / HDU

493 Acute Beds14 Paediatric Beds39 Maternity Beds

12 ITU / HDU

229 Acute Beds3 ITU Beds

HEFT Activity Facts & Figures (11/12)

Also: Renal Dialysis, Cystic Fibrosis, HIV patients, GUM, Bone Marrow Transplant, Blood Bank, Assessment Areas………………

Heartlands

HospitalSolihull Hospital

Good Hope Hospital HEFT

A&E Attendances 115,847 47,335 76,026 239,208

Emergency Inpatients 37,663 6,637 22,485 66,785

Elective Inpatients 8,275 4,213 4,273 16,761

Day Case Inpatients 27,303 15,948 28,603 71,854

Outpatient Attendances 354,844 218,741 260,091 833,676

Births 6,963 409 3,791 11,163

Financials 2011/12

• The Trust earned income of £607m• Savings targets of £23m for the year• Capital expenditure of £18.7m• Financial risk rating of 3• Governance Risk rating Amber-Red

How the NHS is funded

How NHS is funded

• Taxpayers money through tax/NI contributions

• Amount received determined by economic health of the country

• Charitable funds• Private Healthcare• Grants• Research and development

Funding Process

• Initial funds are held by Primary Care Trusts• PCTs are allocated funds from department of health• Weighted capitation formula is used to determine

each PCTs target share and available resource• A commissioning system is used to allocate funding

based on local needs of population• Each PCT is required to show a breakeven position at

the end of the year

Payment for Services

• Payment by Results (Pbr) is the National Tariff Implemented by the DoH

• The currency for this is Healthcare Resource Groups (HRGs)

• Each HRG carries a price

• The HRG is determined by the diagnosis and treatment of each patient

Flow of Clinical Activity at HEFT

Inpatient

Activity (HISS)

O’patient

Activity (UG)

A&EActivity (MSS)

Manual Activity

(e.g. Crit

Care, Sexual health)

Support Services

Data (Pathology

,

Radiology)

Clinical Coding / Data Quality

Monthly Download = assign HRG / £

Measure Performance

Against Targets

Charge Commissioners

for Activity

Payment by Results (PBR)

• PBR Guidelines are issued by the Department of Health (DoH) on an annual basis

• Content of guidelines• National Tariff and Reference Costs• Market forces factor• Best Practice tariffs• National Performance Targets• CQuINs

Tariff Movements

PBR Exclusions

• Some procedures are excluded from PBR such as:

- High cost drugs and devices- HIV- Cystic Fibrosis- Critical Care- Neonatal Cot Days- Chemotherapy

• The reason for these exclusions is the complex nature of these treatments and difficulty in costing them

• Local Delivery Plans are held between the Commissioners eg Primary Care Trusts, Care Trusts and Local Commissioning Boards and the Providers (Us)

• Plans are generally based on outturn from the previous year

• These are broken down into following elements: Activity by Specialty and HRG Monetary Value of the above CQuIN - Commissioning for Quality & Innovation (currently

2.5% increase on the baseline budget) MFF – Market Forces Factor National and local targets (such as 18 weeks and CQUIN)

Contracts with the Commissioners

2012/13 LDPs

PERFORMANCE

Targets for Monitor

•Cancer Waits•A&E Waits (4 Hours)

•18 weeks (admitted / not admitted)•Infection Control (MRSA and C-Diff)

Regulate foundation trusts to ensure they comply with their terms of authorisation. These are a set of detailed requirements covering how foundation trusts must operate – in summary they include:

•the general requirement to operate effectively, efficiently and economically;

•requirements to meet healthcare targets and national standards; and

•the requirement to cooperate with other NHS organisations.

Financial penalties in ContractVolume & ratio targets

Non GP referrals C- Sections Ratio of new to follow up O/P

appointments Well vs Unwell babies Antenatal admissions/no delivery A&E conversion % Ratio of short stay to 08/09 Readmissions in 14 days Elective & non elective XSBDs Emergency bed days vs 08/09 Emergency admissions vs 08/09

Nationally specified

18 Week RTT – up to X% of elective income could be lost

Rates of C Diff – up to X% of income could be lost

4 Hour A&E wait – X% of A&E service line income could be lost if performance is below 95%

Cancer targets – X% of service line income could be lost

Breach of same sex accommodation rule – fine per breach.

Never Events (eg leaving a swab in a patient) - we will not be eligible for payment for the patients care.

Commissioning for Quality and Innovation (CQuIN)

• A number of targets around improving quality and innovation are set between the PCTs and the providers.

• If targets are met the Trust could be set to receive an additional 2.5% of funding on top of their baseline budgets.

• 2012/13 CQUIN Value is £12.2m

• Each target is weighted and so given its own value.

• If target is not met the Trust will forfeit the additional funding for that particular target.

• Targets differ between acute and specialised services contracts

Implications of not meeting quality targets

• Fined up to 2% of contract value

• Monitor and CQC requirements

• Public Perception/Patient Choice

• Primary Care and Partners Perception

• Coroners Court and Health and Safety Executive

CURRENT ISSUES WITHIN THE NHS/HEFT

£20 Billion savings by 2015

• Trusts are asked to make savings of 4% per annum based on turnover

• £20 Billion savings means a 4% reduction in prices the trust charge for activity.

NHS Reform

• White Paper released ‘equity and excellence: Liberating the NHS’

• Set to improve efficiency, productivity and quality

• How?? - To put patients first - To focus on outcomes - To empower NHS staff

• How will this affect HEFT?

White Paper Structure

Trusts running into financial difficulty

• Historic debt

• Too few patients

• Bad activity mix

• Uncontrollable costs

• Affect on HEFT

NHS Global

• NHS on the international stage• HEFT opportunities, CIP

Cabinet Re-shuffle

• September 4th 2012 Andrew Lansley, the architect of the Coalition’s controversial NHS reforms, replaced by Jeremy Hunt

• NHS/ HEFT - ?

HEFT Finance Team

Overview of Finance

Finance Staff Development

TFS (inc Income) Procurement Performance OBS TotalHeadcount 66 36 50 42 194Qualified 12 7 15 15 49 25.3%CIMA 4 4 8ACCA 3 6 9ICAEW 2 2CIPFA 3 3AAT 3 3ACC 12 12Couching 1 2 3Supervisory 2 2Procurement - CIP's 7 7Studying 11 0 5 19 35 18.0%CIMA 3 0 8 11ACCA 2 0 9 11CIPFA 0 2 2AAT 6 0 6ACC 3 3Leadership 1 1Masters 1 1Procurement - CIP's Unqualified 43 29 30 8 110 56.7%

Staffing grading in the NHS NHS

Doctors Consultant contract

The rest Agenda for change contract

Band Type of role Salary max (£)

3 Admin support, health care assistant 18,157

4 Personal assistant, junior nurse 21,318

5 Credit manager, most nurses 26,839

6 Starting CCAB trainee, senior nurse 33,436

7 Part qual CCAB trainee, ward manager (sister)

39,273

8 Senior staff – 4 separate bands a, b, c.d

CCAB qualified can be 8a

80,000

Incremental pay annually, maximum level

CCAB

AAT

(depending on ability &

experience)

QUESTIONS?

• www.heartofengland.nhs.uk• www.nhs.uk/NHSEngland/thenhs/nhs

history/Pages/NHShistory1948.aspx• www.dh.gov.uk/en/Publicationsandst

atistics/Publications/PublicationsPolicyAndGuidance/DH_117353