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Emails reveal elite hospitals' high level lobbying for extra cash

Emails obtained by HSJ reveal an elite group of teaching hospitals’ lobbying for hundreds of millions in extra funding.

The Shelford Group of England’s 10 leading teaching hospitals have pushed for an “infrastructure payment” on top of their existing contract income, the correspondence between the organisations shows.

The group has called for between £15m and £25m in extra funding a year per trust, arguing it will take many years for tariff systems to accurately reflect cost.

The group says the higher costs its members face as providers of specialist tertiary care puts it at particularly high financial risk because of falling tariff prices and training budgets. Tariff prices are calculated by taking the average cost of a procedure across all providers. The Shelford Group argues that its members treat patients of above average complexity.

One of the emails, obtained under the Freedom of Information Act (see attached files, right), refers to the need for the group to make “political arguments” in order to “push the National Commissioning Board [now NHS England] towards implementation”.

The message, sent in March to directors at the 10 trusts, said these arguments would be a “combination of [asking] ‘where the system needs our help’ backed up by ‘what are the adverse consequences of doing nothing?’”.

The group also planned to, “define a tight ring of eligible recipients [of additional funding] … to obviate the fear that this would ‘open the floodgates’ [for other trusts to receive it]”.

When HSJ revealed in August that the Shelford Group was pushing for a 10 per cent top up to its members’ tariff income, many smaller trusts said this would be unfair.

One of the emails seen by HSJ was sent between the finance directors in the group, by a director whose name was redacted. It said that, in a meeting involving NHS England, a senior policymaker had admitted the “core issue around the complexity… attached to bed days which are averaged across providers with quite differing case mix… was probably not ‘fixable’ any time soon”.

The email said that, because of this, there was “a clear argument for ongoing infrastructure payments for our hospitals”.

The group’s efforts to demonstrate the need for additional payments have also included commissioning a report on the differing cost and complexity of patients across hospitals from consultancy Ernst and Young.

The Department of Health’s response, sent to HSJ under the Freedom of Information Act, concluded the consultants had not proven how much of the difference in costs between specialists and other hospitals was due to variation in efficiency. It also said it estimated £200m was already due to be paid to specialist trusts in 2013-14 under “specialist top up” rules.

Readers' comments (17)

  • Hard to believe that the specialised commissioning budget 'hike' won't benefit these trusts immediately.

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  • hahahahahahaha - Perhaps we should have an independent review of the sustainability of specialist hospitals! Unless of course they receive the extra payments on top of the extra tariff for spec comm - hopefully the poor dears will then manage

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  • Hi anon 11.35am, well these documents are from March, but when you read through them you don't get a sense that specialised budgets are going to cover it.
    The other thing is the total extra they're after is similar to the total the no-name DGHs are after here http://www.hsj.co.uk/news/finance/exclusive-surge-in-hospitals-predicting-deficits-as-total-exceeds-200m/5060245.article?blocktitle=Headlines&contentID=7838

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  • How does this tally with current policy to promote treatment outside hospitals?

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  • I think Monitor - specifically the Competition Panel - might be looking at this! I think it raises serious collusion issues and fair playing field questions...!!!

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  • They should be ashamed of themselves. The Shelford group, which are not just tertiary but teaching hospitals as well, are already far less exposed to risk than any other part of the acute Provider System. My understanding from previous reading is that PbR only represents some 19% of their income whereas most non-teaching hospitals have 75%+ of their income exposed to tariff discounting. The entire Acute Sector is suffering enormously under the squeeze and caps on budgets and it is really ironic that the least impacted sector is the one trying to do back room deals to save themselves. These are supposed to be the elite captains of our industry, but if we were on the Titanic, it would appear that they would be willing to push all women and children aside in oder to get priority on the lifeboats. Shame on you!

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  • If the skewed casemix argument is accepted for tertairy providers then it also needs to be accepted that the secondary casemix is also being skewed as lower complexity cases are creamed off by primary and community providers, AQPs, etc., cherry picking low risk patients and leaving the acutes to pick up the more complex, less profitable work.
    The bottom line is that the national tariff (even with MFFs) doesn't work.

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  • It is an artefact of a national payments system which uses average cost that these Trusts need to seek additional payments. This has been known about since the inception of PbR. Highly specialist services cost more, full stop, and if any of us needed their services then we all expect them to be there.

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  • Don't worry! It won't be long before mergers and acquisitions by the Shelford Group will gobble up all the other Acutes until there are no non-Shelford finances left to raid.

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  • Can't agree with 2:26.

    Specialised services are reflected through case-mix classification and are already paid more. The shelford trusts are not unformly declaring 15-25m deficits each, which is the bung they are seeking, but are simply using their bargaining power and connections based on a deal with the NHS England DoF from his NHS London days, drummed up by Ernst & Young. The health economists at York, by contrast, did some rigorous research for the Department of Health that suggested the claims of higher costs are overstated.

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  • I thought bullying was being clamped down on in the NHS or perhaps the Shelford group hadn't heard. There is no doubt that specialist services cost more and this is already reflected through tariffs and top ups. However it is also the case that where most DGHs have cut to the bone the Shelford group still has a long way to go in dealing with the waste that most of us have tackled.
    Separately there are probably other teaching hospitals that would dispute the use of the word 'leading'.

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  • Richard Russell

    Regarding anon 1:44pm you need to remember that the tariff is based on the average cost of the NHS Acute Hospital. So whilst private sector and others take some of the simpler casemix leaving the acute hosptials with the richer casemix it is this richer casemix cost that informs the tariff. This is why we have the patient/procedure selection flexibility so that those getting paid tariff (which is for a richer than average casemix) but not doing the full range of casemix actually get paid less than tariff.

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  • Anon , lets get it clear- the agenda is wealth re-distribution and dumbing down....all emanating from the Kremlin. The LET 'B's are entertaining themselves watching the big players squeal !

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  • These trusts (with no doubt some expensive advice from PWC) are having a laugh, which hopefully the DH (assisted by KPMG or McKinsey) will rebut:
    - The tariff already has complexity adjustments
    - These trusts are generally in London or cities with high MFF
    - These trusts get bunce for teaching, especially dental teaching
    - They also get huge amounts of research money
    - many also have big charities and commercial income for eg clinical trials and IP

    Most have appauling processes and are just downright inefficient. rather than fixing this, they are trying to justify the begging bowl approach

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  • it resembles an attempt to make breakaway premier league of "elite" hospitals who sit at the top of the funding pyramid allowing the residal reveues to drop down the table to the " lesser instutions"...Perhaos an over simlication but could be seen as the natural result of the internal market where brand and marketing collateral become as important as the quality of care.....

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  • How 'elite' are they - is the quality/ outcomes better at these institutions or are they living off brand like a 1970s jaguar?

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  • There is a London problem.
    Either the outer London hospitals close for the greater good of the teaching and specialist hospitals or London continues to receive additional funding to pay for their special contribution.
    If the first route is tried then a lot of London MP's will lose sleep. It is strange that Conservatives find it difficult to maintain the privileges of the elite.
    Personally I support the Sheldon Group recommendations. It will work, defer the problem until after the next election, and take the heat out of the smouldering powder keg.

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