Sally Gainsbury: tariff twister
Everyone knows which NHS hospitals are the most powerful; it’s the 10 who make up the Shelford Group, right?
Right, more or less. But the Department of Health’s proposed rules for triggering a review of NHS tariff prices could subtly change that. Under proposals now subject to consultation, Monitor and the NHS Commissioning Board will be forced back to the drawing board if 51 per cent or more of commissioners or providers object to a given tariff price.
To keep it fair, the DH has proposed to weigh providers according to the proportion of total NHS tariff income they receive. It all seems straightforward. But the trend for the big, powerful and Shelfordesque to skew their income away from standard tariff procedures means the move could add a new twist to the political economy of the NHS. The frequently written-off district general hospital could find itself punching above its weight as the big boys flounder around, distracted by off-tariff tertiary activity and non-patient research income.
Take Guy’s and Tommy’s foundation trust, for example. An undeniable big hitter: Shelford Group; London; teaching; tertiary; part of an academic health science centre; and topping the 2010-11 FT income rank at £953m.
But of that near £1bn, just £196m came from activity on the payment by results tariff. In the tariff income ranking for 2010-11, big old Guy’s comes out a teenieweenie 20th; a full eight positions below infamously troubled and power-light South London Healthcare Trust - a hospital half
Guy’s size, but where nearly 50 per cent of all activity is tariffbased.
It’s not just Guy’s. Other Shelford big hitters such as University College London Hospitals (£163m tariff vs £717m total income) and King’s College (£146m vs £535m) are relegated to below the weight of the likes of Barking, Havering and Redbridge (£169m vs £407m) and Mid Yorkshire (£179m vs £430m).
The intriguing question is: do the district generals have the clever footwork necessary to exploit this newfound clout? The expectation is that providers will lobby for higher tariff prices for given procedures.
But a district general sector threatened by new entrants into the elective market might just be tempted to throw a move in the opposite direction.
Sally Gainsbury is a news reporter for the Financial Times, sally.gainsbury@ft.com
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Readers' comments (4)
Sally Gainsbury | 18-Oct-2012 12:38 pm
The NHS Info Centre's analysis of admitted patient care PbR income for 2010-11 is here:
http://www.hesonline.nhs.uk/Ease/servlet/ContentServer?siteID=1937&categoryID=1865
note the DH's consultation proposes that trusts are weighted BEFORE local payment adjustments such as Market Forces Factor
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Sally Gainsbury | 18-Oct-2012 4:14 pm
The NHS Info Centre's analysis of admitted patient care PbR income for 2010-11 is here:
http://www.hesonline.nhs.uk/Ease/servlet/ContentServer?siteID=1937&categoryID=1865
note the DH's consultation proposes that trusts are weighted BEFORE local payment adjustments such as Market Forces Factor
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Insideperspective | 18-Oct-2012 6:28 pm
It would be interesting to know how profitable the tariff work from these big trusts is - I suspect heavily loss making.
UCLH and Guy's get shedloads of 'funny money' such as: project diamond; facilities SIFT; dental SIFT; captive charitable donations; high margin off-tariff payments; and, IPR/ commercial income. Furthermore, the 25+% MFF that these trusts get is excessive in relation to the additional costs which they incur.
Someone needs to do a root and branch review of how all the funny money flows around the NHS, and not just focus on tariff.
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Robert Royce | 21-Oct-2012 4:35 pm
Looked at another way a trust that has a large percentage of its income funded by PbR is likely to be in severe financial difficulties-which is pretty ironic if you think about it.
Good article.
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