Acute providers have recognised their relative lack of power to make pay savings in a post-Francis world - dramatically undershooting last year. Now CIP targets are tougher and more unrealistic than ever
HSJ’s exclusive analysis of acute trusts’ cost improvement programmes tells a familiar story. CIP targets are tougher and more unrealistic than ever. Trusts missed their 2013-14 CIP targets by 13 per cent, yet have had to set a stiffer challenge for themselves this year.
Acute providers have recognised their relative lack of power to make pay savings in a post-Francis world after dramatically undershooting last year, but are demanding even more from already squeezed non-pay budgets as a result.
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But most telling is the projected growth in income. In 2013-14 trusts boosted their income by £489m. This increase was not all achieved through sucking in extra work. Notably a significant proportion was achieved by what is known to some as “tariff leakage” - effectively shifting money around the system to deal with financial challenges.
“Leakage” may have accounted for around half of the efficiencies achieved over the last three years as strategic health authorities, primary care trusts and clinical commissioning groups, overseeing the legacy strategies of their predecessors, attempted to keep the show on the road.
‘There is less money to play with, encouraging new system managers to reduce the scope for opaque payment deals’
This year the goal is to increase “income” by £507m, but the ability to grow turnover through “leakage” is now much reduced. There is, of course, much less money to play with and this has only encouraged the new system managers to reduce the scope for opaque local payment deals.
The “tariff engagement” document published by Monitor and NHS England, for example, indicates an intention to the tighten the grip on locally negotiated pricing for specialist services.
Trusts that have in the past closed savings gaps with quietly negotiated income transfers are now likely to be forced to either depend on the generosity of the Department of Health or to strive for efficiency targets without the system’s helping hand.