• London trusts criticise changes to payment tariff which would cut their income by £300m
  • Loss would result from an update and refresh of the “market forces factor”
  • NHSI says it has a duty to ensure resources are “shared fairly across England”

NHS trusts in London have criticised proposed changes to the national payment tariff which would cut their income by an estimated £300m.

The financial impact would spring from an update and refresh of the “market forces factor”, which is a mechanism within the tariff that takes account of cost variations in different geographies.

The MFF has not been updated for several years and critics have long complained it is overly favourable to larger teaching trusts in central London.

HSJ understands several trusts and clinical commissioning groups in the capital have complained about the proposed changes to NHS Improvement and NHS England. But the national bodies said they have a duty to ensure resources are “shared fairly” across England.

The changes would be phased in across five years, and the impact is expected to be less severe in the first four years. The losses may also be partially offset by other changes to the tariff and financial regime.

University College London Hospitals Foundation Trust said it expects the annual loss to be £7m next year, rising to £36m once the changes have been fully implemented.

A spokeswoman said: “London providers and commissioners have held talks with NHSI and NHSE about this change, which is based on detailed technical calculations and economic data that fails to fully reflect the difference in the actual cost of providing NHS care in London as reported in providers’ reference cost submissions.

“The cash taken from the London health system will run into many hundreds of millions of pounds, and we have serious concerns that this will jeopardise the policy intention in the NHS long-term plan to ensure all providers break even, and will increase the need for emergency cash for struggling London providers already in deficit.”

UCLH has forecast a £12m surplus this year.

A paper presented to the January board meeting at Chelsea and Westminster Hospital FT referred to “significant concern” across London, and said the changes have been estimated to reduce the annual income of trusts in the capital by around £300m once fully implemented.

A spokeswoman for the trust, which would see its income reduced by around £5m next year and £18m at the end of the period, said it was working with regulators and other trusts to fully understand both the calculation and the impact.

She added: “The trust board were presented with indicative figures for the year four impact based on our understanding of the proposal at the time.”

Chelsea and Westminster has forecast a surplus of £19m this year.

The proposed changes take account of new market data, which had not been updated since 2009. NHSI’s consultation documents said the data update showed that pay differentials between London and the rest of England have reduced since the old MFF values were calculated.

The proposed MFF values have a narrower range than before, with more trusts seeing their weighting reduce than increase.

A spokesman for NHSI and NHSE said: “We have a duty to ensure that the resources available to the NHS are shared fairly across England for the benefit of patients. To support this, we are proposing to update the data used to calculate the unavoidable cost differences between healthcare providers.

“This and our other proposed changes to the NHS payment system will ensure taxpayer money is used to the maximum effect.”

Biggest losers from MFF change

Provider NameChange to MFF adjustment
UNIVERSITY COLLEGE LONDON HOSPITALS NHS FOUNDATION TRUST -8.00%
ROYAL BROMPTON & HAREFIELD NHS FOUNDATION TRUST -7.80%
GUY’S AND ST THOMAS’ NHS FOUNDATION TRUST -7.60%
MOORFIELDS EYE HOSPITAL NHS FOUNDATION TRUST -7.10%
CHELSEA AND WESTMINSTER HOSPITAL NHS FOUNDATION TRUST -6.30%
CENTRAL LONDON COMMUNITY HEALTHCARE NHS TRUST -6.00%
IMPERIAL COLLEGE HEALTHCARE NHS TRUST -6.00%
GREAT ORMOND STREET HOSPITAL FOR CHILDREN NHS FOUNDATION TRUST -5.80%
TAVISTOCK AND PORTMAN NHS FOUNDATION TRUST -5.30%
EAST LONDON NHS FOUNDATION TRUST -5.10%

Biggest winners from MFF change

Provider NameChange to MFF adjustment
TAUNTON AND SOMERSET NHS FOUNDATION TRUST 2.07%
ROYAL CORNWALL HOSPITALS NHS TRUST 1.58%
COUNTY DURHAM AND DARLINGTON NHS FOUNDATION TRUST 1.20%
NORTH CUMBRIA UNIVERSITY HOSPITALS NHS TRUST 1.20%
MIDLANDS PARTNERSHIP NHS FOUNDATION TRUST 1.17%
BRIGHTON AND SUSSEX UNIVERSITY HOSPITALS NHS TRUST 1.05%
DERBYSHIRE HEALTHCARE NHS FOUNDATION TRUST 0.95%
NORFOLK AND NORWICH UNIVERSITY HOSPITALS NHS FOUNDATION TRUST     0.86%
UNIVERSITY HOSPITALS PLYMOUTH NHS TRUST 0.75%
CORNWALL PARTNERSHIP NHS FOUNDATION TRUST 0.71%