Payment by results transition ‘painful’, Mackey admits

Sir Jim’s comments come after trust finance teams raised fundamental concerns to NHSE about the rules for allocating elective recovery funding, as revealed in Recovery Watch, HSJ’s expert briefing on elective care.

Multiple senior finance sources within local trusts have criticised the rules, set out last week, for being overly complex, such as the requirement for trusts serving multiple commissioning boards to have different targets for each one.

Responding to a question from HSJ during a press conference this morning, Sir Jim said: “So, it’s a painful transition [from block contracts on to payment by results, and] we will have to iron some wrinkles out before it goes live.

“That’s a live conversation around that. But we have to recognise that we need to do more work, we need to be more productive, we need to get the transition out of the old world…

“[But in the pre-covid era] I can’t ever remember a time when we had a single contract. Ever. We’ve always had different contracts with different commissioners.”

There have also been some specific concerns that trusts could cease treating patients from commissioning bodies that have already hit their activity targets, as any available incentive funding may already have been used up.

But Sir Jim said: “The idea that an FD (a) would have that much control and (b) anyone would listen to him or her if they said to clinicians ‘don’t see those patients because we’re not going to get paid… [is] absolute nonsense.”

Defending the move to take trusts off block contracts, he said while the arrangements had been “much simplified… there is an argument that block arrangements contributed to a loss of productivity. That is something we need to confront”.

As HSJ reported previously, NHSE has set new elective targets for each integrated care system in 2023-24, ranging from 3 per cent to 14 per cent above pre-pandemic levels as part of the new elective payment framework.

Nationally, the new commissioning targets equate to an average of 107 per cent of pre-covid activity, as measured by the tariff value of procedures, which equates to 115 per cent in raw activity terms.

Commissioners in systems that meet the thresholds will receive additional money from a national funding pot, which would effectively filter through to the providers, according to the activity levels achieved under a “payment by results” tariff system.

The press conference was hosted by the Institute for Fiscal Studies, which has today published a report which concludes the NHS is “highly unlikely” to hit its target of increasing elective activity to 130 per cent of pre-covid levels by 2024-25.