• Planning guidance to include allocation formula changes
  • Require hospitals to escape deficit within two years
  • Full details expected before Christmas

National leaders are set to announce changes to commissioning allocations expected to favour more deprived areas - and will tell all hospital trusts to deliver financial balance within two years, HSJ has learned.

In addition, NHS planning guidance for 2019-20 due to be published before Christmas is expected to say:

  • There will be a new financial “recovery” or “restructuring” fund to help the most challenged areas tackle their structural deficits. All acute hospitals will be expected to deliver financial balance within two years.
  • Formulas which determine commissioning allocations will be tweaked to give more weight to factors like deprivation, mortality and short life expectancy, and less weight to age. Remote areas are also expected to benefit.
  • The new formulas will also give greater weight to mental health needs, and there will be a new weighting for community services, details of which are unclear.
  • CCGs expected to get minimum allocation uplift of 3.5 per cent
  • The current regime of performance targets will remain in place

In the final event, only half of the planning guidance was published before Christmas. CCG allocations and details of the trust financial regime are due in early January. HSJ’s coverage of the section that was published covers changes to the NHS performance regime and standard contract, the future of integrated care systems, and mental health spending controls.

The policies to be introduced from April were outlined by NHS England and NHS Improvement at a meeting for chief executives in Leeds yesterday.

The changes to allocations may prove controversial in more affluent areas with older populations, depending on the detail and implementation. Several sources thought that, broadly, the changes are likely to shift resources from the south of England to the north.

Some providers have annual deficits worth around 20 per cent of turnover, so expecting all trusts to reach financial balance by the end of 2020-21 is very ambitious. But the prospect of achieving this will become clearer once details of the new “recovery fund” are published.

As previously outlined, the regulators also confirmed the “provider sustainability fund” (currently worth £2.4bn) will significantly reduce, with more money diverted into the payment tariff for emergency care instead.

Many local leaders will welcome this, due to the huge distortions in funding distribution under the current system.

For the past three years, providers have received PSF based on their performance against financial “control totals”, which has resulted in some trusts receiving tens of millions in additional funding and others receiving little to nothing.

Trusts which have benefitted from this are also likely to welcome the change, however, as they have had to treat PSF money as non-recurrent which has limited their ability to plan and invest in service transformation.

All trusts will still be given control totals in 2019-20, but without so much financial incentive in place for delivering them.

Other measures which have previously been outlined, such as scrapping the marginal tariff for emergency care, and significantly reducing the CQUIN scheme, were also confirmed.

Sources at yesterday’s meeting also said there was “lots of nervousness” from national NHS chiefs over a no-deal Brexit, including concerns about stockpiling of drugs and devices, and the strength of local contingency plans. Local leaders were told to ensure that local stockpiling does not take place, and to ensure there is a senior officer taking responsibility for contingency planning.

In a joint statement, NHS England and NHS Improvement said: “This was a private meeting to jointly brief trust chief executives and [clinical commissioning group] accountable officers about operational planning for next year, so we will not be commenting on what was a very constructive and helpful but private discussion.”