Controversial financial levers aimed at curbing the growth in non-elective NHS activity are having a “disproportionate impact” on smaller trusts, according to analysis by healthcare intelligence firm CHKS shared with HSJ.

Under current payment by results rules, trusts should be paid only 30 per cent of normal “tariff rates” for non-elective admissions above set thresholds. They should also go unpaid in many cases for emergency readmissions within 30 days of discharge.

CHKS found that smaller trusts faced a heavier blow from these levers, because non-elective admissions accounted for a larger proportion of their total activity.

Proportion of total turnover from non-elective tariff

Proportion of total turnover from non-elective tariff

The firm said in a statement: “At one end of the scale the potential income (before any reduction for marginal tariff or readmissions) from non-elective activity at one smaller trust accounts for 32 per cent of total income, while for one larger trust it accounts for 7 per cent of total income.

“The adverse impact on smaller trusts is further compounded because bigger trusts receive a larger proportion of their income from non-tariff sources (mainly teaching and specialist services).”

CHKS acknowledged that determining “the exact financial impact of this variation in non-elective activity is not straightforward, given that local agreements govern the penalties for readmissions within 30 days”. However, it added that it was “clear that larger trusts will see around half the impact on their turnover (12.5 per cent as opposed to 25 per cent for smaller trusts)”.

CHKS managing director Jason Harries said: “Our analysis has demonstrated that these financial levers are having a disproportionate impact on smaller trusts. This is pertinent given on-going discussion about the future of smaller acute hospital trusts.”