Acute trusts will be paid only 30 per cent of the NHS tariff price for emergency activity above their 2008-09 levels, this week’s operating framework confirms.
The move is a bid to stem increasing inpatient activity, which rose by more than 4 per cent between 2007-08 and 2008-09. The introduction of the capped, or “marginal”, tariff payment means many hospitals will see a drop in their income next year, as any growth in patient volumes since March 2009 will only be paid for at the reduced rate.
The alternatives for community services are rapidly disappearing
At the same time, tariff prices will not be increased to allow for inflation. Any increases in hospital costs such as fuel and wages will need to be covered by new hospital efficiency savings of at least 3.5 per cent. However, hospitals will be able to earn an extra 1.5 per cent if they meet standards set out under the commissioning for quality and innovation framework.
NHS chief executive David Nicholson told HSJ the marginal tariff was “an attempt to force people into a discussion about risk sharing” around unplanned admissions - for example by shifting patients into the community and improving demand management.
He said primary care trusts that “sat back” and enjoyed a 70 per cent discount on rising admissions would effectively be fined the balance of their tariff payments.
Asked what the department would do differently next year to support that, Mr Nicholson said: “The first thing that’s different is that the alternatives for community services are rapidly disappearing.”
This is a reference to a new deadline of March 2010 for all NHS providers that are not yet foundations to submit a time-table for achieving the status or, for community services, taking an alternative organisational form, independent of the PCT’s commissioning arm, by March 2011. If they cannot produce a satisfactory plan they will be offered up for takeover by an existing foundation (see page 6).
Mr Nicholson said he wanted to “bring to a head” discussions about the state of PCT provider arms.
The chancellor’s pre-Budget report last week promised a “real terms increase” during the period after 2010-11 for the “frontline NHS”, which it said accounted for 95 per cent of NHS spending. A Treasury spokeswoman told HSJ that, at 2010-11 levels, that meant 95 per cent of £98.6bn, as it only applied to the cash element of the NHS’s allocation.
That leaves £8.6bn of the service’s full allocation unconfirmed. Speaking at the Healthcare Financial Management Association conference last week Mr Nicholson said that remainder had to be “watched”.
He warned that although PCTs should plan on funds in 2011-12 and 2012-13 rising in line with inflation, finance managers should “bear in mind” that if the settlement on the remaining £8.6bn was bad, funds might need to be requisitioned to pay for things previously in that budget.
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Tariff puts brake on acute admissions