SHA chiefs urge sharing of surpluses

Foundation trusts must expect to share their surpluses with 'other providers' in their health economy if they make 'windfall profits' from 'efficiencies elsewhere in the system' under payment by results, strategic health authority chief executives close to the Nicholson review have insisted.

SHA chief executives who are members of the systems reform leadership group chaired by David Nicholson told HSJ that radical reform of payment by results is vital to ensure the policy is aligned to the NHS improvement plan priorities, particularly around managing chronic illness.

The main thrust of the proposals is to 'look at what happens if the acute sector makes a windfall profit because of investment by the commissioner into a primary care service, which means, say, length of stays in acute have been reduced', South Yorkshire SHA chief executive Mike Farrar told HSJ.

'We do need to work out a way to do profit sharing [so] commissioners whose investments in primary care produce a windfall profit at foundation trusts recoup some benefit, ' explained Mr Farrar.

He added that some people had suggested this could be achieved by setting a 'standardised national rule that top-slices a set portion of [acute trust] profits'. But his preference was to let individual commissioners and providers draw up profit sharing criteria at contract stage, overseen by the SHA to ensure local sensitivity.

Greater Manchester SHA chief executive Neil Goodwin said the changes were necessary to 'support development, not hinder it', adding that foundation trusts 'have to operate within a health system in the same way as other providers'.

He added: 'Just because foundation trusts are being created, it doesn't mean they are being surrounded by aspic.'

'The whole NHS policy now is changing the services delivered by health providers, and payment by results must support that. If it supports one part of the system from a purely monetary perspective it would not have worked.'

He added that accusations from some foundation trust chief executives that SHA's recommendations on the policy were motivated by securing their own future 'makes me laugh because the one organisation that hasn't changed in history is the hospital. Now we want them to decentralise services and change, and that will be driven very hard over the next decade.'

Primary care trusts spoken to by HSJ unsurprisingly welcomed the proposals, although the majority have yet to see the detail of the Nicholson review.

Waltham Forest PCT chief executive and London PCT network chair Sally Gorham said the moves to split tariffs are inevitable.

'National tariffs will end up becoming the maximum any organisations can charge, but we will start to see people undercutting, either by splitting the tariff or by competition [between providers], which would be a healthy thing, ' she said.

Another London PCT chief executive told HSJ that if foundation trusts were allowed to 'forge ahead' under payment by results unchecked, whole health economies would 'unravel'.

'We could go down the line where the go-getting foundation trust says: 'We are just in it for getting as much work in my hospital as possible, regardless', which is fine but that will only secure their position for a few years until the entirety of the health economy starts to unravel, when it will come back to bite.'

North Bradford PCT chief executive Dr Ian Rutter, a member of the DoH's project board on financial flows, also favoured the introduction of split tariffs. He said: 'If lengths of stay are reduced based on a locally agreed care pathway, where the money goes needs to reflect where the cost is.'