• Mid Cheshire Foundation Trust and CCGs unable to resolve contract dispute
  • All parties have had meetings with NHS England and NHS Improvement chief executives
  • South Cheshire and Vale Royal CCGs has employed a well known QC to fight its case, which could cost trust £9m

A foundation trust and its local commissioners are locked in a dispute over its 2016-17 and 2017-18 contracts, which has not been resolved despite meetings with Simon Stevens and Jim Mackey.

HSJ has learned South Cheshire and Vale Royal clinical commissioning groups have instructed leading healthcare lawyer David Lock QC to argue its case against Mid Cheshire Hospitals Foundation Trust. Both sides face losing millions of pounds but the trust has said its legal fees have been limited to £5,000.



The health economy faces a significant funding gap next year

The row began last May and has ended up in formal arbitration by an expert after the trust and CCGs were unable to agree a solution even after meeting with the NHS England and NHS Improvement chief executives.

The argument is about a three year payment by results contract signed between the CCGs and the trust in 2016-17, and a disagreement over estimated activity growth. HSJ understands the CCGs have paid the trust only at contract value since May 2016, and they believe the trust is overcharging them for emergency department attendances and admissions to its clinical decisions unit for patients who have zero day length of stay. The parties have also not agreed a contract for the next financial year.

The situation is exacerbated by a funding gap in local health economy. Together the CCGs’ allocations for next year are £14m below the target allocations calculated by NHS England.

The FT faces a potential £9m in lost income if it loses the dispute.

Board minutes from December recorded trust chair Dennis Dunne saying: “The system pits organisations against each other as there is insufficient money in the system to meet the levels of demand the local health economy, including the trust, require.”

In February, the board were told the trust “still does not have an agreed settlement for the areas of dispute within the 2016-17 contract or an agreed 2017-18 contract with commissioners”. It was told the trust had met with Mr Stevens and Mr Mackey along with the CCGs.

The February minutes said: “At this meeting it was noted that only six systems have failed to agree a contract for 2017-18 so far and that our systems were the only ones subject to such a meeting.”

They also said the trust had spent £5,000 on solicitors but added that the CCGs “had appointed a QC to write their case whereas the trust executives had written their own case, which had then been translated into a legal case and provided to the CCG by the solicitors”.

The December minutes said “numerous conversations and meetings” were being had between the trust and the CCGs, and regional leads from NHS England and NHS Improvement but “little progress” had been made. They said formal arbitration was necessary but “disappointing”, adding that a memorandum of understanding and a contract based on payment by results “are not currently being honoured by the CCGs”.

The CCGs were criticised in February by the Royal College of Surgeons for rationing hip and knee surgery as part of plans to save money. South Cheshire CCG is under legal directions from NHS England and is required to deliver a balanced financial position next year, but HSJ understands its plans do not currently deliver this.

The trust said in a statement: “We are pleased to state that latterly agreement has been reached on a contract value for 2016-17. The dispute that remains is in relation to the counting and coding of a particular group of patients and we expect to hear the outcome of that dispute over the next week or so.”

It confirmed the value of the contract risk to the trust, but added: “The financial gap for the health economy for 2017-18 is considerably more and, regardless of who wins or loses the dispute, partners will work together to resolve this. The outcome of the dispute will allow both parties to move forward and continue discussions with its partners in finding a health economy-wide solution for the challenges that it faces.”

Simon Whitehouse, chief officer at both CCGs, said: “When we look at 2017-18 and the requirement for both CCGS to live within their allocation, we will have to work with partners as we have some really difficult decisions to have to make. Whatever the outcomes of this contractual dispute the system locally has a real challenge in 2017-18 to make sure we can deliver health services that meet the needs of the population within the money that is available. We can only spend the Cheshire pound once.

“We are really disappointed at the situation that we find ourselves in. There are regrets on our part that we have ended up at this point as it is not where we want to be. We want to work with our partners, including Mid Cheshire, to find solutions and work through the difficult conversations we still need to have. All sides need to learn from what’s happened in previous years to find better ways of working together for the local population.”