FINANCE: A clinical commissioning group has secured exemption from a series of national financial rules after discovering a £15.2m hole in its finances for 2013-14, it has told HSJ.
Under NHS England rules, all CCGs are this year expected to set aside 2 per cent of their allocations for one-off – or “non-recurrent” – expenditure, such as the up-front investment costs of redesigning services.
They are expected to hold back a further 0.5 per cent to cover unforeseen contingencies, and to make a 1 per cent surplus for the financial year.
However, Eastern Cheshire Clinical Commissioning Group chief officer Jerry Hawker told HSJ the group had secured permission from its local NHS England area team to waive those rules in 2013-14, to help cover a £15.2m deficit in its financial plan.
“What that effectively means is that for some of the surplus, and the non-recurrent funding, we will use that to offset our deficit,” he said. “Effectively, we’re using that money recurrently, for one year only.”
Eastern Cheshire will aim for a surplus of £200,000 this year, rather than the £2.2m it would have had to make under national rules. According to its plans, to make that surplus it will also have to spend a £2.2m surplus inherited from Central and Eastern Cheshire Primary Care Trust, make £5.3m of quality, innovation, productivity and prevention savings, and underspend its running costs budget by £239,000.
Mr Hawker said the CCG had negotiated contracts with its providers that assumed activity levels this year would be the same as last year. Despite this, he said if the CCG had applied national planning rules for 2013-14, its expenditure would have been £15.2m higher than its allocation.
He added: “In simple terms, that deficit is the result of two things: one, there has always been a historic financial challenge in Eastern Cheshire, and, two, the allocation system used this year was based on a baseline template which we believe contained numerous and significant errors.”
In order to set “baseline” allocations in areas like Central and Eastern Cheshire, where the PCT was split into three commissioning groups, commissioners and the Department of Health went through a complex exercise to determine which of the PCT’s spending commitments would fall to each of the groups. This was further complicated by the need to transfer specialised commissioning budgets to NHS England, and public health budgets to local authorities.
Mr Hawker said at the time of the baseline assessments there were “a number of specialised services, mental health [services], and other contracts, which you could not, at that time, accurately split down at CCG expenditure level”.
He added that the CCG’s current financial challenge was a “reflection of just how difficult that process was”, and that was why “we’ve been well supported by NHS England in trying to resolve this”.
He acknowledged the CCG’s plan meant “we only have that £200,000 surplus, and therefore there is little scope, if any, to manage additional pressures”.
But he said that over the past three years local commissioners and East Cheshire Trust had “worked closely” to manage demand, and had seen lower levels of growth than elsewhere in England.
27 March 2013