Financial squeeze on NHS providers to continue in 2013-14

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NHS hospital trusts and other providers face another tough financial year in 2013-14 with the NHS Commissioning Board unveiling plans for further cuts to tariff income and the introduction of new contractual penalties.

The board’s planning guidance for the coming year confirmed that tariff prices for NHS services would be cut by a further 1.3 per cent in cash terms.

The guidance explained that providers were facing estimated cost inflation of 2.7 per cent, so the cut would impose an “efficiency requirement” on providers of 4 per cent. It added that the 1.3 per cent reduction should also be the “base assumption for discussions on price for services outside the scope of the mandatory tariff”. The cut follows similar reductions in tariff prices in 2011-12 and 2012-13.

The guidance also confirmed that the controversial policies of non-payment for admissions within 30 days of discharge following an elective admission, and a 30 per cent “marginal tariff” for increases in non-elective admissions, would continue. The money withheld from providers in payments for non-elective admissions above the threshold will be administered by the local area teams of the commissioning board, who will use it for “local investment in relevant demand management schemes”.

The board also announced that any referral-to-treatment wait of more than a year should attract a financial penalty.

The planning guidance stated: “Commissioners must enforce the standard [contractual] terms, including the financial consequences for underperformance or failure to provide data on which to assess performance. We will be rigorous in supporting clinical commissioning groups and our direct commissioners to ensure the contract terms are implemented.”

However, the board also said it would work with “stakeholders” next year to “oversee a fundamental review of the incentives, rewards and sanctions available to commissioners to inform the 2014-15 planning round”.

Clinical commissioning groups will receive uniform 2.3 per cent increases in allocations in 2013-14. However, the planning guidance confirmed that they would have to “ringfence” 2 per cent of this money for non-recurrent expenditure, which would need approval from the board’s local area teams. On top of this they would need to hold back a 0.5 per cent contingency fund, and to plan for a 1 per cent surplus.

British Medical Council chair Mark Porter said the BMA was “concerned about plans to penalise hospitals for readmissions” as this “could potentially destabilise trusts that are already struggling in the current financial climate”.