Tariff proposals will not include marginal rate for specialised services

However, Jim Mackey told HSJ providers would be required to buy high cost devices through a central price list, rather than buying them separately and sending the bill to NHS England. These include items such as insulin pumps, bespoke prosthetics and consumables for robotic surgery.

The proposal for a marginal rate in the 2015-16 tariff consultation provoked an unprecedented revolt from providers, with 30 eventually rejecting a revised offer and remaining on the previous tariff.

Mr Mackey admitted there are still concerns from some specialist trusts about the 2016-17 offer, which is due to be published in January, but he “can’t see why anyone would have a substantial reason for objection”.

Last week it was confirmed the overall tariff would increase by 1 per cent in cash terms, after taking account of cost inflation and efficiency requirements.

Mr Mackey said: “We met with some colleagues from the specialist trusts on Monday so they’ve understandably got some concerns, but I think we are pragmatic enough to understand the spending review was a lot better than we thought it was going to be, and actually this tariff settlement overall is better than we thought it could be a few weeks ago.

“We’ve got a fighting chance so let’s not squabble amongst each other.”

Mr Mackey, who previously led Northumbria Healthcare Foundation Trust, is targeting a breakeven position for the provider sector next year, aided by £1.8bn to tackle trust deficits from a £2.1bn “sustainability and transformation fund”.

Asked about the conditions that trusts will need to meet to access these funds, he said: “Convince us you’re going to deliver on [the Carter review of NHS efficiency], the locum and agency cap, and there’s some stuff about [Sir Bruce Keogh’s] plans about avoidable mortality.

This will leave “a small number of providers that have really serious problems”, he said, “and we can do a serious job with them on unpacking it, reconstructing it, and getting it into a more sustainable place”.

He said this could “possibly” lead to department closures in some areas. He added: “Generally in those places there’s an understanding of some difficult decisions that may be need to be made and for whatever reason they haven’t been made and people feel they are unable to confront them….

“Some of them might be standalone organisations that might need to work in a new form, some might want to think about [accountable care organisation] development… We’ll be trying to work through and deliver an approach that suits their circumstances.”

Asked whether the £340m allocated to “transformation” and implementing new care models would be enough, he said: “We need to all have a bit of a gear change on some of those national processes and stop looking at them as processes that provide a grant, and start looking at them as things that if there’s a need for investment, convince yourself or otherwise that there’s a return on that investment and that can maybe help with the pump priming.”

He also said the sustainability and transformation fund was “not hard wired” as recurrent, but there could be further discussions on this.

In 2015-16, Mr Mackey expects £300m-£500m of capital funding to be transferred to revenue at a local level, to help reduce the overall provider deficit to £1.8bn by the end of the year. There could also be separate transfers at a national level, as happened in 2014-15.

He added that controls on agency staff expenditure are “starting to kick in”. He said: “We’ve had some early reports of a 12 per cent reduction in cost in some areas but it’s nowhere near scientific enough to see that we can rely on that kind of number.”

The “vast majority” of providers are expected to hit their “stretch target” for 2015-16, Mr Mackey said, and for those that fail “there may be a link to the transformation fund so if you miss the stretch target this year it might reduce or you might have to come off access to the fund in the next year”.