The Statement of Financial Entitlements (Amendment) (No 2) Directions 2008 were signed on 21 April 2008 and come into effect from 1 April 2008. The Directions amend Section 7C to roll forward the existing IM&T DES to allow PCTs to continue to make payments until 31 March 2009.

New statistics from the NHS Information Centre

• Expenditure on health
• NHS stop smoking statistics
• Hospital outpatient statistics
• Diagnostic waiting times

Monitor’s Third quarter report on NHS foundation trusts’ performance for 2007-8, identifies good overall performance, with no NHS foundation trust currently at risk from intervention for financial reasons. Some NHS foundation trusts are failing to meet the target to reduce rates of MRSA, and seven NHS foundation trust have been required to attend meetings to explain their plans to improve performance in this area.

Following the the Ministerial Industry Strategy Group’s Longterm leadership strategy  for medicines to encourage joint working between the NHS and pharmaceutical industry it was recommended an interactive toolkit was developed to support this.  The strategy had three main themes

• Improving the relationship between the NHS and industry to support the better use of cost effective medicines
• Supporting the European Commission’s plans to improve the competitiveness of Europe through the High Level Pharmaceutical Forum
• The need to improve the effectiveness of medicines regulation.

The toolkit aims to:

• encourage NHS organisations and staff to consider joint working as a realistic option for the delivery of high-quality healthcare
• provide the necessary information and have easy access to the tools which will help to enter into joint working.

A selection of templates are also available.

How Boards use financial management information is critical to delivering value for money from public funds. Reporting financial management information to the Board is a self assesment guide from the National Audit Office to help Boards receive the information they need.

Good financial information available to key decision makers at the right time has a beneficial effect on organisational performance conversly poor or inadequate financial information has  a negative impact on effective decision making. To support Boards to fulfil their responsibilities effectively, the financial management information that they receive must be clearly linked to the organisation’s performance against its objectives and fit for purpose in terms of scope, quality and presentation.

The third quarterly report on NHS finance and service performance shows that the NHS is still on course for a £1.8 billion surplus for this financial year, with only seventeen trusts reporting a deficit. This surplus is about two per cent of the overall NHS budget.

NHS Pay Modernisation: New contracts for general practice services in England (Executive Summary) from the National Audit Office notes that it has contributed to improved recruitment and retention of GPs, with numbers increasing from 26,833 to 30,931 since 2003. However, the contract has cost the Department £1.76 billion more than it originally budgeted for.

In the first two years of the contract, productivity has fallen by an average of 2.5 per cent per year. GPs are working on average seven hours less per week than in 1992, partly because of the removal of the responsibility for out of hours care. While the number of consultations with patients has increased, these are not in proportion with the increase in costs. Primary Care Trusts’ spending on GP services has however now started to level off.
The largest overspend of the contract was due to an underestimation of the amount that GPs would earn from the pay for performance scheme, the Quality Outcomes Framework (QOF). While there is evidence that the QOF has improved consistency in the quality of care, it is too early to say if overall patients’ health has improved as a result.

In 2005-06 the annual average pay of a GP partner was £113,614, an increase of 58 per cent since 2002-03. GPs report, however, that over the last year their pay has stayed the same or decreased. GP partners have taken more profit from the practice as pay while the average salary for GPs they employ increased by only three per cent in the first two years.

The report found that nurses are delivering more practice work leaving GPs to spend more time with more complex cases. The proportion of consultations undertaken by practice nurses increased from 21 per cent to 34 per cent between 1995 and 2006. GPs now spend more time with each patient, an average of around 12 minutes compared to 8 minutes in 2002-03.

The report concludes that Primary Care Trusts have not made use of all the levers in the new contract. Money for new local services has not led to improvements such as increased opening hours and some of the most deprived areas remain under-doctored. Some 40 per cent of GPs believed that aspects of the contract had not helped tackle health inequalities.

The report recommends that the Department develop a strategy for yearly negotiations on the QOF and the QOF should be based more on health outcomes. Primary Care Trusts should provide more services based on local need and review the number and skills of staff employed to commission and performance manage GP services with the aim of improving local commissioning.

The purpose of the Code of Conduct for Payment by Results (PbR) 2007/08 is to establish core principles, with some ground rules for organisational behaviour, and expectations as to how the system should operate, and to minimise disputes, as well as guide the resolution of them. This is Version 2, issued March 2007, which is not a comprehensive update of the original Code published in January 2006. Instead, limited changes have been made to reflect the developments in the national tariff for 2007/08, i.e. unbundling and the data quality assurance framework. We anticipate a more thorough review of the Code once the consultation on the Options for the Future of PbR is complete.

PbR introduces a degree of transparency in NHS financial flows that is almost unprecedented. The new system challenges organisations to manage successfully in a dynamic environment and creates incentives for increasing productivity and making efficient use of resources.

The Secretary of State requires compliance with this Code by all NHS Bodies operating PbR, including health authorities, NHS trusts and primary care trusts (PCTs). .

A report from the think tank the Taxpayers Alliance suggests the bill for public sector pensions is of growing concern for taxpayers facing huge bills for underfunded and over-generous pensions. In December 2007, the TaxPayers’ Alliance (TPA) revealed that there are almost 3,700 retired civil servants with retirement benefits worth £1 million. In the second paper of our public sector pensions series, they look at the generosity of pension arrangements in the NHS in England and Wales.

In £1 Million NHS pensions using information obtained from the NHS Business Services Authority Pensions Division, TPA researcherscalculate the extent of the taxpayers’ pension commitments. The findings are:

• There are almost 8,500 retired NHS employees (including GPs) in England and Wales with retirement benefits worth £1 million.
• The total value of these retirement benefits is almost £8.5 billion (up to £337 per household)

An NHS constitution for England from the BMA calls for an NHS constitution which offers the opportunity to enshrine the core values of the NHS in a formalised document and provide a constitutionally-entrenched framework concerning the rights and expectations of the public and patients. More importantly it would be expected to define NHS governance arrangements and, ensure the NHS is granted a significantly greater level of freedom from party politics and with it a new found autonomy. This would enable greater operational power for health professionals matched by a new and real accountability to the people and offer Parliament a greater strategic policy role.

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David Stout, Director of PCT Network at the NHS Confederation, shares his vision for World Class Commissioning and its potential to transform health services and drive improvements in health outcomes.

He advises on how Trusts can step-up their current approaches in World Class ways - for example, planning for the longer term needs of the population through more effective public engagement and techniques such as risk stratification.

In particular, Mr Stout defines the role of the NHS Confederation and how they are supporting PCTs in their transition.

‘Lost: low earners and the elderly care market’, from the think tank the Resolution Foundation looks at low earners and how they fare in the elderly care system. It identifies that social care for older people rarely receives the political attention it should. The Government’s recent commitment to a Green Paper on social care provides the opportunity for elderly care to become centre stage. Theis report establishes how low earners fare in the elderly care system.

It identifies that:

• Low earners tend to be older than average, and more likely to own their own homes. They also hold disproportionately more of their wealth in housing assets (as opposed to liquid savings) than other income groups.

• Are less likely that higher earners to prepare financially for retirement through
  pensions, and worry more than other income groups as to whether they will have sufficient assets to retire comfortably.

• Inclusion of housing assets when calculating care cost contributions is of critical importance to low earners – it renders the majority of them ineligible for subsidised care, and also most at risk of having to sell their homes or downsize in order to access their wealth to pay for care. This is in contrast to lower earners,who may not own their own homes and be eligible for subsidised care, and higher earners, who may have sufficient funds to pay for care from their liquid assets, such as savings or annuities, rather than their homes.

• Low earners feel the system to be unfair – in the very low level of means testing benchmarks which excludes the majority of low earners from any state funded care; in the inclusion of housing assets which penalises those who have saved

Key messages are:

• There is acceptance that increased elderly care costs cannot be met by the government alone. Low earners still believe only the very wealthy should pay for their care costs, and that the majority of people should receive government funded care or only make a small contribution.

• The number of self funders – i.e. those who either wholly or partially pay for their elderly care – is rising, and will continue to do so, because local authorities are adjusting their eligibility criteria so that only those with greater care needs are eligible for free home or residential care, leaving those with “lesser needs” (which are now nonetheless significant) to fund themselves, regardless of income.

• For those who cannot afford to self-fund formal care – which is likely to be a more common situation amongst low earners – informal care (i.e. care provided by friends or family free of charge) is crucially important. Estimates suggest that 70 per cent of the care provided in England and Wales is currently delivered by informal carers. Demography points to the fact that the numbers of low earners reaching an age where elderly care is required will increase substantially in the next 5 to 10 years, yet the increasing number of elderly living alone, not marrying and not having children will mean there will be fewer children and relatives for older people to rely on to provide them with informal care

• Finally, low earners are also more likely to be carers of relatives than the rest of the population. The age profile of this group, combined with these factors, suggests that a significant proportion of low earners may be shouldering a dual burden – they may be caring for their elderly parents, but also still supporting (financially and otherwise) their own children. This “squeezed” generation phenomenon, which affects women in particular, will be a significant factor affecting their quality of life, but may also have a longer lasting, intergenerational impact – people who give up work to care for relatives will not be contributing to their pensions.

Realising Britain’s Potential: Future Strategic Challenges for Britain (Executive Summary) from the Cabinet Office identifies four major challenges to be faced by Britian:

• The importance of early years learning and childcare in helping those from poorer homes and in improving later performance.

• Continued investment in physical infrastructure (roads and rail).

• Demands on public services and housing, especially in the South East, from a rising population, including continuing net migration into Britain.

• Increasing life expectancy, with a rise of a half within a decade of those aged over 85, and a two-fifths increase by 2022 in the demand for informal care from family, friends and community members.

The report suggests a mix of the public and private sector providers will be required to meet demand. Taxpayers cannot finance all of the expanded early learning and childcare, increased transport facilities and care for the elderly To reduce the tax burden, individuals will have to accept that individuals will have to save much more and pay more in user charges (via road pricing and elderly care).

The Reform think tank have produced NHS reform: national mantra, not local reality uses recent academic studies to show that the performance of the NHS across the lifespan is well behind other countries. Improving patient care will need new investment in many areas, but taxpayer funding is (and should be) restricted in coming years. The solution is improved productivity. The report finds that the internal market has altered to favour producers rather than patients. Patient choice and independent sector treatment of NHS patients are in decline.

The report defines two scenarios:

1. Current trends will lead to the negative scenario where the NHS delivers substandard quality and access for 11-12 per cent of GDP (c.£110 billion – c.£120 billion). In this scenario key staff leave the NHS increasing its problems.
2. Alternatively reform delivers immediate access to excellent quality services at a cost of 9-10 per cent of GDP (c.£90 billion – c.£100 billion). Fundemental to this reform is an economic constitution which requires value for money and guarantees patient choice and a diversity of providers. The report believes this would deliver significant improvement within 18 months.

Key findings are:

• In 2007, seven international clinical benchmarking exercises revealed a cradle-to-grave performance gap compared to peer group countries.
• The medium term requirement is investment in many areas. Funding will be restricted given the immediate pressures of a slowing economy and longer term concerns over economic competitiveness. The NHS must redesign and improve services within a ceiling of 9-10 per cent of GDP.
• NHS reform is increasingly a national mantra rather than local reality. Primary Care Trusts, practice-based commissioning and patient choice have failed to drive significant change in the interests of patients. There is no level playing field for independent sector provision. The short-term focus of policy from the Department of Health has prevented a focus on the medium term challenge.
• The return of the service to financial surplus does not signify a better position in which investment can take place. The surplus is due to a temporary combination of the last years of major funding increases and a pause in centrally-prescribed cost increases.
• Current trends therefore point to the scenario of decline. This could be altered with an economic constitution for the service that defines the duty to create value at all levels.

Even for those with a strong background in accounting, some aspects of NHS finance can be immensely complicated.  The Healthcare Financial Management Association (HFMA) with the Audit Commission, has published three guides for non-executives to help them get a more detailed grasp of their annual accounts.  They have been written especially for non-executive directors with limited financial expertise to help them understand NHS accounts and to explain the role and responsibilities of non-executive directors and auditors in the accounting process.   The guides cover NHS Trusts, Primary Care Trusts and Foundation Trusts.

• NHS Trust Accounts: A Guide for Non-executives

• Primary Care Trust Accounts: A Guide for Non-executives

• Foundation Trust Accounts: A Guide for Non-executives and Governors

NHS reference costs 2007/08: collection guidance  outlines the mandatory requirements for the 2007/08 reference costs collection. It updates and supersedes previous costing guidance. It should be read in conjunction with the latest version of the NHS costing manual.

This is is mandatory return for all providers of services to the NHS. It is also mandatory for commissioning of services for NHS patients whose care is provided by non-NHS providers. Information is also required for services provided to NHS patients under a sub-contract from a NHS provider. Hospices and nursing homes are excluded from this requirement. The data is used to inform the national tariff under Payment by Results. It is therefore essential that the reference cost collection is of the highest quality and accuracy.

The  NHS costing manual 2007-08 manual establishes the principles and practice of costing to be applied in the NHS. It is not just designed to support the production of the National Schedule of Reference Costs and through this, the national tariff, but should also be used in developing and monitoring service and financial frameworks, as well as developments in and the monitoring and implementation of National Service Frameworks.

Giving a comprehensive overview of the social care sector in England ‘The state of social care in England 2006-07 (Executive Summary)’ the Annual Report of the Commission for Social Care Inspection follows concerns raised by the Commission last year, and explores the experiences of people not deemed eligible for state-supported social care. It shows that many younger disabled people and frail older people are being ‘signposted’ to voluntary services. Many are forced to rely on help from family and informal arrangements which can break down at short notice. People unable to rely on families or friends and unable to pay for care services themselves are simply left to cope with everyday life, while some become virtually trapped in their own home.Local authorities are increasingly only helping those with ‘substantial’ or ‘critical’ needs. This despite the use of a national set of rules (called Fair Access to Care Services - FACS ) to decide who is eligible for support. However who does or doesn’t get help varies not only between but also within the same council. In practice the criteria can be interpreted in different ways by local staff.

The full report can be downloaded using the links below along with the evidence that informed it.

State of social care - foreword & overview

State of social care - context and focus

State of social care - part 1

State of social care - part 2

State of social care - appendices

Lost to the System? The Impact of Fair Access to Care

Self-funded social care for older people: an analysis of eligibility, variations and future projections

You can also download the mp3 audio summary Audio summary.

Practice based commissioning: GP practice survey Wave 2 (September 2007), covers a sample of practices from each primary care trust. The aims of the survey are to get feedback from practices on their perception of the support offered by their primary care trust and on the clinical and financial engagement of practices with practice based commissioning. It finds that:

• A slight increase in support for PBC: Fifty-nine percent of GP practices say they are supportive of PBC as a policy (57 percent, Wave 1). Seventeen percent still oppose it, but this is a fall from the 20 percent opposing it in Wave 1.

• The percentage of practices saying that it is too early to tell whether PBC has improved patient care has increase from 37 percent to 46 percent. Thirty percent (31 percent, Wave 1) say that PBC has not improved care and 12 percent (13 percent, Wave 1) say that it has.

• Thirty-six percent (33 percent, Wave 1) of practices have commissioned one or more new services through PBC.

• A ten percentage points increase in the percentage of practices that received an indicative budget for 2007-08, from 56 percent in Wave 1 to 66 percent in Wave 2. However, 76 percent (74 percent, Wave 1) still feel that it has yet to make a difference to the way the GP practice operates.

• An increase in the percentage of practices that have agreed a commissioning plan with their PCT, from 46 percent in Wave 1 to 54 percent in Wave 2.

• Forty-two percent of practices (37 percent, Wave 1) rate the quality of managerial support provided by their PCT as good, the percentage rating it as poor is now 49 percent (51 percent, Wave 1).

• Around a third of practices rate the quality, format and frequency of information provided by their PCT as being good, a figure that has not significantly changed from Wave 1.

• 74 percent of practices (72 percent, Wave 1) say they have a good relationship with their PCT.

• A rise in the number of practices responding to the survey compared to Wave 1, from 59 percent (1,198) to 70 percent (1,398) in Wave 2.

Disability Poverty in the UK shows that disabled people are twice as likely to live in poverty as non-disabled people.  Disabled people are more likely to live in poverty than they were 10 years ago, with an estimated three million disabled people living in relative poverty in the UK .

The report shows

• Low levels of employment for disabled people mean that many are trapped in inescapable poverty. For people not expected to work, benefit levels frequently fail to cover basic costs of living, leaving them with no real route out of poverty.
• Half (49 per cent) of disabled people surveyed had no savings. The majority revealed this was because their incomes were way below the national average.
• Disabled people face discrimination in the education system. Disabled people are more than twice as likely to have no qualifications as non-disabled people.

The Leonard Cheshire Disability report makes a significant number of recommendations to help end disability poverty. This includes extending Winter Fuel Allowance to many disabled people who would also benefit from support with heating costs and reviewing how disability benefits support those disabled people who are not expected to work.