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.

Individual Budgets and the interface with health: a discussion paper was commissioned by CSIP as a stand alone piece of work to capture the issues and learning from the Individual Budgets pilot regarding the interface between Individual Budgets and Health. A “think tank” session was organised with key stakeholders from the Cabinet Office, Department of Health, In Control and Individual Budget pilot sites to discuss these emerging issues and any relevant activity.

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.

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)

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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.

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The World Class Commissioning initiative provides a major opportunity for Trusts to transform care services and develop new ways of maximising the value of limited healthcare budgets.

While Trusts wait for the WCC Assurance Framework, there are many ways to start planning the transition to World Class Commissioning. Evidence-based analysis of population requirements, how money has been spent and how other organisations are approaching commissioning is a key starting point.

In this interview, Andrew Beale, Executive Director of Matrix Knowledge Group consultancy, discusses how evidence-based analysis can help Trusts to better understand their current position, population healthcare patterns and to maximise the benefit of their investments within the available resources.

‘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.

The Right Result? Payment by Results 2003-07 details how Payment by Results (PbR), has been embedded across the NHS and has helped hospitals to be more business-like.  It should start to deliver the significant increases in productivity and efficiency across the NHS that the policy was designed to achieve.The PbR policy was introduced by the government four years ago and is a system of paying hospitals nationally set prices for the number of patients and types of conditions they treat. It is designed to encourage hospitals to treat more patients, more efficiently without compromising quality of care.

This Audit Commission report finds that under PbR most hospitals have improved their financial management and now have a better understanding of how much it costs them to treat patients. The impact on the NHS in terms of efficiency and activity has been smaller than expected, however, and PbR seems to have contributed to positive trends rather than driven them.

The report sets out a number of priorities for future development of the policy that need to be addressed if PbR is to deliver further improvements:

For Primary Care Trusts

• Further develop commercial, legal and contracting skills, identifying gaps in line with the developing World Class Commissioning competencies, to improve their ability to operate in the PbR environment.

• Ensure that 2008/09 contracts contain appropriate incentives and penalties to support appropriate, high quality care, for example, readmissions targets, and that information requirements are clearly specified and enforceable. Progress against these targets should be reported regularly.

• Adopt a robust yet proportionate approach to monitoring and challenging provider activity and costs under contract, prioritising investment in practice level information systems so that practices can engage in the planning and monitoring of hospital activity.

• Actively monitor provider actions in response to the Audit Commission’s PbR data assurance audits, and use the findings from these audits to supplement existing information on potential data quality issues.

For Acute NHS Trusts

• Ensure that robust information and reporting systems are in place that meet all internal and external requirements within the minimum reporting deadline of 30 days following the end of the month, and that local information systems are in place to complement SUS as necessary.

• Embed and promote service-line management and reporting, paying particular attention to the use of surpluses and how this will be managed within the organisation.

• Understand the costing data they require to manage the business, and invest in improving internal costing systems, considering the business case for introducing patient level costing systems where appropriate.

• Prioritise the implementation of the OPCS-4.4 classification system for procedures, to improve coding internally and to support the introduction of HRG4.

• Engage in discussions with commissioners about changing patient pathways, demand management and use of local flexibilities, such as unbundling the tariff into its component parts.

For the Department of Health

• Identify and explicitly prioritise the changes that will be most effective in achieving policy objectives, and ensure that the development programme for addressing these priorities is realistic, properly resourced and communicated to stakeholders.

• Ensure that timely guidance, support and direction continues to be provided to both commissioners and providers in a balanced way, including more effective mechanisms for receiving and providing feedback, particularly in relation to contract and information issues.

• Review and address the perceived limitations of SUS in supporting PbR, ensuring there is a clear vision for NHS data and organisations’ responsibilities that is shared by NHS Connecting for Health and the Information Centre for Health and Social Care, and that the expectations of the NHS are consistent with this vision. Additional steps should be taken to ensure that guidance from these bodies is consistent.

• Invest in information systems to capture and report on community services and support the development of an appropriate payment mechanism.

• Monitor usage of the new standard contract and reinforce the move toward a consistent approach to contracting across the NHS, providing guidance as appropriate to ensure that balanced, fair contracts, that support nationally agreed principles, are negotiated.

• Use the tariff as a policy lever to drive desired behaviours, rather than purely as a reflection of average costs, signalling likely changes to the NHS well in advance.

• Explore the use of separate payment streams in addition to the tariff, for example to reward quality or to fund capital costs, where this is necessary to provide the right incentives to NHS bodies.

• Carefully monitor the implementation of HRG4 to ensure that the additional complexity of the payment classification is warranted and is not undermining policy objectives.

Mental Health Act Commission Twelfth Biennial Report - Risk, Rights, Recovery finds that there are severe funding issues faced by providers of mental health services in that:

• Patients deemed to be a threat to themselves or others are being denied hospital beds while commissioners disagree with regard to funding.

• The Mental Health Act Commission has found practitioners are being told to delay sectioning people with urgent mental health needs until primary care trusts ascertain who should pay for their treatment.

• The problem is caused by high bed occupancy levels and the need for PCTs to balance budgets.

• This has encouraged PCTs not to detain patients who have travelled from other areas until the home PCT has agreed to pay.

Thse practices are unsuprisingly condemned in this report.

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.

Mental Health Act Commission Eleventh Biennial Report (In Place Of Fear) questions whether all inpatient mental health services provide their patients with acceptable levels of security, care, or a sense of being treated as  someone who matters. It welcome the Government’s announced refocus on inpatient services and call for it to concentrate on building up these aspects, in place of the fear that many patients have of services and that many people have of mentally disordered people.  The importance of breaking such ‘circles of fear’ for Black and minority ethnic patients are particularly welcomed.

There is evidence that inpatient services are losing staff and resources to community
services, but that pressures on inpatient beds remain high. Over half of all wards are full or have more patients than beds, with staffing shortages and unpleasant ward environments undermining the therapeutic purpose of inpatient admission.

The report highlights the dangers inherent in devolved service commissioning for ensuring adequate levels of specialist provision, and note the vulnerability of mental health services as Trusts face financial crises.

The extension of patient ‘choice’ across health service provision should not be allowed further to disadvantage or ostracise patients who are unable to exercise choice because of their mental incapacity or because of legal powers of compulsion held over
their treatment.

Boundaries of current mental health law under stress, with discussion of about forty cases
in court, and a more general observation of legal powers being used in ways that may not have been intended by Parliament, often for pragmatic reasons where professionals are keen to intervene in what they perceive to be a person’s best interest or as measures of social order.

It also discusses aspects of the use of present mental health powers in relation to civil detention and police powers, including an extended discussion on the detention of mentally disordered offenders.We provide analysis of deaths of detained patients; seclusion incidents notified to the Commission; and Second Opinion activity during this period.

The report has a strong focus on measures to encourage and support the empowerment of all patients, including those without mental capacity to make certain decisions about their care.

It finally reviews the proposed future arrangements for monitoring detention of mentally disordered persons and suggest ways in which the forthcoming Mental Health Bill might be improved to ensure acceptability to mentally disordered persons and the effective protection of their rights.

Mental Health Act Commission Eleventh Biennial Report - Errata and Addendum

Summary of responses to the  ‘Options for the Future of Payment by Results: 2008/09 – 2010/11′ consultation put forward proposals for future developments in PbR including tariff setting, coding and classification, expanding the scope of PbR, and supporting health policies through financial reform.

Caring for Vulnerable Babies: The reorganisation of neonatal services in England (Executive Summary) considers if the reorganisation of neonatal services in England has helped improve care for premature and low birth weight babies with fewer babies travelling long distances for suitable treatment. The National Audit Office in it find that further improvements to the service are being limited by shortages in nursing staff, a lack of cots in the right place at the right level of care and a lack of widespread specialist 24 hour transport. They also provide a comparison with international neonatal services via RAND Europe: The provision of neonatal services and the Survey of Neonatal Units in England by the National Audit Office upon which the report is based.

Every year around 10 per cent, or 60,000, newborn babies require some form of specialized neonatal care. And these numbers are increasing, up 5 per cent between 2005 and 2006, due to an increase in the proportion of women with high risk factors such as high or low maternal age, obesity, ethnic origin, deprivation and assisted conception such as IVF. In 2006-07, some £420 million was spent on running the 180 neonatal units in England, which are organized into 23 managed clinical networks.

A number of improvements since the Department announced the reorganization of neonatal services into networks in 2003 are identified. There has been a reduction in long distance transfers of mothers and babies, with only 3.4 per cent of babies across England admitted to units outside of their network. Overall, 17 networks are meeting the target to treat babies within their network and the consistency, communication and co-ordination of care within and between the networks has improved. The number of cots has also increased from 3,243 to 3,521. Neonatal units have made strides in considering the needs of parents and involving them in their babies care. Parents are mostly very happy with the specialist care and expertise their babies receive.

In 2005, England’s neonatal mortality rate was 3.5 deaths per 1,000 live births, similar to other developed countries. But the report found that this figure masks wide variations across the country. The South West Midlands had the highest mortality rate of 4.8 deaths per 1,000 live births, compared to Surrey and Sussex with 1.8 deaths per live 1,000 births. More work is required to determine the contribution that different socio-economic, ethnic, demographic, cultural and service factors are making to these variations in mortality rates.

The report also highlighted shortages in the numbers of neonatal nurses. On average, each unit had nearly three nursing vacancies for nurses qualified in neonatal care. Only half of units met the British Association of Perinatal Medicine (BAPM) professionally developed standard for high dependency care of one nurse to two babies, and only 24 per cent met the standard for intensive care of one nurse to one baby. The vast majority of level three (intensive care) units, which require a 1:1 ratio of nurses to babies for the whole unit, did not meet the standards for intensive care.

Cots for the right level of care are not always available, resulting in units having to close and babies being cared for in the wrong places on occasions. On average, each unit had to close to new admissions once a week, the most common reasons being a lack of cots or skilled nursing staff. Nearly a third of units had to care for a baby who should have been transferred to a higher level of care and just over half looked after an improving baby who was ready to be transferred but could not because a receiving cot was not available. In 2006-07, nearly a third of neonatal units operated above the BAPM recommended occupancy rate of 70 per cent and three units operated above 100 per cent. High occupancy rates could have consequences for patient safety, for example due to increased risk of infection or inadequate levels of care.

Neonatal transport is an essential element of networked neonatal care, with all bar one providing some form of specialist transport during day time working hours, but only half of networks providing specialist transport services 24 hours a day seven days a week. Few transport services have separate staffing arrangements from the clinical inpatient services meaning that staff have to leave the unit to accompany a baby on a transfer. Three quarters of units experienced delays in moving babies and 44 per cent believed that care was compromised as a result.

The report concludes that the cost of neonatal services as a whole are not fully understood and there is a mismatch between costs and charges. Also charges per day for an intensive care cot varied from £173 to £2,384. The reorganization of care into neonatal networks has improved the co-ordination and consistency of services pointing to increased effectiveness, however there is still capacity and staffing problems and a lack of clear data on outcomes. In addition, the variable financial management information makes it difficult to judge the economy and efficiency of the service.

The NAO recommends that NHS and Foundation Trusts need to improve their financial management information. Commissioners, in conjunction with networks and Strategic Health Authorities, should commission all neonatal care services together and in particular examine the relative cost-effectiveness of the different transport options currently in place. In addition, NHS and Foundation Trusts should develop a targeted action plan to address neonatal staffing shortages.

To develop a strategic framework for its investment in the third sector to transform the current piecemeal arrangements into a strategic portfolio of investment that more explicitly supports delivery of the Department’s objectives and priorities the Department is undertaking a review. Responses from third sector organisations to the consultation document are due by 20 March 2008.<!–