News / Equal rights

The new PCT allocation formula  shifts spending towards areas with the greatest health inequalities, reports Seamus Ward

The long-awaited revision of the formula that allocates revenue to primary care trusts received a warm welcome in many of the areas with greatest deprivation. When the allocations for 2009/10 and 2010/11 were announced this month it became clear that a handful of PCTs, assessed as having the greatest health inequalities and need, had been handed a windfall that will see their growth levels set at almost twice that of many of their peers in 2009/10.

PCTs’ allocations will grow by an average 5.5% in 2009/10, with all getting at least 5.2%. In 2010/11, the average growth will again be 5.5% and the floor level 5.1%. But a small number of significantly under target outliers have been given almost 10% in 2009/10.

The Department said the most under target PCT will be 10.6% below target at the beginning of 2009/10 and by the end of 2010/11 they will be 6.2% below target. ‘This is a significant improvement from 2003/04 when some PCTs were 22% below target and in 2005/6 when some were 16% below target.

‘We remain committed to bringing PCTs to their target allocations as soon as is practicable,’ it added.

Bassetlaw PCT will receive the biggest two-year increase in percentage terms (17.1%), followed by Barnsley PCT (15.2%), leaving both 6.2% under target by the end of 2010/11. A further three PCTs will receive more than 13% growth over the two years. By the end of the period, 13 PCTs will be 6.2% off target.

Bassetlaw PCT chief executive Louise Newcombe (pictured above) said it had benefited from  the new formula. In the current financial year the PCT’s baseline allocation is £153m but it will rise to £167.9m in 2009/10 and £182.4m in 2010/11. ‘The formula increasingly reflects the level of need within the community. This is excellent news for the locality,’ she said.

 

Speedy new services

Services would be developed more quickly than planned and in the next year the PCT’s aims included improving screening and developing new services for people with heart disease.

Ailsa Claire, NHS Barnsley chief executive, was pleased with the increase, even though she believed ‘the trust remains below its fair share of resources’.  But she said: ‘This allocation recognises the significant health issues that Barnsley currently faces.’

The Department is front-loading the increased allocations. The rate of growth in NHS spending will slow down in the next spending review period and, in the past, lower growth has been accompanied by a slower pace of change to target allocation.

King’s Fund chief executive Niall Dickson said the process and timescale for bringing PCTs’ budgets to target had not been made clear and warned against moving too quickly to target allocations. ‘[This] could be worrying to managers who will have to plan for any budget changes – especially when facing a period of lower growth in any case. It may have been better to have made bolder adjustments about reallocating funds during periods of growth rather than now.’

With any new funding formula there are winners and losers and some PCTs have moved from being under target in the old formula to being over target in the new one. Around a third of PCTs (46) will get the minimum 10.6% increase over the two years and 12 will be 10% or more over target allocation by the end of the two-year period. These include Westminster (20.8%), Richmond and Twickenham (23.4%) and Kensington and Chelsea (20.4%). Michael Munt, finance director of Surrey PCT which will receive the minimum 10.6%, said that though the allocation was less than previous years, it would still allow the PCT to deliver real improvements in care.

NHS chief executive David Nicholson said the allocations would enable the NHS to deliver on its priorities. But he said: ‘Given the current economic challenges, it is more important than ever that we focus these resources on securing high quality care for all, because better care means better value.’

The changes followed a review by the Advisory Committee on Resource Allocation (ACRA).  The formula’s four elements are population base, a new needs formula, enabling need according to age and other factors to be assessed for the first time, a new health inequalities formula and a revised market forces factor (MFF). Changes in the MFF will see a reduction in the overall range between organisations with the highest and lowest MFFs, as well as smaller cliff edges between neighbouring organisations.

ACRA said its new need-based model focuses on healthcare use and so does nothing to reduce health inequalities. A separate formula was needed to adjust for health inequalities. However, the weight given to the health inequality formula should be a ministerial decision as they have found no technical way of assessing how much weight should be applied.

ACRA’s review hinted at how the allocation formula might change in the next few years, suggesting the population base could move to a count of GP registrations. ACRA will continue to develop a person-based allocation formula for use in practice-based commissioning. Both could be implemented after 2010/11.

Finance directors will be keeping one eye on these developments but for now they will be more concerned with how the new elements of the formula impact on their allocations and what it might mean beyond 2011, when NHS funding growth will slow.