News / Operating framework seeks to strike the right risk balance

NHS providers will be able to earn a further 1% of contract value in 2012/13 if they meet five quality standards, the Department of Health announced.

Launching the operating framework for 2012/13, NHS deputy chief executive David Flory said the Department was keen to ensure there was a balance between the funding of commissioners and providers. He said commissioners’ budgets would increase overall by at least 2.5%.

Although details of one-year allocations to PCTs would be outlined in December, he said the overall increase would be reviewed in line with the Office for Budget Responsibility’s inflation forecast, which was due to be published alongside the chancellor’s autumn statement on 29 November.

Providers would again have a 4% efficiency target – up to 1.9% of this would be cash-releasing and add to commissioners’ spending power. As a result, while commissioners would have an extra 4%-4.5% to spend in 2012/13, providers face pressures of up to 4%.

‘One of the important judgements we had to make was about getting the right balance of risk between commissioners and providers in the system,’ he told the NHS chief executives’ conference at the end of November.

‘Yes, we want to challenge the system and drive efficiencies as hard as we can, but we don’t want to put ourselves at risk of losing some services. But when we looked at the range of +4.5% to -4%, we thought it was too wide.’

To close the gap, the increment that can be earned under the CQUIN (commissioning for quality and innovation) scheme will be increased from 1.5% to 2.5%.

‘As an end in itself, increasing the element of contract payments related to quality is the right thing to do. But the secondary benefit of balancing the risk between commissioners and providers is also right,’ he added.

The operating framework heralded a widening of the scope of CQUIN. Existing national goals cover VTE risk assessment and responsiveness to personal needs of patients. The framework added improving diagnosis of dementia in hospitals and use of the new NHS Safety Thermometer improvement tool.

Also, where CQUIN funding has been used previously to achieve a higher standard of quality, that funding may be made recurrent through CQUIN, but only where the commissioner is satisfied it is the necessary means to maintain the improvement.

PCTs will again be required to set aside 2% of their funding for non-recurrent spending. And clinical commissioning groups (CCGs) will not be responsible for resolving PCT legacy debt that arose prior to 2011/12. It is expected that aspirant CCGs, set a management allowance of £25 per head, will continue to work closely with PCTs to ensure no PCT ends 2012/13 in deficit. NHS trusts are expected to plan for a surplus consistent with their NHS foundation trust pipeline plan and their tripartite formal agreement.

The framework said by 2014/15 the overall running costs of the new NHS superstructure?will be on average a third lower than the running costs of the NHS in 2010/11. The running cost allowance for the core functions of the NHS Commissioning Board will be at least £492m.

Also speaking at the conference, health secretary Andrew Lansley praised the service’s efficiency savings. ‘The NHS has done fantastically well. Over last year it delivered £4.3bn in QIPP (quality, innovation, productivity and prevention) savings and there are plans this year for £5.9bn,’ he said.

He insisted the public and NHS should be made aware QIPP was not about cuts. ‘I would urge everybody here to make it clear to members of staff or the public the reason we are doing this is so resources will be deployed to meet rising demand, rising needs and improving technologies for patients. It’s not about cuts – it isn’t about diminishing services and calling it a saving, but about the best use of resources and using them more effectively to enable us to cope with the demands of the service.’