Income and Costing Training Gavin Rush

NHS Income flows Future Focused Finance - How money flows in the NHS Other useful information sources: NHS England - The health & Care System from April 2013 The Kings Fund – How does the NHS in England work?

PbR and Non PbR Introduced in 2003, payment by results (PBR) was the system for reimbursing healthcare providers in England for the costs of providing treatment. Based on the linking of a preset price to a defined measure of output or activity, it has been superseded by the national tariff The national tariff or payment mechanism is a system of financial flows – a way of moving funds around the health service. It enables healthcare providers in England to be reimbursed for the costs of providing treatment. Under payment by results, the term ‘national tariff’ referred to the price paid by commissioners for a clinical procedure. A local price is one that is negotiated and agreed between a commissioner and a healthcare provider for a healthcare activity when a national preset price does not exist. Even if a currency exists, e.g. Critical Care.

Coding, Tariff and Billing The Income Cycle Patient attends hospital for treatment. Patient is discharged and clinicians write up the notes Clinical Coders extract and translate information from patient notes into codes (A&E and Outpatients is done at source) Coded Information processed by the Data Warehouse team through the “Grouper” to attach an HRG code Finance attach national tariffs to each patient, report the financial position to the Trust Board and bill each CCG

Activity Reporting Activity Tariff Value Annual Target M6 Target   Tariff Value Annual Target M6 Target M6 Actual Variance % var Gross Variance Marginal Rate Adj't Net Variance Daycases 27,762 13,936 13,102 (834) (6%) £18,127,499 £9,099,860 £8,433,282 (£666,578) £0 (7%) Elective Inpatients 4,141 2,139 1,812 (327) (15%) £11,929,619 £6,160,377 £5,255,336 (£905,041) Non-Elective Inpatients 26,433 13,128 12,709 (419) (3%) £51,406,166 £25,531,129 £25,711,274 £180,145 (£208,303) (£28,158) (0%) Non-Elective Block #DIV/0! Sub-Total 58,336 29,203 27,623 (1,580) (5%) £81,463,284 £40,791,366 £39,399,891 (£1,391,474) (£1,599,777) (4%) First Outpatients 52,638 26,424 25,086 (1,338) £9,000,111 £4,517,984 £4,335,009 (£182,976) Follow Up Outpatients 101,553 50,979 46,159 (4,820) (9%) £7,973,402 £4,002,584 £3,608,992 (£393,592) (10%) Outpatient Unbundled 23,972 12,034 10,088 (1,945) (16%) £2,137,528 £1,073,022 1,017,477 (£55,545) Outpatient Procedures 38,554 19,354 18,174 (1,180) £4,906,394 £2,462,971 £2,249,610 (£213,361) Maternity Antenatal 3,205 1,609 1,337 (272) (17%) £4,541,407 £2,279,750 1,975,459 (£304,291) (13%) Maternity Postnatal 2,367 1,188 1,097 (91) (8%) £769,106 £386,085 350,922 (£35,164) 222,289 111,587 101,941 (9,646) £29,327,949 £14,722,397 £13,537,469 (£1,184,928) A&E Attendances 56,150 28,606 30,065 1,459 5% £6,938,868 £3,535,015 3,581,441 £46,426 1% Best Practice Adj'ts Fragility Hips £324,493 £161,161 £123,375 (£37,786) (23%) Stroke £352,365 £175,004 £128,794 (£46,210) (26%) TIA £12,742 £6,328 (£6,328) (100%) PBR Variance 336,775 169,396 159,629 (9,767) £118,419,700 £59,391,270 £56,770,970 (£2,620,300) (£2,828,603) Gross Non PBR 1,137,441 570,594 578,312 7,718 £54,006,167 £27,155,617 £29,292,828 £2,137,211 8% PBR & Non PBR Variance 1,474,216 739,990 737,941 (2,049) £172,425,867 £86,546,887 £86,063,797 (£483,089) (£691,392) SMART Recharge (£3,688,466) (£1,861,073) (£1,984,457) (£123,383) Fertility Recharge (£497,683) (£248,842) (£144,946) £103,896 Critical Care, SCBU & Maternity Risk Reserve (£1,161,219) (£580,610) £580,610 PBR & Non PBR Variance exc SMART £167,078,499 £83,856,363 £83,934,395 £78,032 (£130,270) 0% Less Funding Dispersed to Divisions: Urgent Division - Heart Failure BPT (£9,770) Planned Division D&P Division Planned Division - Bariatrics PBR & Non PBR Net Variance (Corp) (£140,040)

Total Planned Care Share Total Divisional Share Activity Reporting Speciality General Surgery Activity Variance Value Variance Total Planned Care Share POD Specialty   English Welsh Total Total Divisional Share DC 100 (182) (44) (226) (£205,844) (£48,701) (£254,545) (£145,478) (£34,419) (£179,898) EL (73) (24) (97) (£97,961) (£35,560) (£133,520) (£73,526) (£26,690) (£100,215) NEL 550 66 616 £390,662 (£74,119) £316,543 £212,354 (£47,399) £164,955 OPFASPCL 506 110 615 £112,502 £15,675 £128,177 £78,049 £10,875 £88,923 OPFUPSPCL (519) (147) (666) (£38,163) (£10,965) (£49,127) (£25,612) (£7,359) (£32,970) OPPROC (1) (0) (£278) (£45) (£324) (£215) (£35) (£250) TOTAL 280 (40) 240 £160,918 (£153,715) £7,203 £45,572 (£105,027) (£59,455) 18 Week Pathway and RRT Not Booked Outs (NBOs) Reduction in OP Procedures Positive number represent overperformance and negatives are underperformance Referral patterns and 18 weeks need to be considered along side activity For example, High referrals and low activity could indicate a growing 18 week problem

Block Contract Advantages and Disadvantages Largely based on historical patterns of care, a block contract allows a healthcare provider to receive a lump sum payment to provide a service, irrespective of the number of patients treated or type of treatment provided. Cost per case contracts identify for each episode or unit of care a payment to the service provider. This form of contract is commonplace for individual, expensive and bespoke care package agreements – for example, the placement of patients in medium secure mental health facilities. Block Contract Advantages and Disadvantages Impact assessment of changes to services The right thing to do but what dopes that mean for the trust How will we get paid Advantages Disadvantages Protection of income Growth – we do not get paid anymore if we see more patients Risk reduction Greater need for efficiency and costs Service redesign Focus on targets Focus on the health economy What happens next? Still need to record activity Tracking changes and efficiency's Emphasis on collaboration

Control totals, deficits and STF A financial control set by one organisation for another. These are used by NHS England and NHS Improvement to set limits on expenditure and targets for yearend surpluses/ deficits for commissioners, providers and STP areas. In local government, this term is variously used, most often to describe the amount of the overall public spending envelope the government decides should be spent by local government. Deficits An agreed level of overspend to ensure that all departments are correctly funded to deliver patient care. Sustainability and Transformation Plans (STPs) The provisional allocation of the Sustainability and Transformation Funding (STF) has been calculated by NHS Improvement and agreed with NHS England. STF will be ring-fenced as pass-through payments to providers that are in addition to normal contractual payments.

COCH Financial Plan 2017-18 Income £226.1m Expenditure (£241.1m) Deficit (£15.0m) CRS £12.4m Control Total (£2.628m) Donated Asset Transactions £0.433m Revised Deficit (£2.195m) £11.4m (£3.628m) (£3.195m)

Sustainability & Transformation Funding 2017/18 STF Profiling Month Q1 Q2 Q3 Q4 Total Financial (70%) 15% 20% 30% 35% 100% Financial £ 544,845 726,460 1,089,690 1,271,305 3,632,300 Target   Acheivement Y/N Actual £ - GP Streaming (15%) Performance £ 116,753 155,670 233,505 272,423 778,350 90% 95% Performance (15%) Total Plan 1,037,800 1,556,700 1,816,150 5,189,000 Total Actual 661,598 1,388,058 (116,753) (311,340) (1,556,700) (1,816,150) (3,800,943) £5.189m income included in 2017/18 Plan:- 2 elements split in to:- Financial Performance (70% £3.632m) A&E Performance (30% £1.557m)

Costing terms Reference costs (Business as usual BAU) National mandated costing return based on the average costs of providing treatment Education and Training return The Costs of providing training to clinical staff split my salaried and non-salaried trainees Integrated Reference costs The average costs of providing treatment less the net cost of training clinical staff SLR Service Line Reporting PLICs Patient Level Information Costing CTP Costing Transformation Program (to move from Reference costs to a PLICs Submission) SLR Looking in detail at the profitability and financial contribution of services in much the same way as a private sector company analyses its business units. When supported by patient level costing information this allows clinicians to relate service delivery actions to costs. PLICS Computer software that enables an organisation to determine and analyse patient-level costs. This information can help organisations to understand whether cost variations result from differences between patients or between how their treatment was delivered.

Costing Reference Costs PLICs CTP Limitations of Costs Nationally mandated costing return Costs submitted as an average Main source of information for: Tariff Model Hospital/Carter GIRFT GAPI Excludes all welsh activity (£30m for 201617) PLICs Currently a voluntary submission Plans to mandate from the summer of 2019 (201819 activity) Will inform Tariff, Model Hospital, GIRFT, etc. but as a secondary source Costs Submitted at patient level and will be linked to HES data CTP GAPI Group Advising on Pricing Innovation Limitations Highlight the reliance finance & data feeds - knowing where costs sit ledger is accurate costs match when income is recognised as best as possible (not budget matching all the time and ensuring costs are recognised when used e.g. devices and not change purpose of codes etc..) Limitations of Costs Costing is only as good as the source data Financial ledger Information feeds Based on Fully absorbed costs and must reconcile to the annual accounts.