WestawayGillis Innovators in Healthcare Solutions Development of a Business case in the NHS Mr Kim Sergeant Managing Director

Agenda Context – the NHS today Business cases Focus on PCTs Information needs Good business cases Common mistakes

PCTs hold 75% of the NHS budget! Although NHS Trusts remain the main providers of secondary care…they now get their money from PCTs! Department of Health Accountability Contracts Budgets Own org money only PCTs hold 75% of the NHS budget! 28 SHAs ‘Special payments’ Anita Until October 2002: New strategic health authorities exist in shadow form only – enabling legislation still needed (promised by Oct 2002) NHS Regional Offices are being phased out New Regional Directorates of Health & Social Care are being formed now – recruitment is not complete PCTs are grappling with huge new responsibilities – many have recently undergone mergers Regional Directors of Health & Social Care will act as a link between the DH and the new Health Authorities – which exist as “shadow” StHAs until October 2002 Budgets: HAs will receive funding for their own activities, from the DH PCTs will receive their funding from the DH, via the StHAs Acute Trusts will get their funding from PCT commissioning, and from the DH via the StHAs Accountability HAs are reporting into the Regional Directors for H&SC PCTs and Acute Trusts are performance managed by the HAs Acute Trusts & Foundation Trusts 308 PCTs & CTs Local Authorities

PCTs are responsible for commissioning the majority of care… Central commissioning PCT PCT Consortia at different levels Board sets overall strategy Executive (PEC) develops policy Primary Mental health Secondary Specialised GMS GPs PMS GPs & PMS Plus “Provider services” employed by PCT e.g. District Nurses, Health Visitors Mental Health Trusts NHS Trusts Private Sector Tertiary & specialist centres Commissioning by block agreement contracts is being phased out In their place, payment for secondary and tertiary services will linked to activity and adjusted for casemix Hospitals (and other providers) will be paid for the activity that they undertake Primary Care Trusts (PCTs) will commission: the volume of activity required to deliver service priorities adjusted for casemix (mix of patients and/or treatment episodes) from a many of providers at a standard national price tariff, adjusted for regional variation in wages and other costs of service delivery Casemix will be indicated by a system of Healthcare Resource Groups

From a Trust perspective things are changing too… Historically Trusts hold contracts with multiple commissioners Commissioning arrangements are often based on historical precedent and do not change frequently Some localities have block contracts, others have case-by-case arrangements Contracts may or may not include cost of drugs

Introduction of Payment by Results – HRGs & the National Tariff The new system of payment will be introduced gradually over five years HRGs and a national tariff will be put in place to enable volume-casemix commissioning This will be developed to capture as much NHS activity as possible, so radically changing PCT commissioning methods Foundation Trusts will use the National Tariff for all procedures from April 2004

Across the NHS there is an increasing need to justify new or increased investment in services or products Key questions to address include: What is the product / service New drug / indication / technique The problem / situation this is addressing The benefits Where will it be prescribed / utilised Who will it be prescribed to / used for (specific groups of patients / entry and exit criteria) Performance in relation to alternative therapies / techniques Efficacy Safety Where does it fit with national / local priorities

Even if D&T Committee approval is given funding still needs to be found Funding can be found by Using within current budget replacement / cheaper products stopping doing something else Approach the Trust for funding Approach PCT for in-year funding Approach PCT for future funding

Timing is important for success: the funding process starts in September 2º care directorates look at previous spend Budgeted figure Outturn Within directorates each department will review future requirements Cost pressures Review inflationary uplift and any savings that may be needed Rheumatology department will generally be part of the medicines directorate. Each department will review its activity for the previous year. If they are expecting to provide a similar service in the coming year then they will be expected to do it within the same budget (plus inflationary increase if the PCT gives them this. The PCT will get an inflationary rise but may not pass it on to the PCTs) or the may be required to make savings(particularly if the trust is in deficit or the dept has made an overspend). Up to the clinician to flag up clinical needs to business manager and for them to highlight additional resource. Our associates highlight that this is not a robust system.

There are key stakeholders involved in the process 2º Care Business / directorate manager Management accountant Chief pharmacist / directorate senior pharmacist Clinician Contract manager dealing with commissioners Director of operations 1º Care / PCT Director of Commissioning / Lead commissioner Chief pharmacist Chair of Rx committee Finance Director The people in pink – are the owners of the process. The Directorate manager has to sign the budget and manage it.

Within the trust – priorities have to be established Each directorate flags up budget needs Trust management team Prioritisation process starts Agreement reached in funding - LDP Trust meet with PCTs Process is that each directorate will decide the budget it needs – these are then prioritised within the Trust –before the Trust goes to each PCT that it deals with. Prioritisation is usually via a prioritisation group (healthcare summits/prioritisation committee etc). Trust management team consists of CE/Director of Operations/ Finance Director. StHA facilitates and deals with deficit management. Negotiation with the PCT – with Finance Director and Commissioning Director. NB – PCT will have been going through the same process – looking at what it needs to deliver and looking at any overspends/deficits

Money will generally follow priority areas Anything that can demonstrate a positive impact on waiting lists waiting times Star ratings Anything that fits in with the PCT priorities

When presenting a ‘business case’ PCTs have specific information needs Impact on other parts of the system Primary/secondary care interface Walk in centres PGDs (Patient Group Directives) Nurse/pharmacist prescribing training Policy/target hooks/performance management Any impact on NICE/NSFs “This is the bit that the industry are pretty good at” Costs – in a form that matches up with requirements and reflects NHS budgeting & planning frameworks Immediate costs Longer term costs

If the case isn’t clear cut additional information may be requested Effect on referrals “Likely to become more critical under new contract as GPs already feel over-burdened” Risks and assumptions in realising financial benefits Are there external factors that might jeopardise benefit realisation Closer look at outcome data Qalys/NNTs

There are some common mistakes that need to be avoided when making a business case Timing is everything “If you get something at the wrong time you generally put it in the bin” Budgets and services are parochial Be careful when trying to sell on a cost saving realised by another department / trust / budget “Moving funding around is getting better but it is time and energy consuming” “Projects often founder because there are dependencies or benefits elsewhere in the system” Using language that is too ‘clinical’ Information needs to be in a format that more ‘generalist’ purchasers can understand

Good business cases are setting the standard Business cases need to be comprehensive Business cases need to be realistic Anything that enables localities to personalise information is key “draft protocols that can be amended for local use saves us heaps of time” Independent review of evidence is persuasive