2011/12 Operating Framework Vanessa Harris 21 st December 2010

Overview of structure for NHS OF 2011/12 Transition & Reform What needs to happen in 2011/12 to realise the White Paper’s aspirations in terms of new organisations and roles Focus is on: Transparency & local accountability Where we can get better at local accountability and how we support a revolution in patient power Service quality How we maintain delivery and meet QIPP challenge Financial & business rules System levers and enablers Supported by: System accountability Planning and assurance The Operating Framework sets out the priorities for the NHS in 2011/12, the first full year of the transition, and the changes to national levers to enable the system to deliver

Transition and Reform Local Level: Will undertake a managed consolidation of PCT capacity, Clusters. Will have a single Executive Team and be in place by June Includes requirement for £2 per head development fund – funded from management cost savings Stronger Contracting: All contracts must be signed by start of financial year. PCTs to ensure that contracts allow for Providers to manage demand in their own organisations. PCT to use contract sanctions if not satisfied with data. SUS will be standard repository by April 2012 and progress towards deadline performance managed in 2011/12

Service Quality QIPP: Commitment to £20bn efficiency challenge, despite changed assumptions of CSR and pay freeze QIPP to be embedded in a single operational plan for each SHA and PCT Key New Commitments: New coalition commitments e.g. more Health Visitors and Family Nurse Partnership expansion

Finance and Business Rules Surplus Strategy: Expected drawdown of SHA / PCT surplus will be £150m (c.15%) No PCT to plan operating deficit in 2011/12. Trust deficits planned only where part of a planned recovery, in agreement with DH and SHA Requirement for 2% of PCT recurrent resource to be spent non recurrently for each PCT 2% will be held by SHA and accessed only through agreement of business case GP consortia will not be responsible for resolving legacy debt that arose prior to 2011/12. PCTs must ensure that debt issues are resolved by the end of 2012/13 GP consortia to work closely with PCTs to prevent PCT deficits over the next two years

Finance and Business Rules PCT Allocations: Average growth in recurrent allocations is 2.2%. Including non recurrent allocations for social care, PDS, GOS and pharmacy average increases of 3%. Running Costs 2010/11 last year for reporting PCT, SHA and Provider management costs. For SHA and PCTs will be replaced by “running costs” from 2011/12. By 2014/15 running costs to reduce by one third from current (2010/11). Details to be provided as part of Planning Guidance. GP consortia could have a running cost allowance of £25 - £35 per head by 2014/15

Finance and Business Rules Capital: Trusts: Primary source of funding will continue to be internally generated cash and interest bearing loans Capital allocation unspent from 10/11 not carried forward No expectation that a central capital budget programme will exist in 11/12. All capital requirements will be handled as part of planning process Regime for new community Trusts will follow NHS Trusts Spending review means smaller financial envelope for capital. Trusts are expected to prioritise backlog maintenance and patient safety, privacy and dignity PCTs: There will be no automatic capital allocation for PCTs with funding being granted on a cases by case basis

Finance and Business Rules Tariff: Increase in use of Best Practice Tariffs. Reduction in payments for short stay patients attracting a long stay tariff All tariffs set 1% below average cost (Originally this was targeted to certain tariffs only). Result of these changes is that published tariff will reduce by 2%. Inflation of 0.5% added to this – net effect 1.5% reduction. Non tariff services also subject to 1.5% reduction 4% provider efficiency to offset 2.5% pay and prices inflation

Finance and Business Rules Tariff: Adult Renal Dialysis comes into scope of PbR. Changes to A&E, Specialist Tops Ups, Critical Care currencies Service users in Mental Health allocated to tariff clusters 30% marginal rate continues for emergency activity over the 08/09 baseline No payment for Emergency readmissions following Elective admissions, local agreement about other readmissions within 30 days Option to provide services at lower than national tariff Actual impact of 11/12 tariff on PCTs is most closely aligned with most favourable WCC scenario from 10/11

Further Information Includes 2011/12 National Tariff and Guidance (incl. 30 day readmissions) – Dec PCT Allocation Working Papers – Mid January 2011 Detailed Planning Guidance (incl. 2% non-recurrent, running costs definitions) – End January 2011 Information Strategy – Early 2011 Detail on Operation of the Cancer Drugs Fund – Advice published following consultation

Finance and Business Rules PCT Allocations and Distance from Target

Planning Timetable – PCTs and NHS Trusts January 19 th – Submission of Initial Plans by Trusts and PCTs to SHA High Level DH templates covering I&E, Capital and Resource and Applications (PCTs) Income, Activity and Operating Costs bridge from 10/11 High Level workforce numbers QIPP – SHA planning to use 30 th November / 31 st December QIPP returns from orgs SHA Templates by December 31 st March 11 th – Submission of final FIMS plans by Trusts and PCTs to SHA