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

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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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.

10. 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.

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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