Health leaders discuss £14m deficit at Hartlepool’s Clinical Commissioning Group

The meeting was held at Billingham Health Centre.
The meeting was held at Billingham Health Centre.

A health authority is facing a “£14m problem” amid a tough financial forecast.

Hartlepool and Stockton Clinical Commissioning Group (HaST CCG) buys in services and medicines for GPs and some hospital procedures in the two towns.

But it faces a tough year to come and some “robust contract negotiations” to put it on a solid footing, according to its chief finance officer.

A panel of health leaders heard how a draft budget had been drawn up at the CCG at a meeting this week.

A new NHS “long term plan” will see new funding allocations arrive for CCGs in April – with an average 5.65% rise in budgets for CCGs nationally to meet increasing demand.

But chief finance officer Graeme Niven explained HaST CCG had received only received a 5.31% increase – about £22m – to meet extra pressures.

Mr Niven said: “Changes to the formula have moved HaST further away from targets.

“But we’re still within the range where we do not have any significant growth impacts.”

However, the finance chief warned the “underlying deficit” at HaST meant there was an “underlying problem” of £14m at the CCG which meant it was “not in a good place”.

This change also limited the amount of reserves the health body could put to one side.

Mr Niven said: “We’re starting with a £14m gap before we start to grow in HaST. We’ve been trying to flag that in relation to sustainability.

“We can only set aside a risk reserve of 0.25% – when we work with our providers all this will change.

“So it’s not a strong plan in relation to financial sustainability at this moment in time.”

Coupled with this complex formula is something called the QIPP (Quality, Innovation, Productivity and Prevention programme) – a long-running scheme designed to cut costs through “transformation” at the NHS.

When NHS England reviewed QIPP in 2017/18 for 2018/19 they found a gap of about £400m nationwide where CCGs were at risk of not meeting savings targets.

Mr Niven said there was a “3% ask” on QIPP for HaST – meaning “robust contract negotiations” would be needed to bring down costs.

He added: “HaST is in a worsening financial place in relation to the plan – even through it looks like we’re getting growth, we’re starting off from a worsening position.”

The CCG buys in much of its services from NHS trusts – including North Tees and Hartlepool NHS Foundation Trust, meaning there is often crossover within the complex world of health finance.

Total costs are expected to change as negotiations on health contracts intensify in the coming weeks.

But Dr Neil O’OBrien, chief clinical officer at HaST CCG and Darlington CCG, said it was more important to focus on “the true cost of delivering care”.

He said the current forecasts worked off something called PbR (Payment by Results).

NHS England offers a “simple guide” to this system which is 72 pages long.

But a simple definition of this is a rules-based system for giving money to NHS trusts – rewarding efficiency and patient choice, among other things, to make it a “fair system” of funding, according to the Department of Health.

However, Dr O’Brien said PbR was different to the actual cost of care for people with a greater focus on “block arrangements” to strengthen the hand of CCGs.

He said: “That’s the real conversation that needs to change – we need to move away from PbR and away from trusts chasing PbR.

“Looked at on a pure PbR basis it looks pretty gloomy, but that’s not our aspiration.

“Our aspiration is to have block arrangements with all our providers working as five CCGs together to manage that risk and system risks in the wider geography.”

Alex Metcalfe, Local Democracy Reporting Service.