COVID-19 forces radical changes in NHS finance

Image of a clipboard with a white cross on a red background, heart trace, calculator, pen, money and glasses to show COVID-19 forces radical changes in NHS finance

Oli Hudson, Content Director at Wilmington Healthcare, discusses how COVID-19 is forcing radical changes in NHS finance and gives an overview of the latest developments which are fully explained in a newly-updated course run by the company’s Digital Learning Academy.

The 2020 Budget, which was announced in March, marked the start of a raft of dramatic financial changes in the NHS as the Government was forced to set aside additional money to fight the coronavirus pandemic.

Since then, NHS finances, resources and practices have continued to change at speed, from the announcement of further emergency funding, to wiping out historic NHS provider debt and suspending payment by results (PBR).

In this article, we give an overview of these developments, which are explained in more detail in a recently updated course on ‘How does finance work in the NHS?’. The course is provided by Wilmington Healthcare’s Digital Learning Academy – the leading online learning platform for the life sciences industry.

COVID-19 funding  

The onset of coronavirus forced the Government to announce more money for the NHS in the Budget, than originally planned, in the form of £5bn in emergency response funding.  This was followed, in the middle of April, by the Treasury’s announcement of another £6.6bn for the NHS to tackle COVID-19 as part of a £14.5bn coronavirus emergency response fund. This was in addition to the £5bn mentioned above and the Chancellor of the Exchequer, Rishi Sunak, said that: “whatever extra resources our NHS needs to cope with coronavirus ― it will get”.

New measures

Just five days after the Budget, a ‘Dear Colleague’ letter was sent from NHS Chief Executive Sir Simon Stevens and Chief Operating Officer Amanda Pritchard to leaders of trusts, Primary Care Networks (PCNs), Clinical Commissioning Groups (CCGs), local authorities and social care, Sustainability and Transformation Partnerships (STPs), Integrated Care Systems (ICSs), and NHS 111 providers. It introduced a raft of new measures.

Payment by Results (PBR)

Among the key changes was the announcement that all NHS trusts and foundation trusts would move to block contract payments for an initial period from 1 April to 31 July 2020. During this time, the usual national tariff payment architecture, payment by results or ‘PBR’, and ‘associated administrative and transactional processes’ has been suspended.

Quality and Outcomes Framework (QOF)

The Quality and Outcomes Framework (QOF) incentive programme, which prompts GPs to collect vital signs data on patients with long-term conditions, has also been temporarily suspended. This is because GPs are under pressure to triage COVID-19 patients and non-coronavirus patients are not visiting GP surgeries to have QOF-related tests during the pandemic.

CCG funding and FRF

The letter also stated that CCG allocations for 2020/21 would remain the same; while the Financial Recovery Fund (FRF), as described in the NHS Long Term Plan, would be suspended during this period. The FRF aims to support the efforts of systems and organisations to make all NHS services sustainable, so that by 2023/24 no trust is in deficit.

Local plans

A further key point in the letter was that the plans that local health economies were due to publish last year in response to the Long Term Plan have been delayed once again as normal financial arrangements are no longer in place so new budgets cannot be determined. Also delayed until later in the year is the NHS Long Term Plan Implementation Framework, which sets out further detail on how the overarching plan will be delivered.

Provider debts

At the beginning of April, Health Secretary Matt Hancock announced that some £13.4bn of debt would be written off as part of a major financial reset for NHS providers to tackle the COVID-19 pandemic.

He said that the move would free more than one hundred NHS hospitals of historic debt, enabling them to invest in services and longer-term infrastructure improvements. However, this announcement was not entirely unexpected as NHS England Chief Executive Sir Simon Stevens had hinted in January 2020 that trust historic debt would be restructured as CCG historic debt would be written off.

Community pharmacies

Another announcement at the beginning of April set out how community pharmacies would receive a £300m cash boost to ensure they could carry out essential services during the outbreak. The funding aims to support pharmacies in providing critical services to protect community health, including “supplying medicines and providing medical advice to patients during a period of unprecedented demand”.

Some £200m was paid on 1 April to pharmacy contractors alongside their normal monthly payments from the NHS Business Services Authority. A further £100m was allocated on 1 May.

Conclusion

The NHS is operating in unprecedented circumstances and it is impossible to say what else may change in its finances this year, or whether, indeed, COVID-19’s effects might be felt across the entire 10-year lifetime of the NHS Long Term Plan.

It will, of course, be essential for pharma to monitor these changes and the further updates that are expected, including one on the longer-term status of PBR, following its suspension until the end of July.

Keeping abreast of these fundamental changes and understanding the reasoning behind them will help pharma to navigate the way ahead in supporting the NHS through these challenging and uncertain times.

More information on NHS Funding can be found on Wilmington Healthcare’s Digital Learning Academy. 

Oli Hudson is Content Director at Wilmington Healthcare. For information on Wilmington Healthcare visit www.wilmingtonhealthcare.com