1. Demystifying NHS Finance
Dr Ak Maheswaran
Every decision that a Clinicians makes on diagnostics and treatments have financial implications. So, it is imperative that clinicians fully understand the value of these decisions and appreciate that reducing wasteful activity will release resources to improve patient care and ultimately ensure that our NHS is sustainable.
Why Do Clinicians Need to Know About NHS Finance?
There are ways to measure value in healthcare, but ultimately you need to balance up the improvement in quality gained against the total costs.
Source: Best Possible Value – Future Focused Finance (Based on Porter’s Equation)
The Structure of the NHS is constantly evolving; the last major reform was because of The Health and Social Care Act The diagram shows the current structure of the NHS and how money flows from Parliament to the front-line organisations providing patient care.
How Does Money Flow Through the NHS?
We have also produced a Youtube animation describing the process which can be accessed using the QR code below.
NHS Trusts are financed in two different ways:
Revenue Finance – covers the day to day running of the trust
Capital Finance – to fund the purchase of assets (building and equipment) that support provision of clinical services
Where do NHS trusts get there money from and how is it spent?
Based on data from Hospital Annual Reports 2015/16
Commissioners are required to use specific contracts when engaging the service of a provider. This contract determines the method by which reimbursement is provided. This is shown below:
What determines how much money is paid for NHS services?
Block Contract
Provision of Specific Service for Specific Time
Capitated
Payments are made to care providers based on the number of patients in a target population.
Case-Based
Activity based payments related to episodes of care based on a national tariff
Pay for Performance
Payments that rewards or penalises providers based on their performance
Fee for Service
Provision of a specific service
Diagram and Table adapted from Outcome Based Healthcare, “Contracting for Outcomes – A Value based approach” July 2014
Our Finance and Clinical Educator (FACE) network are teaching clinicians about healthcare finance. They are approachable and always willing to answer any queries you have. Find your local Finance and Clinical Educator via our website.
You can also contact us for more information at:
Via
Where Can I get more information?