1. Income and Costing Training
Gavin Rush

2. NHS Income flows Future Focused Finance - How money flows in the NHS
Other useful information sources:
NHS England - The health & Care System from April 2013
The Kings Fund – How does the NHS in England work?

3. PbR and Non PbR
Introduced in 2003, payment by results (PBR) was the system for reimbursing healthcare providers in England for the costs of providing treatment. Based on the linking of a preset price to a defined measure of output or activity, it has been superseded by the national tariff
The national tariff or payment mechanism is a system of financial flows – a way of moving funds around the health service. It enables healthcare providers in England to be reimbursed for the costs of providing treatment. Under payment by results, the term ‘national tariff’ referred to the price paid by commissioners for a clinical procedure.
A local price is one that is negotiated and agreed between a commissioner and a healthcare provider for a healthcare activity when a national preset price does not exist. Even if a currency exists, e.g. Critical Care.

4. Coding, Tariff and Billing
The Income Cycle
Patient attends hospital for treatment. Patient is discharged and clinicians write up the notes
Clinical Coders extract and translate information from patient notes into codes (A&E and Outpatients is done at source)
Coded Information processed by the Data Warehouse team through the “Grouper” to attach an HRG code
Finance attach national tariffs to each patient, report the financial position to the Trust Board and bill each CCG

5. Activity Reporting Activity Tariff Value Annual Target M6 Target
Tariff Value
Annual Target
M6 Target
M6 Actual
Variance
% var
Gross Variance
Marginal Rate Adj't
Net Variance
Daycases
27,762
13,936
13,102
(834)
(6%)
£18,127,499
£9,099,860
£8,433,282
(£666,578) £0
(7%)
Elective Inpatients
4,141
2,139
1,812
(327)
(15%)
£11,929,619
£6,160,377
£5,255,336
(£905,041)
Non-Elective Inpatients
26,433
13,128
12,709
(419)
(3%)
£51,406,166
£25,531,129
£25,711,274
£180,145
(£208,303)
(£28,158)
(0%)
Non-Elective Block
#DIV/0!
Sub-Total
58,336
29,203
27,623
(1,580)
(5%)
£81,463,284
£40,791,366
£39,399,891
(£1,391,474)
(£1,599,777)
(4%)
First Outpatients
52,638
26,424
25,086
(1,338)
£9,000,111
£4,517,984
£4,335,009
(£182,976)
Follow Up Outpatients
101,553
50,979
46,159
(4,820)
(9%)
£7,973,402
£4,002,584
£3,608,992
(£393,592)
(10%)
Outpatient Unbundled
23,972
12,034
10,088
(1,945)
(16%)
£2,137,528
£1,073,022
1,017,477
(£55,545)
Outpatient Procedures
38,554
19,354
18,174
(1,180)
£4,906,394
£2,462,971
£2,249,610
(£213,361)
Maternity Antenatal
3,205
1,609
1,337
(272)
(17%)
£4,541,407
£2,279,750
1,975,459
(£304,291)
(13%)
Maternity Postnatal
2,367
1,188
1,097
(91)
(8%)
£769,106
£386,085
350,922
(£35,164)
222,289
111,587
101,941
(9,646)
£29,327,949
£14,722,397
£13,537,469
(£1,184,928)
A&E Attendances
56,150
28,606
30,065
1,459 5%
£6,938,868
£3,535,015
3,581,441
£46,426 1%
Best Practice Adj'ts
Fragility Hips
£324,493
£161,161
£123,375
(£37,786)
(23%)
Stroke
£352,365
£175,004
£128,794
(£46,210)
(26%)
TIA
£12,742
£6,328
(£6,328)
(100%)
PBR Variance
336,775
169,396
159,629
(9,767)
£118,419,700
£59,391,270
£56,770,970
(£2,620,300)
(£2,828,603)
Gross Non PBR
1,137,441
570,594
578,312
7,718
£54,006,167
£27,155,617
£29,292,828
£2,137,211 8%
PBR & Non PBR Variance
1,474,216
739,990
737,941
(2,049)
£172,425,867
£86,546,887
£86,063,797
(£483,089)
(£691,392)
SMART Recharge
(£3,688,466)
(£1,861,073)
(£1,984,457)
(£123,383)
Fertility Recharge
(£497,683)
(£248,842)
(£144,946)
£103,896
Critical Care, SCBU & Maternity Risk Reserve
(£1,161,219)
(£580,610)
£580,610
PBR & Non PBR Variance exc SMART
£167,078,499
£83,856,363
£83,934,395
£78,032
(£130,270) 0%
Less Funding Dispersed to Divisions:
Urgent Division - Heart Failure BPT
(£9,770)
Planned Division
D&P Division
Planned Division - Bariatrics
PBR & Non PBR Net Variance (Corp)
(£140,040)

6. Total Planned Care Share Total Divisional Share
Activity Reporting
Speciality
General Surgery
Activity Variance
Value Variance
Total Planned Care Share
POD
Specialty
English
Welsh
Total
Total Divisional Share DC
100
(182)
(44)
(226)
(£205,844)
(£48,701)
(£254,545)
(£145,478)
(£34,419)
(£179,898) EL
(73)
(24)
(97)
(£97,961)
(£35,560)
(£133,520)
(£73,526)
(£26,690)
(£100,215)
NEL
550 66
616
£390,662
(£74,119)
£316,543
£212,354
(£47,399)
£164,955
OPFASPCL
506
110
615
£112,502
£15,675
£128,177
£78,049
£10,875
£88,923
OPFUPSPCL
(519)
(147)
(666)
(£38,163)
(£10,965)
(£49,127)
(£25,612)
(£7,359)
(£32,970)
OPPROC
(1)
(0)
(£278)
(£45)
(£324)
(£215)
(£35)
(£250)
TOTAL
280
(40)
240
£160,918
(£153,715)
£7,203
£45,572
(£105,027)
(£59,455)
18 Week Pathway and RRT
Not Booked Outs (NBOs)
Reduction in OP Procedures
Positive number represent overperformance and negatives are underperformance
Referral patterns and 18 weeks need to be considered along side activity
For example, High referrals and low activity could indicate a growing 18 week problem

7. Block Contract Advantages and Disadvantages
Largely based on historical patterns of care, a block contract allows a healthcare provider to receive a lump sum payment to provide a service, irrespective of the number of patients treated or type of treatment provided.
Cost per case contracts identify for each episode or unit of care a payment to the service provider. This form of contract is commonplace for individual, expensive and bespoke care package agreements – for example, the placement of patients in medium secure mental health facilities.
Block Contract Advantages and Disadvantages
Impact assessment of changes to services
The right thing to do but what dopes that mean for the trust
How will we get paid
Advantages
Disadvantages
Protection of income
Growth – we do not get paid anymore if we see more patients
Risk reduction
Greater need for efficiency and costs
Service redesign
Focus on targets
Focus on the health economy
What happens next?
Still need to record activity
Tracking changes and efficiency's
Emphasis on collaboration

8. Control totals, deficits and STF
A financial control set by one organisation for another. These are used by NHS
England and NHS Improvement to set limits on expenditure and targets for yearend
surpluses/ deficits for commissioners, providers and STP areas. In local
government, this term is variously used, most often to describe the amount of the
overall public spending envelope the government decides should be spent by local
government.
Deficits
An agreed level of overspend to ensure that all departments are correctly funded to deliver patient care.
Sustainability and Transformation Plans (STPs)
The provisional allocation of the Sustainability and Transformation Funding (STF) has been calculated by NHS Improvement and agreed with NHS England. STF will be ring-fenced as pass-through payments to providers that are in addition to normal contractual payments.

9. COCH Financial Plan 2017-18 Income £226.1m Expenditure (£241.1m)
Deficit (£15.0m)
CRS £12.4m
Control Total (£2.628m)
Donated Asset Transactions £0.433m
Revised Deficit (£2.195m)
£11.4m
(£3.628m)
(£3.195m)

10. Sustainability & Transformation Funding
2017/18 STF Profiling
Month Q1 Q2 Q3 Q4
Total
Financial (70%)
15%
20%
30%
35%
100%
Financial £
544,845
726,460
1,089,690
1,271,305
3,632,300
Target
Acheivement Y/N
Actual £ -
GP Streaming (15%)
Performance £
116,753
155,670
233,505
272,423
778,350
90%
95%
Performance (15%)
Total Plan
1,037,800
1,556,700
1,816,150
5,189,000
Total Actual
661,598
1,388,058
(116,753)
(311,340)
(1,556,700)
(1,816,150)
(3,800,943)
£5.189m income included in 2017/18 Plan:-
2 elements split in to:-
Financial Performance (70% £3.632m)
A&E Performance (30% £1.557m)

11. Costing terms Reference costs (Business as usual BAU)
National mandated costing return based on the average costs of providing treatment
Education and Training return
The Costs of providing training to clinical staff split my salaried and non-salaried trainees
Integrated Reference costs
The average costs of providing treatment less the net cost of training clinical staff
SLR
Service Line Reporting
PLICs
Patient Level Information Costing
CTP
Costing Transformation Program (to move from Reference costs to a PLICs Submission)
SLR
Looking in detail at the profitability and financial contribution of services in much the same way as a private
sector company analyses its business units. When supported by patient level costing information this
allows clinicians to relate service delivery actions to costs.
PLICS
Computer software that enables an organisation to determine and analyse patient-level costs. This
information can help organisations to understand whether cost variations result from differences between
patients or between how their treatment was delivered.

12. Costing Reference Costs PLICs CTP Limitations of Costs
Nationally mandated costing return
Costs submitted as an average
Main source of information for:
Tariff
Model Hospital/Carter
GIRFT
GAPI
Excludes all welsh activity (£30m for )
PLICs
Currently a voluntary submission
Plans to mandate from the summer of 2019 ( activity)
Will inform Tariff, Model Hospital, GIRFT, etc. but as a secondary source
Costs Submitted at patient level and will be linked to HES data
CTP
GAPI
Group Advising on Pricing Innovation
Limitations
Highlight the reliance finance & data feeds - knowing where costs sit
ledger is accurate
costs match when income is recognised as best as possible (not budget matching all the time and ensuring costs are recognised when used e.g. devices and not change purpose of codes etc..)
Limitations of Costs
Costing is only as good as the source data
Financial ledger
Information feeds
Based on Fully absorbed costs and must reconcile to the annual accounts.