News / NHS urged to consider rural funding needs

07 March 2022 Seamus Ward

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landscape_landscapeAn All-Party Parliamentary Group on Rural Health and Care report, published in February, said that health services in rural and coastal areas faced a number of challenges that, if not addressed, would move from urgent to critical.

The parliamentarians said health inequalities are often dispersed within rural settings, which tends to average out need when examined as part of funding allocation. Consequently, the costs of providing services are underestimated.

Populations temporarily swell in summer and at harvest times. Additionally, the group said, it is more difficult to provide care to dispersed communities, while the wider determinants of health, such as fit-for-purpose housing, and education and employment opportunities, can be lacking.

The allocation formula could be a mechanism to mitigate these costs. In 2018, the Nuffield Trust examined the impact of rurality and sparsity on the costs of delivering healthcare. This review looked at the key factors for calculating health allocations. It concluded that while population and demographic needs are key, a further adjustment could be made for the higher costs of running hospitals with 24-hour A&E departments in remote areas. In evidence to the inquiry, the Nuffield Trust said six rural hospitals carried a quarter of England’s NHS funding deficit at the end of 2019/20.

The current funding formula for clinical commissioning groups has three adjustments for the costs of providing services in rural areas. These cover the extra cost of ambulance provision, an allowance for hospital remoteness, and an adjustment for supply-induced demand in urban areas to help ensure remote areas are not under-funded relative to need.

The NHS in Scotland and Wales have developed allocation formulae that adjust for the costs of providing services to remote areas.

In a note to NHS England on its recommendations for 2019/20 CCG target allocations, the Advisory Committee on Resource Allocation (ACRA) said it could find ‘no nationally consistent evidence’ that pointed to a need to make further changes to the ambulance and remote hospitals adjustments. But it backed the development of a community services formula to better recognise the needs in some rural and coastal areas.

The inquiry insisted ambulance and remote hospital adjustments were outweighed by costs due to market forces and health inequalities. In the total budget for core services these factors moved around £600m from predominantly rural areas to urban and less rural areas.

It made 12 recommendations, including setting up pilot sites to test integration of health and social care budgets in rural areas, measuring outcomes against that budget.

Miriam Deakin, director of policy and strategy at NHS Providers, said: ‘Health inequalities are a priority focus for trusts, and a one-size-fits-all approach is not appropriate. This report highlights the unique factors impacting health outcomes in rural, remote and coastal communities, and the health inequalities challenge facing these communities differs from the challenge faced by more urban populations. Efforts to address health inequalities must take into account these differences in context.’


Isle of Wight challenges
Darren Cattell (pictured), chief executive and former finance director of Isle of Wight NHS Trust, gave evidence to the all-party group. The island trust faces operational and financial challenges as a result of its remoteness, he said. ‘Health inequality is a big factor for us as we continue to improve services.’

news_Darren Cattell_half portraitDuring summer, tourism doubles the population. ‘Even without the influx of tourists, we have enough people to demand a wide range of services. But if you compare that population with that of other small district general hospitals, our remoteness and size means it is a challenge to make sure services are clinically and financially sustainable.’

The trust provides acute, ambulance, mental health, learning disabilities and community services to a year-round population of about 142,000, which doubles in summer.

‘We cope incredibly well. But it’s a significant challenge in clinical and financial terms, particularly attracting and retaining a high-quality workforce. And while the lifestyle offered by island living will be attractive to some, others will prefer city life or working in a major teaching hospital,’ Mr Cattell said.

Working with partners, the trust is mitigating the workforce issue, putting in place joint appointments, shared rotas and different ways of working, with less reliance on traditional medical roles. It is also recruiting at home and overseas, setting up apprenticeships and visiting schools.

Mr Cattell praised the NHS England and NHS Improvement South-east Regional Office and the Hampshire and Isle of Wight Integrated Care System for supporting the trust in identifying ‘what we call the island structural deficit. This is two-thirds of the total trust deficit, and exists where costs exceed income where we provide sub-scale but necessary services for residents of and visitors to the island’.

The changes in the CCG target allocation formula have helped, and he welcomed ACRA’s determination to introduce a community services formula to account for the added costs of rural and coastal provision.

‘There will be a further move towards target in next year’s allocation. It’s a slower process than we’d like – that’s not a criticism, but it’s inevitable given the reality of the current economic situation.

‘The report will prompt other organisations to dig deeper to understand the true drivers of deficits and to produce realistic plans to solve them.’

The trust is willing to support others by sharing its work, Mr Cattell said.