News / Pace of change under the spotlight in allocation review

By Seamus Ward

NHS England’s review of resource allocation is considering the impact of handing less than real-terms growth to some commissioners.

The national commissioning body launched the review last December. In August, it published several documents, including its   terms of reference for the review.

According to the paper, NHS England will seek to develop an evidence base for decisions on pace of change – specifically, the belief that all areas should receive a minimum growth level to ensure stability, while maximum growth is capped to deliver value for money (as rapid growth cannot be spent effectively).

Past decisions to have a growth floor and ceiling had been based on ‘judgement’ and not evidence, it said.

The paper raised the prospect of giving some commissioners less than real-terms growth to move others to target allocations more quickly. It said the review would scope research on how quickly new growth could be used effectively and how much investment needed to be protected to support stability.

‘This will include an assessment of the resilience of commissioners and providers, and will link to decisions on tariff and will need to consider the extent to which local health-social care integration funding is relevant in assessing reasonable pace-of-change levels,’ it added.

However, the paper also accepted radical action on pace of change would be difficult, with funding likely to be restrained for the next six years. It said it will consider multi-year allocations and modelling the risks of uniform growth, whether over a single or multiple years.

The review is wide-ranging. As well as the work on pace of change, it will inform the 2014/15 allocations and feed into the development of a new allocation formula for the future.

NHS England director of strategic finance Sam Higginson said it would consider how resources should be allocated between different commissioning streams – ‘that is to say, how we balance the total resources available to clinical commissioning groups and the direct commissioning streams, such as primary care and specialised services’, he said.

‘We then need to think about how each of these resource pots is distributed geographically, between individual clinical commissioning groups or area teams. A further challenge is then to understand how these different strands interact.’

The Advisory Committee on Resource Allocation (ACRA) fair shares formula will provide the starting point for a new formula.

ACRA developed the fair shares formula for the 2013/14 allocations to commissioners. However, NHS England decided against using it, as it appeared to shift funds to areas with better outcomes.

NHS England has always maintained that the formula was accurate in predicting future need, but worried about its impact and the implication that it did not reflect unmet need. The review will analyse why the formula ‘behaves differently’ from the PCT formula.

John Bailey, NHS England head of financial strategy and allocations, said it was vital the ways in which allocations were calculated and made were closely aligned with NHS England objectives.

‘The funding formula developed by ACRA was assessed in 2012 to be not fully appropriate on its own for implementation for funding CCGs within the new health and social care system. However, this independent group’s knowledge, experience and research base remains fundamental to the assessment of unique funding needs based on local population profiles,’ he said.

‘In looking to understand and develop an allocation formula, the review has used the formula developed in 2012 as a starting point, taking into account the comments made when initially presented.’

NHS England will hold four workshops this month to help inform its review of allocations to clinical commissioning groups and area teams for direct commissioning.

To support discussion at the morning workshops, it has published the ‘target’ allocations under the fair shares formula, compared to the amounts CCGs actually received in 2013/14.