News / HFMA calls for more nuanced approach as part of wider efficiency debate

By Seamus Ward

The HFMA has called for a broader debate on efficiency outside the tariff setting process.

In its response to Monitor and NHS England tariff engagement documents, published in July, the HFMA said if the tariff efficiency factor was set at current or higher rates it would limit the delivery of transformational change. A blanket efficiency rate was too blunt a tool to deliver the transformation required in the NHS. It called for a more nuanced approach until regulators could apply differential efficiency factors confidently.

Consideration should be given to how the tariff efficiency factor should be applied – the HFMA said the focus should be on outcomes rather than outputs, which has been the case to date. This should target resources at delivering better outcomes for patients.

The proposed efficiency factor of between 3% and 5% would prove ‘extremely challenging’, particularly in the context of the current environment.

HFMA policy director Paul Briddock said the association’s proposals for changes in payment systems would incentivise better care.

‘Many health economies have already removed significant costs and therefore opportunities for savings on a similar scale may be limited,’ he said. ‘Post Francis, the ability to make savings on clinical staff is much more limited for individual organisations and savings must be found on the remaining expenditure.

‘We recognise therefore that organisations will need to continue looking at transformative changes, which may require upfront investment.’

The response added that while community services were in many cases critical to delivering efficiencies elsewhere, the association was concerned there was a lack of focus on these services in the tariff engagement documents.

Insufficient attention was being paid to the community services minimum data set, making it hard to obtain robust data to inform activity modelling and support local payment systems as an alternative to block contracts.

The HFMA also called for a wider debate about leakage, adding it was premature to adjust tariffs until it was fully understood. While supporting the use of the 2011/12 reference cost design, it backed a move to HRG4+ in 2016/17 together with transparent process to ‘identify, work through and understand the implications’.