The following table is from the strategy document of my local PCT (covering a population of 450,000). It lists the projected funding for primary (GPs) and community care (district nurses, physios etc) and for acute and tertiary care (hospitals). This was the plan of the PCT and the GP commissioners may not use the same figures, but this table does illustrate an important point.
|Primary and Community||237,192||252,072||271,783||288,752||308,978|
|Acute and Tertiary||337,849||336,173||310,281||289,801||268,994|
Notice how, over four years, funding is transferred from acute care to primary and community care. This is significant because this PCT wholly funds two acute hospitals (35% and 24% of the PCT hospital budget) and partially funds a third, tertiary hospital (30% of the PCT hospital budget, but 22% of that hospital's income) in a neighbouring PCT. The shift in funding is perhaps better illustrated in the following line graph.
There will be a huge shift from acute care (predominately NHS providers) to primary (GPs: independent contractors) and community care. The PCT does not break down their projected rise in the income of the GP practices, but it is instructive to realise that currently 77% of the £237m listed above, is GP funding. GPs (independent contractors) appear to be getting more business at the expense of the NHS hospitals.
The complication is Transforming Community Services. This was the policy of the last government who insisted that from April 2011 PCTs should only commission services and so they had to dispose of any services they provided by this date. In most areas this means Community Health Services has to be moved out of PCT control. There are three options. The service could be merged with a Foundation Trust, it could be turned into a Community Foundation Trust, or it could be turned into a social enterprise. The third option ("right to request") is the preferred option of the current government because it means that yet another part of the NHS is taken out of public ownership. This option has been unpopular, there are just 29 such schemes across England.
The majority of PCT community services have been transferred to hospital Foundation Trusts, and this is the case with the PCT described above: one of the two acute hospital trusts is a Foundation Trust and has taken over the PCT community services.
This makes a lot of sense. Firstly, it is better for the patient: when they have care they have just one provider as opposed to having to transfer between two*. It also makes sense for the hospital trust. The graph above shows that the income of the three hospital trusts funded by the PCT will decrease so that in four years time the one trust that is a Foundation Trust will have around 10% less funding than it is now (around £10m less). Since 60% of the budget of this trusts is salaries this clearly means losing staff. However, since this trust will take over community services, it will have increased income to cover the community services and this income stream itself will increase (by approximately £23m more in four years time than it is now). The extra work in community health services means more staff and hence a hospital trust needing to shed staff can transfer those people to community services. This is called vertical integration and you'll see this term used a lot in the coming months.
It is interesting that Sir David Nicholson referred obliquely to vertical integration when he was interviewed by the BBC a few days ago:
"Most hospitals will be able to survive and thrive in the new world. But undoubtedly there will be those that will find it difficult," he said. "The thing about the hospital service is that it has grown enormously over the last 10 years in particular and we are going into a period where growth in the NHS is what they describe as 'flat real'. Those hospitals whose business model is based on increasing capacity have got to seriously look at the way they operate. That is why some hospitals are looking towards taking over community services."
What Sir David is saying here is hospitals will have less funding in the future and will need to shed staff and this is why they are taking over community services. This explains why some hospital trusts, when replying to the Freedom of Information requests from False Economy have indicated modest job losses. The trusts have been accurate in that they are not losing large number of staff, instead, the staff will be transferred to community health services.
[*However, I mentioned that there were two hospital trusts in the PCT area, so clearly in part of this area patients will get their acute care from the other hospital trust. This is likely to be a source of contention between the two trusts. Ideally, the community services should be split between the trusts, but this was not the offer on the table, particularly because the other trust is not yet a Foundation Trust.]