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How a PCT got its practice budgets within 5% of fair shares

So is the Government’s aim for all PCTs to come within the 10% range realistic? North-East Lincolnshire PCT has already got its within 5%. Rebecca Norris found out how they did it...

So is the Government's aim for all PCTs to come within the 10% range realistic? North-East Lincolnshire PCT has already got its within 5%. Rebecca Norris found out how they did it...

Health watchdog the Audit Commission praised North East Lincolnshire PCT for its ‘sound approach to moving to fair shares' in its report Putting commissioning into practice, published in November 2007.

The PCT set indicative PBC budgets in 2006/7 using historical activity that was recosted to the Payment by Results tariff for that year. This historic spend was then compared with a weighted capitation share, using the national formula, to establish a distance from fair shares target for each practice.

National guidance published in January 2006 allowed PCTs to set a 10% variance from fair shares target. But North East Lincolnshire decided a 5% variance would be a reasonable balance to strike between those practices who were significantly under the 5% target and needed additional access to funding and those practices above 5% who needed to be encouraged to operate within their fair share.

Eddie McCabe, assistant director of finance at the PCT (now known as North East Lincolnshire Care Trust Plus), said: ‘One large practice was only 6% from its fair share target but this equated to about £1m.

On the other side there were several smaller practices at 7-8% over capitation, equivalent to £200,000 over their absolute fair share. In general the doctors in the area did not want to see funding tied up in those practices deemed to be over capitation and wanted to encourage better referral practice.'

Of the area's 33 practices, 11 were above the 5% target – one of which was above 10%; four practices were more than 5% below fair shares and the rest were within target range.

The decision was not without its risks, however, and the PCT stood to lose £500,000 if practices didn't deliver better referral practice.

Mr McCabe says: ‘Our perspective is that it's not cost-neutral. If we move by 1% a practice that is below target and let them access £200,000, we would be hoping to get £200,000 back from several other practices through better patient management.

But that isn't to say everyone will deliver their savings – and that's what leaves the PCT at risk.'

The opportunity to be involved in improving service delivery has been a big pull in getting practices on board to make the necessary changes.

‘The differences are less marked now,' says Mr McCabe. ‘Practices have taken a great leap forward in moving towards target because they know it will free up resources for service improvement plans, which will provide other services to manage referrals.'

Some smaller practices are still not engaged in the overall impact of PBC, he says, but generally there has been significant practice involvement.

Other PCTs considering their approach to fair shares need to work out their financial exposure, says Mr McCabe.

‘We had very few large practices who were far from the 5%. The extremities were with the generally smaller, one- or two-partner practices – so although in percentage terms they may have seemed large numbers, in terms of the cash funding, it was often relatively small.'


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