Appendix 3

NHS WEST CCG FINANCIAL DUE DILIGENCE REVIEW FOR ADOPTING DELEGATED COMMISSIONING OF PRIMARY MEDICAL SERVICES

1.0 SUMMARY

1.1 The aim of this Primary Care co-commissioning financial due diligence review is to ensure that the CCG is prepared for adopting full delegated commissioning of primary medical care functions from NHS , and to assure the Governing Body that the following points have been addressed:

 The financial implications and risks for the CCG understood from becoming fully delegated.  The staffing capacity required by the CCG to cover the management of the new contracts.  The financial implications from not co-commissioning Primary Medical Services.

1.2 Upon approving the move to fully delegated commissioning an agreement will need to be drawn up between the CCG and NHS England to clearly explain the responsibilities and risks that each organisation would hold in the new arrangement.

2.0 FINANCIAL IMPLICATIONS OF FULLY DELEGATED

2.1 The key points for the Governing Body to consider are

 The information available to CCGs is now more detailed at a practice level, which will enable us to forecast the costs more accurately and further clarity is being sought from NHS England on the areas where in detailed figures are required.  NHS England are currently forecasting that in 2015/16 NHS Leeds West CCG (LWCCG) will be on balance with the resource allocation of £41.976m.  NHS England have suggested that several services could come in under budget, but further clarification needs to be sought on these. These services were PMS Premium, QOF, Enhanced Services and Premises, which could represent around £500k in savings.

2.2 Cost pressures from NHS England’s planning assumptions are

 Overall expenditure should be more than the allocation in 2016/17 but from 2017/18 there is a potential financial surplus of between £100k- £300k, although if the public health allocation isn’t made recurrent then there would be a shortfall each year. NHSE colleagues have advised this can be assumed to be recurrently available.

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 NHS Leeds West CCGs list size growth in the last 2 years has ranged from 0.6% to 1.2%. As NHSE’s planning assumptions are based upon growth of 0.8% this could represent around a risk of around £110k in year 1.  There is also a risk around the PMS Review which is being carried out to ensure equitable funding between PMS and GMS practices. This should represent a saving for the CCG in 16/17 to 18/19, but a potential cost pressure from 19/20 onwards.  Premises cost growth funding of 1.2% had originally been assumed by NHS England when normal growth would be around 2-3%. 3% has been built into our assumptions as the potential financial risk of this would be £51k to £114k for the CCG in the first year.  The business rates that GP practices are charged on premises has been legally challenged recently. This has resulted in the Local Authority having to repay back some of the business rates collected. These fees are going directly to Central Government, however the CCG’s should see the benefit in unspent allocation going forward. There is a risk that this allocation could be withdrawn if these business rates are no longer charged.

3.0 IMPLICATIONS FOR STAFFING RESOURCE

3.1 The CCG has informally contacted and Humber CCGs who have already moved to full delegation to understand the potential impact on teams and individuals due to the increased responsibilities. Teams where there is an anticipated impact include:  Finance/Contracting  Primary Care  Governance (Quality and Risk and corporate Committee support)

3.2 The CCG will continue to work with citywide colleagues to review processes and systems to understand what functions could potentially be delivered collaboratively across the City to prevent duplication and ensure value for money.

3.3 NHS England are continuing to look at staff resource and have established a Co-commissioning HR working group. Recent guidance advises that the roles and resources for primary care commissioning roles remain within NHS England.

3.4 Three employment models are incorporated in the delegation agreement with a set of supporting documents. The three models are: 1) Assignment – NHS England staff remain in their current roles and locations but provide services to CCGs that have been granted full delegation on the basis of a memorandum of understanding between the CCGs and NHS England. 2) Secondment – NHS England staff are formally seconded to CCGs that have been granted full delegation 3) Direct employment - CCGs create new posts within their organisations however are obliged to make NHS England staff aware of the

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opportunities and guarantee an interview where the applicant meets the person specification

Locally we will be allocated a “relationship manager” from NHS England to work with all three Leeds CCGs. The conversation need to continue with our NHS England colleagues as to the future working relationship as it becomes clearer as to the status of fully delegated co-commissioning across .

3.5 Current staffing budgets are being reviewed internally as to whether flexibility remains within existing staffing budgets that could be utilised to support increase responsibilities.

3.6 Currently the CCG is operating below its full running cost allocation. We will continue to ensure that this flexibility is retained to support Co-Commissioning and potentially increase premises costs. However this needs to be considered in the context of potentially reduced running costs.

4.0 FINANCIAL IMPLICATIONS OF NOT GOING FULLY DELEGATED

4.1 NHS England West Yorkshire Local Area Team currently manages the primary care budgets for 10 CCGs and they have a responsibility to balance WY expenditure against budget. If NHS Leeds West CCG were to remain at Greater Involvement, then the CCG would be at risk of overpaying for Primary Care services due to having to pay part of other CCGs’ overspends.

4.2 NHS Leeds West CCG currently receives the minimum allowable level of growth on its element of the Primary Care Allocation because the West Yorkshire local area team are 3% over target, despite NHS Leeds West CCG being 3% under target.

4.3 If NHS Leeds West CCG moved to delegated budgets, and the allocation growth was decided at a CCG level then it could potentially mean a greater level of allocation growth.

4.4 NHS Leeds West CCG would not have complete control over how the primary care budget is spent. With QOF and enhanced services being locally agreed the CCG would have little decision making power unless fully delegated, at which point the CCG would be able to use this money to develop services locally.

4.5 CCGs might not see the benefit of rates incorrectly charged to GP Practices because if the allocations stay with NHS England these might be distributed across CCG’s to cover overspends elsewhere.

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5.0 DETAILED FINANCIAL REVIEW

6 year plan

5.1 The below 6 year projection shows the expected funding shortfall/surplus over the next 6 years to 2020/21.

5.2 2016/17 shows a shortfall, mainly because of the potential full year impact of premises reimbursements and enhanced services which are underspending in 2015/16.

Leeds West CCG Allocation & Expenditure

Allocation £'000 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Recurrent GP allocation 41,759 42,260 42,767 43,280 43,800 44,325 Recurrent Public Health allocation 217 217 217 217 217 217 Total Allocation 41,976 42,477 42,984 43,497 44,017 44,542

Expenditure £'000 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 GMS 5,750 5,909 6,008 6,111 6,217 6,326 PMS 21,698 21,391 21,361 21,358 21,604 21,951 PMS premium reinvestment 150 299 171 150 0 0 QOF 3,938 3,985 4,033 4,082 4,131 4,180 Enhanced Services 2,551 2,899 2,933 2,969 3,004 3,040 Other 1,585 1,635 1,654 1,674 1,694 1,714 Premises 6,269 6,457 6,651 6,850 7,056 7,268 Collab Fees (contingency & QIPP) 36 36 36 36 36 36 Total Expenditure 41,976 42,610 42,847 43,229 43,741 44,516

Funding (Shortfall)/Surplus 0 -(133) 137 268 275 27

Allocation

5.3 The resource allocation from NHS England to NHS Leeds West CCG for Primary Medical Services is £41.976m recurrent, with a £0.2m non-recurrent public health budget. As mentioned in (4.2) above the West Yorkshire (WY) local area team are currently over target all West Yorkshire (WY) CCGs are subject to the lowest level of allocation growth.

5.4 Despite West Yorkshire being 3% over target, NHS Leeds West CCG are 3% under target and, should the growth be applied at a CCG level in the future following delegated commissioning, LWCCG could see higher levels of growth.

The levels of growth applies in 2014/15 and 15/16 were;  14/15 – Min 1.6% growth. Av 2.14%, Max 3.01%  15/16 – Mix 1.2% growth. Av 1.70%, Max 2.44%

5.5 The above table has been based on NHS Leeds West CCG getting the current lowest level of growth (1.2%) for the next 6 years. It also applies the assumption that the non-recurrent public health allocation will become

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recurrent in 2016/17. Please note the entire methodology for CCG/NHSE allocations is being reviewed so these positions could change.

5.6 Current Expenditure 2015/16 expenditure for NHS Leeds West CCG is currently forecast to be £41.976m, which is on budget with the 15/16 allocation.

5.7 GMS/PMS payments & List size movements - Current spend £27.597m. The main 2 areas of impact are; - NHS England are currently undergoing a PMS review to ensure equitable funding between all PMS and GMS practices, at a rate of around £80.43 per patient by 2020/21. - Patient list size numbers are consistently increasing, on current estimates this is about 3% by April 2020. This is based on an average increase of 1.9% per year for Leeds Student Medical Practice and 0.5% per year across the other NHS Leeds West CCG practices. - We are aware that there are significant housing developments planned in Leeds with 17,259 new houses identified within the Leeds West area alone (taken from the Site Allocations Plan Consultation document). These new houses will likely increase our population but also pose a further challenge with regard to our workforce capacity.

Based on the above this could mean a spend increase on GMS/PMS payments of £0.676m. The full detail is in Appendix 1.

GMS/PMS payments Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 to Practices £27.371m £27.300m £27.369m £27.469m £27.821m £28.277m

The reductions in PMS in 2015/16 to 2018/19 would result in underspends, which would need to be reinvested locally by the CCG.

5.8 Quality and Outcomes Framework (QOF) - Current spend £3.938m.

NHS England’s latest forecast shows that QOF is likely to be underspent in 2015/16. However the threshold increased in 2015/16, making it harder for practices to achieve. For future years we have based the cost assumptions on QOF being fully achieved.

Should the CCG move to delegated commissioning QOF money could be available to CCG’s to adapt the scheme to suit local priorities.

5.9 Enhanced Services - Current spend £2.55m.

NHS England’s latest forecast shows that spend on Enhanced Services is likely to be underspend in 2015/16. For future years we have based the cost assumptions on enhanced services budget being fully achieved and growth of 1.2%.

As with QOF, if the CCG moved to delegated commissioning the CCG would be able to adapt the enhanced services to fit in with the local priorities.

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5.10 Premises - Current spend £6.27m.

Premise details have been provided by NHS England for current rents, rent review dates and business rates etc. The split is; - PMS – Rent £4m, Rates £1.42m - GMS – Rent £0.6m, Rates £0.25m

The main issues with Premises are; - Premises growth funding. The allocation only includes growth of 1.2% when normal growth would be around 2-3%. This could present a potential financial risk of £51k to £114k for the CCG in the first year. - Rent reviews. Several practices’ rent reviews are outstanding, which suggests either the information log hasn’t been kept up to date or there is a long backlog in reviews. Community Health Partnerships (CHP) as head tenant for the NHS LIFT estate are responsible for the overall management of all LIFT buildings so are aggressively moving towards commercial rent valuations. - Business Rates review. Following a review and legal challenge GP practices who were charged excessively for business rates in the last 10 years have been allowed to reclaim this overpayment. As commissioners re-imburse these monies to practice they can reclaim this directly from Local Government; however the money is likely to be returned to Central Government. The benefit of this rebate will be seen by CCG’s within its allocation, as the CCGs won’t lose any allocation but should pay out less to GP practices in business rates in future years.

5.11 ‘Other’ – Current spend £1.59m

This covers GP Seniority payments, professional prescribing fees, locum sickness/maternity/paternity pay, legal and medical fees as well as ad hoc payments like printing and sterilisation. The only issue of note in other spend is the GP Seniority. This scheme is being phased out from 2015/16, and as a result around £0.91m will be removed from ‘other’ spend, although there is an expected increased impact on PMS/GMS payments so has been left within the assumptions. NHS Leeds West CCG expects further NHS England guidance to follow on this issue.

6.0 DETAILED IMPACT REVIEW

6.1 Moving to Delegated Commissioning will mean the CCG having to undertake the following for Primary Care services:

Strategic level  Define the Primary Care strategy and provide strategic direction, leadership and engagement for Leeds West GP practices and the CCG.  Manage through the Governing Body the resolution of issues and approval of business cases and reports.

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 Measure, monitor and manage contract performance, including changes/developments and contract disputes. Operational level  Agree priorities and discuss delivery plans.  Develop pathways, specifications and cost up models of care.  Report on financial performance, patient outcomes, KPIs and CQUINs.  Hold contract meetings and provide commissioner feedback. Transactional level  Sign contracts and approve invoices.  Arrange board meetings and reports, and respond to Freedom of Information requests.  Consult with patients and gather feedback.  Publish plans online, request ad-hoc data and perform spot checks.

7.0 FINANCIAL RISK ASSESSMENT

Risk Mitigation RAG NHS England pass over a Deficit financial Perform a full financial due position diligence review to understand all costs and risks. Growth funding is less than anticipated This review assumes lowest level of growth estimated. Not opting for fully delegated will be Considered as part of the overall detrimental to benefitting from some review. resources and growth Premises Costs Work closely with CHP colleagues to be aware of any future premises cost changes Phasing out of MPIG and the national Co-commissioning provides the efficiencies required may impact on opportunity to engage members in quality the future commissioning of services. CCGs will continue to be responsible for supporting practices to improve quality and look for efficiencies through joint working and collaboration Cost reductions/QIPPs passed onto The financial due diligence process CCGs to go with current requirements. reviewed all currently known QIPP schemes. Confidence level with regard to The new allocations formulas could achievability of future QIPP requirements prove detrimental to the level of allocations received by the CCG, even though the CCG has a better understanding of the current QIPP targets and cost pressures of level 3 Co-Commissioning of Primary Care Services. Weak/inadequate information available Ensure close relations with NHSE following handover. colleagues to provide all information required.

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Appendix 1 – List Size increases and impact on PMS/GMS spend

Actual Forecast list size growth Forecast PMS/GMS spend

Practice Name Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Morley Health Centre 2,268 2,272 2,275 2,279 2,283 £171,587 £173,923 £176,291 £178,691 £181,123 £183,589 Medical Centre 13,406 13,441 13,477 13,513 13,549 £1,013,040 £1,027,930 £1,043,040 £1,058,371 £1,073,928 £1,089,713 Highfield Surgery 7,988 8,363 8,756 9,167 9,597 £578,116 £612,519 £648,970 £687,589 £728,507 £771,860 Hillfoot Surgery 6,598 6,673 6,749 6,825 6,903 £523,815 £528,915 £534,349 £539,837 £545,967 £555,180 Robin Lane Health & Wellbeing Centre 12,285 12,656 13,038 13,432 13,838 £903,530 £941,993 £982,094 £1,023,902 £1,067,489 £1,112,932 Manor Park Surgery 14,613 14,591 14,568 14,545 14,522 £1,108,991 £1,120,545 £1,132,220 £1,144,017 £1,155,937 £1,167,981 Craven Road Medical Practice 9,778 9,934 10,093 10,254 10,417 £890,767 £852,346 £830,294 £807,324 £820,197 £837,823 Health Centre 7,302 7,375 7,449 7,524 7,599 £574,025 £579,782 £585,597 £591,471 £597,952 £611,197 Priory View Medical Centre 9,601 9,515 9,429 9,343 9,259 £768,634 £761,686 £754,800 £747,977 £742,551 £744,668 Hyde Park Surgery 7,897 7,907 7,918 7,928 7,938 £782,883 £718,662 £676,048 £633,321 £634,148 £638,442 Queen Street Surgery 3,329 3,282 3,236 3,191 3,147 £258,331 £255,229 £254,693 £254,158 £253,625 £253,092 Burton Croft Surgery 10,378 10,739 11,112 11,498 11,898 £818,268 £839,610 £863,892 £888,847 £919,728 £956,878 & Yeadon Medical Practice 10,784 10,751 10,719 10,686 10,653 £865,286 £862,644 £860,009 £857,383 £854,764 £856,805 Vesper Road 5,934 5,968 6,003 6,038 6,073 £446,987 £454,989 £463,135 £471,427 £479,867 £488,458 New Croft & Lane Surgeries 22,865 23,041 23,218 23,397 23,577 £1,765,062 £1,778,651 £1,792,345 £1,823,338 £1,859,424 £1,896,225 Rawdon Surgery 7,200 7,327 7,456 7,588 7,722 £620,786 £607,816 £602,314 £596,428 £606,962 £621,054 West Lodge Surgery 16,823 16,912 17,002 17,092 17,182 £1,335,415 £1,342,486 £1,349,595 £1,356,741 £1,363,925 £1,381,914 Silver Lane Surgery 6,053 6,127 6,201 6,276 6,353 £453,157 £464,162 £475,435 £486,981 £498,807 £510,921 Park Road Medical Centre 10,715 10,771 10,828 10,884 10,941 £807,674 £821,638 £835,843 £850,294 £864,995 £879,950 Windsor House Surgery 15,187 15,149 15,110 15,072 15,034 £1,266,894 £1,242,746 £1,225,670 £1,208,673 £1,205,601 £1,209,100 Sunfield Medical Centre 4,009 3,954 3,901 3,848 3,796 £336,788 £320,645 £316,300 £312,013 £307,785 £305,271 Thornton Medical Centre 9,724 9,577 9,432 9,289 9,149 £748,150 £745,664 £743,185 £740,715 £738,253 £735,800 Leigh View Medical Practice 15,641 15,722 15,803 15,885 15,968 £1,178,969 £1,199,310 £1,220,002 £1,241,050 £1,262,462 £1,284,243 Moor Grange 4,110 4,028 3,947 3,868 3,791 £360,322 £342,672 £328,998 £315,733 £309,426 £304,899 Fountain Medical Centre 15,649 15,748 15,847 15,947 16,047 £1,398,710 £1,340,779 £1,304,451 £1,267,611 £1,275,596 £1,290,638 Abbey Medical Centre 4,612 4,362 4,126 3,903 3,692 £403,101 £375,980 £352,293 £330,068 £312,223 £296,955 Burley Park Medical Centre 10,761 10,635 10,512 10,389 10,268 £1,002,848 £935,276 £887,554 £840,817 £831,017 £825,815 Butt Lane Medical Centre 8,555 8,552 8,549 8,546 8,543 £648,398 £655,954 £663,599 £671,333 £679,157 £687,072 Fieldhead Surgery 4,394 4,400 4,405 4,411 4,417 £332,486 £336,914 £341,400 £345,947 £350,553 £355,222 Laurel Bank Surgery 5,684 5,704 5,724 5,744 5,763 £429,202 £435,859 £442,620 £449,485 £456,457 £463,537 The Gables Surgery 4,082 4,081 4,081 4,080 4,080 £356,180 £343,434 £334,926 £326,421 £326,386 £328,133 Gildersome Health Centre 3,444 3,479 3,514 3,550 3,586 £258,304 £264,067 £269,958 £275,980 £282,137 £288,431 The Highfield Medical Centre 4,523 4,526 4,529 4,532 4,536 £371,933 £367,731 £365,014 £362,292 £362,552 £364,792 Lane Medical Centre 6,243 6,174 6,107 6,039 5,973 £478,264 £478,691 £479,119 £479,548 £479,976 £480,405 Beech Tree Medical Centre 1,915 1,958 2,001 2,046 2,091 £147,029 £150,289 £153,622 £157,169 £162,582 £168,181 Hawthorn Surgery 5,498 5,821 6,164 6,526 6,909 £401,057 £424,628 £451,735 £484,024 £518,621 £555,691 Medical Centre 2,722 2,746 2,771 2,796 2,821 £232,049 £227,097 £224,402 £221,642 £223,629 £226,867 Leeds Student Medical Practice 29,382 29,940 30,508 31,088 31,678 £2,334,017 £2,366,306 £2,403,066 £2,440,368 £2,486,707 £2,547,757 Total 341,952 344,202 346,558 349,021 351,594 £27,371,055 £27,299,568 £27,368,876 £27,468,985 £27,821,017 £28,277,491

Practice list size growth is based on the average rate of growth between April 2013, April 2014 and April 2015.

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