The NHS's fines and performance hokey cokey

11 Apr 16

What matters most to the NHS? That it gets its finances in order or that it hits performance targets? The shifting policy on fines shows system leaders can’t make up their minds

Fines, where commissioners withhold money from NHS providers when they fail to hit certain national performance targets (such as waiting times from referral to treatment), have long been the preferred mechanism NHS England and other central bodies use to try to lever better quality from providers.

However, the past 12 months have seen those system leaders muddy their thinking as to whether good finances or good performance takes priority for the sector to deliver. The result has been a shifting, hokey cokey of in/out policy positions on the application of fines.

You put your fines back in…

At the start of the 2015/16 financial year, NHS England removed the ability of local clinical commissioning groups (CCGs) to waive fines – every performance breach must have a financial penalty attached. The message was clear: fines must be used to improve performance, even to the detriment of provider finances. CCGs could not exercise their flexibility to waive fines even if a provider was struggling financially.

Similarly, in October 2015, some parts of NHS England told CCGs to make sure they are using fines to properly ‘incentivise’ providers to deliver targets. The message was that CCGs could only justify reinvesting collected fines back in providers when it would definitely result in performance target improvements.

However at some point after October 2015 there is a change of heart, as providers’ deficits across the country balloon out of control.

…you take your fines back out…

NHS England and other central bodies wrote to CCGs in January 2016 to say any money raised from fines either should be reinvested straight back in providers’ or commissioners’ financial bottom lines to help address deficit positions. It is explicit: any movement of money must just go towards supporting financial positions, and not be withheld to ‘incentivise’ hitting targets or spent on improvements to increase service performance.

So the message was now everything, but everything, must be thrown at getting finances in order.

…in out, in out, and shake it all about.

The end of the financial year arrives, and for 2016/17 NHS England and central bodies are now in a position where they still desperately need the provider sector to return to financial balance, but also cling to the preoccupation that the a key way to get a provider to improve performance is to fine it. How to remedy these two opposing views? For this year at least, it is to have two systems in play simultaneously.

In system one there is now a pot of (very welcome) sustainability funding that acute providers can access to help bring them back into financial balance. Access, for one year only, is based on a number of conditions: making stretching efficiency savings, signing up to financial targets and achieving lower, locally set performance targets. But if you are a provider who feels unable to deliver this package you will still be fined against the old national performance targets and can’t access sustainability funding. 

So, this year, some providers will receive extra funding even though they might not be meeting national performance targets, while others achieving national performance targets will not get extra funding even if they are deficit.


All this shows NHS system leaders are still wrestling with the fundamental question of what matters more: a sector in balance or a sector hitting targets? It is apparent they have not come to a clear position. The result has been a lack of coherent narrative given to providers, who just want to know what the system will be prioritising, while they struggle with balancing the quality finance equation.

The way forward is for the system leaders to recognise that financial balance vs hitting targets is the wrong starting premise. This means breaking the view that withholding funds and improving performance are inextricably linked. They aren’t.

Providers are already heavily scrutinised on performance through the national regulators and standards are actively managed by boards – introducing financial penalties into that mix is counter productive. If a trust has to pay a fine (or is denied the extra funding it needs), it can’t spend that money on extra staff and better patient care. It also clearly impacts their ability to return to financial balance. NHS system leaders therefore should re-examine the use of withholding funds to see if that is really achieving what it is designed to do, let the regulators focus on performance, allow boards to exercise full accountability and give providers the support they need to return to balance by the end of 2016/17.

  • Edward Cornick
    Edward Cornick
    Edward Cornick is policy adviser - finances at NHS Providers. He tweets @edcornick

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