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23.03.16

Providers warn efficiency savings in 2016-17 tariff carry ‘significant risk’

Tariff changes for the NHS in 2016-17 have been cautiously welcomed by NHS Providers, but they warned that there is still a tough year ahead as NHS trusts seek to cut costs.

In the 2016-17 NHS National Tariff Payment System, published today by Monitor and NHS England, the Enhanced Tariff Option (ETO) prices are adjusted for a 2% efficiency factor, 3.1% cost inflation, and 0.7% increase in costs for the clinical negligence indemnity scheme for trusts.

Chris Hopson, chief executive of NHS Providers, welcomed the reduced efficiency factor from the original target of 3.4%, saying the burden on trusts to deliver the same or better services for less money had contributed to the £2.3bn NHS deficit.

However, Hopson said: “Despite the welcome uplift to tariff prices next year and the extra £1.8bn of sustainability funding, our members tell us that, following the control totals exercise, they are still facing extremely stretching savings targets that carry significant risk.”

The tariff adjustment will lead to a 2.2% uplift in pay costs, reflecting 2.4% pay drift inflation and a promised 1% pay increase for NHS workers.

There will be a 0.37% cost uplift for drugs and a 0.34% uplift for other operating costs.

Hopson said CCGs must use the increased tariff to support community services and mental health services, for which the government recently promised £1bn funding by 2020 after a report warned that services are dangerously inadequate.

Hopson also welcomed the decisions to delay introducing cost-based HRG4+ until 2017-18 and to not use a specialised service marginal rate.

However, he added: “We would urge NHS England and Monitor to continue supporting the development of new payment options, in particular for mental health services and new models of care.”

The full NHS Tariff Payment system can be viewed here.

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