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Funding streams. Wellard's Academy June 2007. Objectives, challenges and hurdles. Objectives Understand primary care funding streams Improve uptake of company products Challenges Get products on to trust formularies Achieve volume potential Hurdles Drug cost implications

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Funding streams

Funding streams

Wellard's Academy

June 2007

Objectives challenges and hurdles

Objectives, challenges and hurdles


  • Understand primary care funding streams

  • Improve uptake of company products


  • Get products on to trust formularies

  • Achieve volume potential


  • Drug cost implications

  • Changing customer approaches

Where money comes from

Where money comes from

How money flows through the system

How money flows through the system

Taxation (82 per cent)

Patient charges (2 per cent)

National Insurance (13 per cent)

Department of Health

Primary care trusts

Community services

Acute trusts



More later!



Service level agreements

The provider agrees to deliver a given volume and quality of efficient, effective health services to the purchaser for three years

Service level agreements

An NHS trust


Local delivery plans

Local delivery plans

  • Three-year plans

  • PCTs, NHS trusts, SHAs

  • Services needed

  • Milestones

SHAs collect PCT LDPs to make an area plan

Primary care investment plan pcip

Primary care investment plan (PCIP)

  • Services

  • Staff

  • Premises

  • IM&T

Pct budgets

PCT budgets

  • Full legal responsibility for finance

  • Single unified budget from DH

  • Proportion of health budget to PCTs increasing

Pct budget

PCT budget

Gp contracts


Personal medical services


General medical services

GP contracts

Personal medical services

Personal medical services

Four out of ten GPs prefer PMS

  • Offers opportunities for local modernisation

  • Tailored local targets

  • Salaried GP on short contracts

  • No out-of-hours

General medical services

GMS aims

  • Widen range of services

  • Meet local needs

  • Improve quality

  • Fairer funding

  • New roles for health professionals

  • Make primary care an attractive career for doctors

  • Major overhaul of GP surgeries

General medical services

GMS applies to 20,800 GPs

Funding streams:

  • Global sum

  • Quality payments

  • Seniority payments

  • Enhanced services

Global sum

Global sum

  • Global sum decreases as practices get more income from quality-based elements

  • Practices must deliver service levels: essential; additional; enhanced

Gms service levels

GMS service levels

Additional services

Offered by most practices

  • Eg, contraceptive services

Essential services

Provided by every practice

  • Eg, general management of long-term conditions

Enhanced services

Available at some practices

  • Eg, flu and childhood immunisations

Gms in the future

GMS in the future

  • Contract negotiations continue

  • Successful practices to provide extended hours

  • Review MPIG

  • Money to follow patients if they switch practices

Quality payments

Quality payments

Organisational181 points

Clinical 655 points

Quality and out comes framework Total of 1,000 points

Patient experience108 points

Plus 20 pointsHolistic care

1 point = average £124.60 in 2005/06

Additional services36 points

Payment by results

Payment by results

Encourages acute trusts to manage costs efficiently

Fixed price tariff for all treatments across whole NHS

Encourages PCTs to treat patients in the community

Payment by results1

Payment by results

  • Cost and volume agreements and healthcare resource groups (HRG) used to adjust funding

  • Trusts can reinvest surpluses as they see fit

Payment by results2

Payment by results

Will PBR extend beyond acute hospital care?

Do information systems to support extension?

Is a tariff based on average NHS cost appropriate?

Mixed public-private provider configuration?

Care packages?

Practice based commissioning

GP practices commission services

Singly or in partnership

Practice based commissioning

Practice based commissioning1

PCTs decide how much of the savings go back to the practice

Practice based commissioning

PCT professional executive committees make these decisions

Pbc progress

PBC progress

  • Fears that PBC would lead to cherry picking of easy cases seem to be unfounded

  • Uptake at 96 per cent

  • Some confusion in practices

More information

More information

  • PBR and PBC are complex topics. offers courses and presentations with more detail, and a set of PBC case studies based on interviews with practices around the country.

Nhs trusts

NHS trusts

Practice-based commissioners

Primary care trusts

Education and training

Acute trusts get their money from…

NHS sanctioned R&D

Income generating schemes

Pricing the service

Pricing the service

  • Trusts price their services according to the following criteria:

    • for NHS service agreements, prices must equal costs

    • no cross-subsidisation between services

    • trusts to achieve 1% efficiency savings year on year

Prescribing budget

Prescribing budget

Hospital medicines spend = 20% of NHS total

Drug expenditure = 3-4% of hospital budget

Drugs budget decentralised to clinical directorates:

Budget under severe pressure because:

  • difficult to control

  • grows rapidly as new and more effective products become available

Area prescribing committees


  • Prescribing advisers

  • Hospital consultants

  • GP prescribing leads

  • Hospital chief pharmacists

Area prescribing committees

  • Produce primary/secondary care treatment guidelines

    • Common policies for continuing in the community regimes started in hospital

    • Decide which drugs to be monitored by hospital staff

Drug and therapeutics committee

Drug and therapeutics committee


  • consultants in major specialties

  • chief pharmacist

  • formulary pharmacist

  • local pharmaceutical advisers

Approves major changes to formulary

Enforces compliance with formulary

When drugs get more money

When drugs get more money

  • Recommended by NSF

  • Recommended by NICE

  • Save money on equipment

    • Eg, photodynamic therapy for age central blindness. NICE guidelines on it also DH issued instructions – PCTs should have made provision and funded separately

Formulary and fund flow directorate example

Formulary and fund flow: directorate example

Consultant makes application to DTC

DTC inspects application form:

  • Why it's better

  • What it's replacing

  • Cost

  • Patient numbers per month

  • Clinical evidence

  • Where role of treatment

  • First line/last line, etc

Turned down because evidence lacking

Recommend to use if finance cleared

Formulary and fund flow directorate example1

Formulary and fund flow: directorate example

Recommend to use if finance cleared

Band 1: £5,000 p.a. Directorate funds

Three funding bands

Band 2: £5,000-£10,000 p.a. Need to secure funds

Band 3: More than £10,000 p.a. Need to secure funds



  • Important for the NHS — important for you

  • Understanding commissioning, contracting, purchasing, procurement and financial flows will allow you to work out how to best obtain the funding required for your new medicines

  • Where do existing medicines fit in?

  • New customers?

  • And finally… note that PBR, HRGs and tariffs are still a bit mysterious even to the local NHS

Funding streams

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