Memorandum submitted by the

Countess of Chester Hospital NHS Foundation Trust (CBPS 18)

Executive summary

1. This submission explains current cross-border issues in relation to financial arrangements between Welsh commissioners of health services and the Countess of Chester Hospital NHS Foundation Trust and comments briefly upon the impact of differing health care policies along the border.

2. The key points made within the submission are:

a) Current Welsh Assembly policy is that English healthcare providers should be funded on the basis of a historic (1991) financial and activity baseline with only the marginal costs of additional activity funded each year.

b) As a result over time the actual costs of providing health services to Welsh residents has considerably outstripped the funding provided by Welsh Local Health Boards. The forecast underlying deficit in 2008/9 in funding provided to the Trust for services to Welsh residents is £2.2m. The Trust believe that it is effectively subsidising the Welsh Health Service to this extent.

c) It is highly unlikely that negotiation based on current cross-border financial arrangements will resolve this long-standing issue and the Trust believe that revised cross-border financial arrangements based on a standard approach agreed between the two governments is necessary.

d) Suggestions of a policy of repatriation whereby all Welsh residents would be ultimately treated within Welsh hospitals would not be in the best interests of Welsh patients and their safety.

e) Differences in policies relating to waiting times, prescription charges and car parking charges can be confusing and of concern to many citizens along the border, however we accept these as a natural consequence of devolution and the relative priorities of the different governing bodies within the UK.

Introduction to Submitter

3. Peter Herring has been Chief Executive of the Countess of Chester Hospital NHS Foundation Trust for approximately eight years and is submitting this evidence on behalf of the Board of Directors of the Trust.

4. For brevity I will occasionally refer to the Foundation Trust as 'the Trust' or 'the Countess'.

The Countess of Chester Hospital NHS Foundation Trust

5. The Countess of Chester Hospital is a 580-bed, single site general hospital situated on the outskirts of Chester. The Trust has over 3,000 employees and provides acute emergency and elective services, primary care direct access services and obstetric services to a population of approximately 250,000 residents mainly in Chester and surrounding rural areas, Ellesmere Port and Neston and the Deeside area of Flintshire in North Wales.

6. The Trust provides hospital services to approximately 30% of the population covered by Flintshire Local Health Board in Wales, and smaller volumes in other North Wales Health Board areas. Welsh patients represent approximately one fifth of the total workload of the Trust. In 2007/8 the forecast number of Welsh patients treated is as follows:

Elective (non-emergency) inpatients and daycases: 4200

Emergency inpatient admissions 6700

Outpatient attendances 41750

7. The Countess of Chester Hospital was established as one of the first ten NHS Foundation Trusts on 1st April 2004 under the Health and Social Care (Community Health and Standards) Act 2003. Essentially a Foundation Trust is an autonomous organisation established in law as a Public-Benefit Corporation and free from central government direction and control.

8. Foundation Trusts are only established in England, they do not exist in Wales but English Foundation Trusts have a duty of care embodied within their Terms of Authorisation to treat patients whatever their country of residence and to co-operate with the commissioners of health services - Primary Care Trusts (PCTs) in England and Local Health Boards (LHBs) in Wales.

Funding issues relating to cross-border services

9. The Trust income relating to Welsh patients in 2007/8 comprised £18.2m representing 15% of total income from health service commissioners, although Welsh patients represent 20% of the total patient workload of the Trust.

10. In England, Trusts, whether they be Foundation Trusts or traditional NHS Trusts still under Department of Health control, are largely paid through the Payment by Results (PbR) system whereby for each patient treated the Trust is automatically paid a 'price' based on tariffs established by the Department of Health. The national tariff varies according to the type of patient (e.g. outpatient, day-case or inpatient) and the condition of the patient.

11. In relation to Welsh residents, the Local Health Boards will not recognise the Payment by Results system and the funding for services is subject to negotiation between the provider and the commissioner based on a historic funding position established we believe in 1991. Flintshire Local Health Board insist that they are only prepared to meet the marginal costs of additional activity over and above the historic baseline and that this reflects the national cross-border policy.

12. This position ignores that fact that:

a. The current relevance of a baseline established nearly 17 years ago is highly questionable;

b. Funding at marginal cost over a long period ignores the step changes in costs necessary to meet service improvements, and to fund the quality and infrastructure requirements of a 21^st century health service.

As a result over time the full costs of providing health services to Welsh residents has considerably outstripped the funding provided by the Local Health Board.

13. Whilst negotiations with Flintshire LHB have recently provided for an additional £1m of funding, irrespective of this, for the forthcoming year 2008/9, we estimate that the funding provided to the Trust will be approximately £2.2m less than the actual cost of providing services to Welsh residents. If the required level of activity were to be reimbursed on the basis of English national (PbR) tariffs we would expect an additional £3.8m over the current funding level.

14. In addition, in respect of English border hospitals the funding of A & E attendances and sexual health clinic attendances until 2005 were traditionally the responsibility of the host Primary Care Trust. Since these services were 'de-hosted' in 2005 Flintshire LHB have refused to fund A & E and sexual health growth (equivalent to £200k), arguing that this remains the responsibility of Western Cheshire PCT. The Trust is therefore not being paid for additional activity in these areas by either commissioner.

15. It is not unreasonable for a provider of services to expect the commissioner to pay a fair price for the services provided - it is clear that as our basic costs are not even being covered, the Trust is effectively subsidising the Welsh Health Service and thereby compromising its full potential to provide services to both English and Welsh residents alike.

16. Flintshire Local Health Board have insisted that they are complying with cross-border policy and that resolution of any underlying deficit in funding will only be resolved by the Department of Health in England transferring funds to Wales. The Department of Health, however, resist this and believe it should be resolved through local agreement.

17. The Welsh Assembly's position was expressed in a letter from the Chief Executive of NHS Wales to myself on 30^th March 2007 as follows:

'The Welsh Assembly Government position is clear, in that we expect Welsh commissioners to agree contracts with providers that reflect, as far as can be determined, the cost of service provision. This position has not changed in Wales since 1991.'

18. Whilst this initially seemed to support the principle of a provider's actual costs of service delivery being covered, a subsequent letter from the Director of Finance for NHS Wales supported Flintshire Local Health Board's contention that they are only required to meet the marginal costs of additional activity over and above the historic baseline. It appears unlikely therefore that the underlying deficit with Flintshire will be resolved through negotiation whilst this policy is maintained and supported by the Welsh Assembly.

19. The Local Health Board have refused to enter into a formal contract arrangement with appropriate dispute resolution arrangements arguing that they are forbidden to do so by the Welsh Assembly. In the event of a dispute of this nature as an individual provider of NHS services the Trust has very little ability to reach agreement with a local commissioner supported by its government and national policy.

20. The simplest and most transparent solution to cross-border financial arrangements would be to reimburse English providers on the basis of a tariff arrangement whether this be equivalent to English tariffs or specific to Wales; a tariff system does not exist within Wales itself however.

21. Alternatively, English based Trusts use a standard national system to identify their actual costs for each type of activity and patient. This is produced in accordance with guidance established by the DOH and is subject to annual external audit to verify its accuracy. These are known as reference costs within England and they inform the construction of the national tariffs each year. No comparative system exists within Wales. In addition to reference costs, Trusts require a surplus to fund quality and capital investment and an agreed percentage oncost could be added.

22. Either way we believe a standard approach would be helpful to remove the reliance on local negotiation which has proven to be ineffective in reaching a satisfactory resolution to cross-border funding disputes.

23. Whilst the DOH has no direct responsibility to help resolve a matter between a Foundation Trust and local commissioners. The Minister of State for Health Services, Mr Ben Bradshaw has been very supportive in attempting to facilitate a resolution of these matters with the Welsh Assembly, as have local English and Welsh Members of Parliament and certain Welsh Assembly members.

24. Whilst we believe these matters are being addressed by the two governments the Trust would urge the rapid introduction of revised cross-border financial arrangements for future years to avoid English providers of health services to Wales (and their patients) being disadvantaged by historic arrangements that do not meet the requirements of a modern commissioning relationship.

A policy of repatriation?

25. Suggestions have been made from a number of sources that a policy of 'repatriating' Welsh residents might be adopted. In other words Welsh commissioners would as a matter of policy direct that all Welsh patients were treated in Welsh Hospitals. This has indeed been alluded to on a number of occasions in response to the Trust's pursuit of financial equity.

26. The Countess of Chester Hospital is approximately 2 miles from the border with Wales and for the population of Deeside the Countess is their natural local hospital of choice and the closest in terms of patient safety for emergency cases.

27. Together with other English providers along the border, the Countess has provided health services to Welsh residents since the inception of the NHS. The Countess of Chester Hospital NHS FT value the services we provide to Welsh residents very highly. To pursue a policy of repatriation would in our view seriously compromise the best interests and safety of Welsh patients in our catchment area. The Trust sincerely hopes that such a policy will not be adopted by the Welsh Assembly and that we will be allowed to continue to provide high-quality health services to Welsh residents.

Differences in health policies and waiting time targets

28. By the end of March 2008 (December 2008 for most other English Trusts) the Countess will be delivering for English patients a maximum waiting time of 18 weeks from the point of referral by a GP to the time of a patient's first treatment (that is encompassing any diagnostic requirements, outpatients and an inpatient stay or operation if this is required).

29. For Wales the maximum waiting targets at the end of March 2008 are:

§ 22 weeks for an outpatient appointment;

§ 22 weeks for an inpatient or daycase appointment;

Further improvements in Welsh waiting times are being pursued over the next two years so that by December 2009 no Welsh resident will wait more than 26 weeks from the point of referral by a GP to the time of a patient's first treatment.

30. Whilst the Trust would ideally wish to provide the same access to patient care irrespective of the patient's point of residence, Welsh patients on average now wait longer compared to English residents as result of the differing policies, although generally waiting times for Welsh patients at the Countess are still much lower than average waiting times in Wales.

31. This situation clearly creates additional administrative complexities and costs in arranging appointments and admissions in respect of Welsh residents and can create confusion and concern for patients along the border when they see their close neighbours getting swifter access to healthcare.

32. Free prescription charges and the recently announced free car parking arrangements are other examples of the differing policies experienced along the border.

33. My Board accept these as a natural consequence of devolution and the relative priorities of the different governing bodies within the UK and it is appropriate that we respect these differences and comply with the requirements of Welsh healthcare commissioners.

Conclusion

34. This concludes my evidence to the Committee. My Board and I would welcome any support the Committee may be able to offer to help encourage a resolution of the matters considered in this paper.

12 March 2008