NHS funding flows fail to adequately compensate trusts in remote and rural areas for the extra costs they face, a report has said.
The report, conducted by the Nuffield Trust on behalf of the National Centre for Rural Health and Care, said that six of the seven trusts in rural areas ended 2017/18 in deficit.
Despite representing only 3% of all trusts in England, their combined deficit is equivalent to almost a quarter of the overall £1bn deficit for trusts.
The report said that this ‘is possibly indicative of unavoidable rural costs’.
£1.3bn away from rural areas
The current formula deciding how NHS funding is allocated takes ‘at least £1.3bn away from rural areas’, according to the report.
Trusts in remote areas have also higher cost pressures, the authors of the report wrote.
The report said: ‘While the performance across the seven trusts is variable, on average, they have longer waiting times and lengths of stay, more delayed transfers of care, higher average unit costs, and worse financial positions.’
Other challenges trusts in rural areas have to deal with include:
- Difficulties in staff recruitment and retention and higher overall staff costs
- Higher staff travel costs
- Difficulties in realising economies of scale
Allocations to CCGs
Allocations to CCGs do take into account the local population needs, and take into consideration factors such as the extra costs of ambulance provision, the report said.
However, funds considerably favour urban areas, where more money is needed to reduce greater health inequalities and respond to the higher cost of premises, land and labour.
NHS England recently allocated £570bn to CCGs through a new allocation formula and NHS funding for each area will rise by at least 17% in the next five years.
An NHS England spokesperson said: ‘The NHS funding formula is overseen by an independent panel [the Advisory Committee on Resource Allocation], and already accounts for unavoidable costs related to providing services in rural areas, and we will continue to work with local hospitals and health groups to ensure that the formula is based on the best possible evidence of the needs of different communities.’
However, according to the Nuffield Trust, NHS England’s planned changes to the allocation formulae will start favouring rural areas from 2020 onwards only.
The Nuffield Trust’s chief economist and director of research Professor John Appleby, who also co-wrote the report, said: ‘We recommend that the true scale of costs is examined again, and that national bodies are much clearer about how they make their funding decisions.’