2012/13 Contract Negotiations Update
Agenda Item 5
Board Meeting: 5 April 2012
Presented by: Paul Thefaut, Director of Operations (East Midlands) and Carole Theobald,
Director of Operations (East of England)
1.1 This paper provides an update to the Midlands and East Specialised Commissioning
Group regarding progress with the 2012/13 contract negotiation process. It includes a
summary of the main acute and mental health provider contracts in Appendix 1.
2. Executive Summary
2.1 Teams have been managing a far more complex and comprehensive set of issues this
year as they incorporate Minimum Take Services, including Major Trauma, and agree
revised baseline budgets with PCTs. For some, this is in addition to taking
responsibility for contract documentation for the first time, and ensuring all SCG and
PCT Associates are involved.
2.2 Contract negotiations are progressing well with providers. Price Activity Matrices
(PAMs) are agreed with most providers, although the arrangements where contract
negotiations are tripartite with PCTs means that the final budgetory envelope has not
been comprehensively set for some, and therefore subject to last minute alterations,
making finalising contracts challenging.
2.3 Some notable achievements to date include application of 1.8% deflator for most non-
PbR contract lines and successful negotiation with providers around coding and
costing proposals, such as CF and NIC benchmark tariffs and marginal rates for over
performance. In addition, agreement on a range of QIPP initiatives and a selection of
focused service specific work programmes for 2012/13 will support the delivery of
financial balance in 2012/13. These include collaborative procurement on high cost
devices, VAT savings on drugs dispensing, reducing follow-ups with delivery of
home-care drugs to improve patient experience and reducing cost and continued
improvements in case management in mental health and childrens services, to reduce
lengths of stay.
2.4 The status of the key acute (£40m threshold) and mental health (£10m threshold)
contracts, which the SCG is the co-ordinating commisisoner for, are attached as
2.5 Overall mental health contracts are progressing well, and it is anticipated that the
majority will be agreed/signed off by the end of March.
2.6 Finalising Price and Activity Matrices for Midlands & East SCG Associate contracts is
progressing well, although there are delays where host SCG/PCT negotiations are
taking precedent over out of area negotiations or due to local pricing issues. This is a
particular issue for some of the London contracts. However, agreement should not be
an arising issue, following local SCG resolution.
2.7 Contract documentation and schedules have been produced and distributed to all
providers for agreement and signing. The Dashboards’ CQUIN and new information
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requirements, especially with the larger tertiary providers that have a number of
services included in the initiatives is of particular concern with providers.
2.8 All teams are working to obtain contract completion, including signature by close of
play Friday, 30 March 2012. However, where this is not possible for the reasons
above, teams are aiming to ensure agreement on Price and Activity matrices and
SCG specific contract documentation schedules with documentation and signature
being finalised in April.
3.1 The Midlands and East Specialised Commissioning Group is asked to note the
content of this progress report.
4. Author & Date
Rob Lusuardi, Associate Director (EM) and Carole Theobald, Director of Operations (East of
26 March 2012
Appendix 1 – Main Provider Contract Negotiation Status
Financial Specialised Commissioning Teams are required to complete
contract negotiations within agreed budgets, ensuring delivery of
priorities detailed in the Operating Framework and local SHA and
SCG Plans in a timely manner, ensuring a balanced financial
position for 2012/13 for the M&ESCG.
Clinical Contract arrangements and priorities need to ensure the delivery of
clinical services for patients within the M&E SCG.
Risk Non-completion of signed contracts before the commencement of a
service exposes commissioners and providers to the risk of not
being able to assure themselves of service delivery, quality and
improvements alongside potential financial risks for both parties.
Equality & Diversity Standardised contractual process and national service
specifications ensure equitable access to minimum take services,
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Appendix 1: Main Provider Contract Negotiation Status
PROVIDER TYPE OF ESTIMATED R COMMENTS/ISSUES
NTRACT SERVICE CONTRACT A
ACUTE/MH VALUE £'000 G
Nottingham Acute 171,000 Budget still to be agreed with PCT's on in area
University contracts. CQUIN being progressed. All plans
Hospitals for out of area PCT's / SCG's have now been
received and submitted to Notts County PCT
for inclusion in the next offer. The cost of Major
Trauma Best Practice Tariff will be £1.2m. This
is being negotiating with PCT's separately.
University Acute 162,000 PAM agreed. Anticipated sign off date 31/3/12.
University Acute 157,171 PAM offer out 17/2; CQUIN issues. Awaiting
Hospitals counter offer from provider.
Cambridge Acute 86,861 Expect to reach agreement in March and do
University not anticipate problems with contract
Hospitals NHS document.
Birmingham Acute 76,490 PAM agreed
University Acute 69,486 PAM offer out 10/2; CQUIN offer out 13/2
Heart of England Acute 64,889 PAM offer out 10/2; CQUIN offer out 13/2
University Acute 62,922 PAM offer out 10/2; CQUIN offer out 13/2
Hospitals of North
Royal Acute 59,233 PAM agreed; CQUIN offer out 13/2
Hospitals NHS T
Papworth Hospital Acute 55,756 Activity and finance was agreed in principle,
NHS Foundation pending final confirmation of recent grouper
Trust impact. Working towards contract
documentation sign off by end of March.
Basildon and Acute 46,743 Activity and finance agreed - subject to Trust
Thurrock University confirmation of 2011/12 year end settlement.
Hospitals NHS Working towards contract documentation sign
Foundation Trust off by end of March.
Birmingham & Mental 32,903 PAM agreed
Solihull Mental Health
Health NHS Trust
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St Andrews Mental 29,105 Cost per Case Contract; Prices to be agreed
South Essex Mental 20,338 Agreed and sent for signature.
Partnership Trust Health
Norfolk & Suffolk Mental 18,610 Dispute issues remain regarding activity to be
MH FT Health purchased – SCG counter proposal sent to
Mersey Care NHS Mental 17,118 Subscription service; National Contract
Trust - Ashworth Health
South Staffordshire Mental 14,799 PAM agreed
& Shropshire Health
Partnerships in Mental 10,892 Agreed and sent for signature.
NHS Mental 10,000 PAM and contract agreed, awaiting information
Nottinghamshire Health on PD net, then will send for signature.
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