Insight report
The variation in elective and non-elective
activity between acute hospital trusts and
how this has an impact on income
August 2013
www.chks.co.uk
Introduction
CHKS wanted to investigate the scale of the variation
in the main elements of work undertaken in acute
general hospitals (A&E, outpatients, elective and
non-elective work and maternity services). In the
first part of this report we show how this variation
in non-elective activity was larger than expected.
In the second part we investigate the impact of this
variation on income under the current payment by
results (PbR) regime.
Over the last few years there have been three major
adjustments to the PbR tariff which have all had an
impact on provider income.
1.
Annual percentage deflator, which affects all
activity equally (not considered here).
2. Introduction of the marginal rate tariff (30 per
cent) for non-elective activity in excess of the 2008/9
baseline.
3.
Reduction in payments for non-elective
readmissions following a previous recent hospital
episode (within 30 days). These both have an impact
on non-elective income only.
1. Variation in non-elective activity
The first issue we addressed was to adjust for the
different relative sizes of acute sector trusts. We decided
to standardise on the basis of volume of elective admissions
(daycase and inpatient combined). The reason for this
was that we wanted to examine the relative proportion of
electives to non-electives.
Using HES data for the calendar year 2012, we calculated
and applied the necessary adjustment and then rounded
for ease of reading. There are 142 acute (non-specialist)
providers and Table 1 shows that the “average” provider has
the following characteristics when standardised in this way
(with the range shown for information):
Activity type
Average Range
A&E attendances:
250
100 – 1350
First outpatient attendances:
300
100 – 1200
Electives (incl. daycases):
100
(n/a)
Non-electives:
80
20-150
Maternity:
20
0 - 80
Table 1 - “Average” provider
This clearly shows that, on average, most trusts carry out
more elective activity than they do non-elective.
The extent of the variation
However, the extent of the variation between acute
sector trusts which is shown in chart 1 was unexpected. This
chart shows all 142 acute trusts and the relative size of their
non-elective activity when the elective volume is based at
100.
Chart 1 - Relative proportion of
non-elective activity
There are 16 trusts which did more non-elective activity
than elective, and nine which did less than half the amount
of non-electives compared to electives.
Insight report: August 2013 3
The highest and lowest ten trusts
for non-elective activity:
To explain this further, Table 2 (below) shows the ten highest and ten lowest trusts for non-elective activity.
We can see from this table that the highest relative proportion of non-elective activity still shows a wide variation.
Trust A&E
First
Electives NonMaternity
Attends Out-patients
electives
1
507
635
100
153
43
2
665
441
100
149
35
3
438
565
100
135
17
4
417
501
100
121
24
5
379
478
100
119
21
6
224
291
100
115
41
7
354
461
100
113
16
8
258
272
100
112
22
9
225
439
100
112
0
10
387
385
100
110
24
133
104
177
100
51
1
134
160
229
100
50
8
135
173
266
100
50
14
136
129
212
100
50
10
137
181
341
100
48
13
138
137
195
100
46
10
139
115
240
100
45
11
140
228
280
100
43
25
141
128
221
100
39
6
142
121
210
100
23
10
We found the following:
A&E attendances (from 224 to 665)
Outpatients (from 272 to 635)
Maternity (from 0 to 43)
In addition, those with the lowest proportion
of non-electives not surprisingly show a smaller
number of the following:
A&E attendances (from 104 to 228)
Outpatients (from 177 to 341)
Maternity (from 1 to 25)
This analysis shows us non-elective activity varies
considerably between individual trusts.
Table 2 - Ten highest and ten lowest
trusts for non-elective activity
Insight report: August 2013 4
2. The impact of this variation on
income
Given the extent of this variation we decided to look at
income rather than activity. We used the same dataset
(HES, calendar year 2012, all acute general trusts) and
applied mandatory tariff to the activity. This time we looked
at the relative proportion of total tariff income that derived
from non-electives (Chart 3).
It should be noted that we did not apply any of the
reductions for marginal activity or readmissions, in part
because we could not be sure how they were being applied
locally and therefore could not ensure accuracy. Again we
can see there is a wide variation from 47 per cent to 17 per
cent.
Chart 3 - Percentage of tariff income
Chart 2 - Proportion of total tariff income
We then investigated whether smaller trusts receive a
relatively larger proportion of their tariff income from nonelective activity. Chart 3 shows percentage of tariff income
from non-electives against total tariff income. Whilst the
relationship is not statistically strong, there is a discernible
pattern of higher total tariff income being linked to a lower
proportion of non-electives.
Insight report: August 2013 5
What is the link between turnover
and size?
Finally, we wanted to look at the relationship with total
turnover between the amount of non-tariff income received
and size, especially as the majority of non-tariff income
relates to teaching and specialist services.
By combining these two we have been able to show that
smaller trusts tend to have a larger proportion of their tariff
income from non-electives, and that they receive a relatively
smaller proportion of non-tariff income.
Total turnover is difficult to obtain without going through
every individual trusts published accounts. However,
colleagues at the Foundation Trust Network shared the data
that they had which covered 121 of the 142 trusts we had
been examining.
As such this creates a double impact of the relative
importance of non-elective tariff income for them. Chart 5
shows the overall relationship between the total turnover
and the proportion of this that derives from non-elective
tariff income.
First we looked at the amount of non-tariff income compared
to total turnover. Chart 4 shows that the larger the turnover,
the greater the proportion of non-tariff income.
Chart 5 - Proportion of total turnover
Chart 4 - Total turnover and non-tariff income
This chart shows a much stronger relationship of higher
turnover relating to less income from non-elective activity.
This chart shows that when looking at the third of trusts
to the right of the chart compared to those on the left the
proportion of non–tariff income goes up approximately twothirds rather than less than half to the left.
Insight report: August 2013 6
Conclusion
Our analysis highlights the considerable variation between
trusts in the relative proportion of elective and non-elective
activity.
Two of the three main financial levers only affect nonelective activity – these are marginal tariff and readmissions.
The adverse impact on smaller trusts is further compounded
because larger trusts receive a bigger proportion of their
income from non-tariff sources (mainly teaching and
specialist services).
The analysis has therefore demonstrated that these financial
levers are not having an equal impact across the NHS. This
is pertinent given ongoing discussion about the future of
smaller acute hospital trusts and an area that requires further
investigation whilst tariff is being reviewed.
To find out more, please contact us:
T: + 44 (0)1789 761600
E: [email protected] or visit www.chks.co.uk