A DECISION crucial to the funding of health services in the county is due within the next 24 hours.

Both Wye Valley NHS Trust (WVT) and Herefordshire Clinical Commissioning Group (CCG) are tight-lipped over the outcome of 11th hour talks to secure contractual funding agreements.

Had the talks on Monday not reached  an agreement, both parties were due to go to arbitration by today (Wednesday) with a 24 deadline for decision.


More than £6m is at stake with WVT and the CCG at odds over the correct funding of the community health services contract  valued at £4.3m and four disputes relating to the application of the national tariff -  a set of prices to help HCCG work with WVT on service provision.

On Thursday, the WVT board was told that the outcome of arbitration was crucial to the Trust’s 2015-15 budget that already projects a deficit of £9m.


WVT, HCCG, NHS England (NHSE) and the Trust Development Authority (TDA) have been locked into talks over recent months without reaching agreement.

NHSE and the TDA expected  that all contracts would be signed by February 28 and that a failure to achieve this would see WVT and HCCG  subject to a disputes process.


With no appeal to the determination by arbitration,  both WVT and HCCG would then have until  Friday (April 4) to present final submissions.

At its meeting, the WVT  board was told that the Trust was “not confident” that HCCG’s QIPP (Quality, Innovation, Productivity and Prevention) programme would deliver  the reduction in activity it intends, so the Trust had to assume it can recover this “lost” income through contract over-performance – a risk of up to £3.2m.


HCCG wants to reduce its contract with the Trust by £3.2m.

At the same time the Trust is trying to secure agreement from HCCG over funding for improved stroke services. WVT has asked for an extra £600k it thinks is needed to deliver a specified level of service and the board was told that while this sum is yet to be fully agreed, HCCG has indicated its broad support.


Other key contractual issues that need to be taken into account as posing a potential risk to the Trust are CQUINS ( payments relating to quality improvements which are worth £2.5m to WVT) and an extension to fines HCCG can impose over contractual performance.

Previously, HCCG has re-invested fines in WVT, but this position could change over 2014/15 as the process moves to a rules-based system, leaving the Trust with a risk of over £550k  based on performance breaches this financial year.


A CCG board meeting on Tuesday was told the ongoing contract discussions with the Trust represented a “major financial risk” with the potential for budgets being agreed over and above those identified in the draft budget.

The CCG’ board was told that WVT had identified a “significant gap” within their plans, mainly surrounding the provision of community services.


Both parties have outstanding pricing issues  including funding for the Clinical Assessment Unit at Hereford County Hospital.

As financial risks emerge in year, they must be managed by the CCG.


The level of financial risk for local pricing issues is assessed by the CCG as around £1.8m.

WVT  quotes a short-fall of around  £3.7m over the community contract.

The CCG does not believe that this issue can be resolved contractually and has offered to work with the Trust on a resolution over the next 18 months.