The MFF and the NHS
I do have an answer now to the way in which tarriff payments are calculated for hospitals. It is the simple one of:
payment = MFF * unit cost.
What this means is that a central London hospital gets paid roughly 25% more than a Birmingham hospital and 40% more than the Cornwall hospital.
The real absurdity comes from doing this when they are actually ignoring the massively variable fixed costs. The fixed costs are due to be paid regardless so whereas they take into account local variations on a theoretical basis they don't take into account local variations on a non-theoretical basis.
I read through the Audit Commission's resport on the NHS finances for 2004-5 and as I expected much of the post audit increase in deficits comes from intra NHS balances. I have asked a question to tease out these figures for 2005-6 (which will probably not get answered). However, what is clear is that the figures reported by the Department of Health are not yet reliable.
Some local MFF figures
Birmingham and Solihull Mental Health 1.125837
Birmingham Childrens 1.127814
Birmingham Heartlands and Solihull (Teaching) 1.127678
Birmingham Womens Hospital 1.130812
Heart of Birmingham Teaching 1.123832
Sandwell and West Birmingham 1.097593
Good Hope (now merged) 1.088251
Some other MFF figures
Great Ormond St NHS Trust 1.417732
West of Cornwall 1.000000
University College London NHS Foundation Trust 1.420888
St Mary's NHS Trust 1.446064
What this means is that if someone turns up Dead on Arrival in West Cornwall the hospital gets £71 tariff whereas if they turn up DoA in St Mary's the hospital gets £102.67.
More importantly for Birmingham we are threatened with losing services at the Children's hospital because of a funding shortage whilst Great Ormond Street gets an additional 25.7% for every operation.