NHS Improvement proposes changes to Market Forces Factor affecting billions in funding

NHS Improvement has today published new proposals for changes in the way hospitals are funded from next year. The proposals include a number of changes to the existing system including some to the Market Forces Factor (MFF) which estimates the unavoidable cost differences between healthcare providers, based on their geographical location. The MFF is very important as it is used to adjust national prices and commissioner allocations based on the level of unavoidable local costs faced by providers. As such it affects tens of billions of funding distributed to hospitals across the country.

The proposed changes have been supported by Frontier’s in-depth review of the MFF (and resulting recommendations) which was published alongside the payment system reform proposals. The reforms proposed include:

  • Introducing business rates to the formula
  • Using more up to date geographical boundaries (Travel to Work Areas to replace the now obsolete Primary Care Trusts)
  • Introducing an adjustment for providers on the fringe of London (for some staff groups)
  • Using a more consistent method for combining the formula components into a single index

Frontier regularly advises the NHS, Government, regulators and providers on healthcare issues.

For more information, please contact media@frontier-economics.com or call +44 (0) 20 7031 7000