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ICB invests in new GP funding model based on population need

by Victoria Vaughan and Rima Evans
10 June 2024

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A new GP funding model that helps the most under-resourced GP practices in Leicester, Leicestershire and Rutland (LLR) ICB has been given money for a further year until April 2025.

The model, which is based on population need, allocated eligible practices with a ‘health equity payment’ from a pot of £2.85m annually, to top up core GMS funding.

The extra funding had been approved initially by the ICB only for a three year-period starting in 2021 but following a recent assessment showing it has had a positive impact, it’s been decided it will run for another year.

The scheme is based on a specially designed funding formula that uses the Johns Hopkins University adjusted clinical group (ACG) system, which looks at population need.

All 127 practices in LLR were grouped into four categories from most to least underfunded, recognising that all practices in LLR feel underfunded.

The most underfunded half of practices have been given a share of £2.85m from the ICB annually from April 2022, with £119,000 being the maximum amount a single practice received in 2024, to bring them up to the average level of funding for the patient needs at their practice.

The practices in the least underfunded half didn’t receive any extra money under this new GP funding model.

The LLR GP funding formula was developed by an ICB ‘task and finish’ group and that included people from finance, population health, primary care and public health. 

The formula uses data looking at the individual patients that make up a practice while also taking into account deprivation and communication issues, which is a particular challenge in Leicester, the UK’s first plural city where ethnic minority groups are the majority (see also box below).

Retired GP Dr David Shepherd, who sat on the ICB task and finish group, explained: ‘It works out that 47% of the money gets allocated as core funding, about 5% to 6% is allocated on deprivation, and the rest gets allocated on the basis of our assessment of practice needs and communications issues.

‘The basic idea of the model was to use newer ways of looking at patient-level data using the ACG system, which allows you to process data in meaningful ways to measure the needs of the population more accurately than the Carr-Hill formula. You can then allocate resource more accurately.

He added: ‘One of the problems with the Carr-Hill formula, which has been recognised, is that it lumps a lot of practices together that should actually be different levels of need, overfunding some practices and underfunding others. So for the last 20 years, it’s effectively embedded health inequalities into the very funding model of the practices’.

Practices that received the extra cash used it for cloud-based telephony, recruitment, increasing administrative hours, locum support cover, health inequalities work, training and recruitment and in one particular case, ‘to stay afloat’.

Dr Nikhil Mahatma, GP Partner at Kingsway Surgery in Leicester, said: ‘The additional funding has allowed us to provide more pharmacists provision. Pharmacists support the prescribing team, treat and advise on managing minor ailments and carry out our asthma and heart failure reviews. This has freed up GP appointments to provide continuity of care for our patients with more complex conditions.’

The ICB’s decision to extend the health equity payment scheme was taken after an assessment of the GP funding model was carried out – and it was found to have positive results.

Dr Shepherd and others reviewed the model against the GP patient survey questions relating to access. In particular, they noted the percentage of patients who answered ‘fairly easy’ or ‘very easy’ in response to the question: how easy is it to get through to someone at your GP practice on the phone?

Nationally, this has been on a steady downward trajectory since 2012, apart from in 2021. When the LLR practices were broken down into the four categories from most to least underfunded, those that were the least underfunded performed better on this question.

And when looking at workforce data, Dr Shepherd and his team also found these practices tended to employ more whole-time equivalent staff.

He explained: ‘The conclusion we’ve drawn, which seems pretty obvious, is you get what you pay for. The reason it hasn’t been obvious before is because people haven’t been able to break practices down to meaningful levels of funding. As far as the Carr-Hill [formula] is concerned they are all funded the same. So, it does look to us, one of the reasons for better performance is better funding.

‘In 2021, the satisfaction rates shoot up as the government put in a lot of funding to primary care during the pandemic – around £12m in LLR. So, although the picture is complex, we have a natural control that we think shows increased funding improves performance,’ Dr Shepherd, also a former board member of Leicester City clinical commissioning group, added.

Significantly, LLR’s data on the same patient survey question from 2022 to 2023 showed the most underfunded practices improved following the funding injection received as part of the new local GP funding model.

Caroline Trevithick, chief executive of the LLR ICB said: ‘In LLR we are focussed on addressing the avoidable differences in life expectancy and healthy life expectancy between different parts of our population and we find the Carr-Hill formula has limitations in this regard. The ICB has therefore agreed the Health Equity payment scheme to run during 2024-25. We are really pleased to be piloting this new model of funding, which is designed to address historical underfunding of practices, based on greatest need.  It gives us the opportunity to align funding more closely with the needs of local patients’.   

Ms Trevithick said the running of the model would continue to be reviewed in the next year as well as ‘the impact on patient experience and outcomes in those practices in receipt of a health equity payment’. 

‘This review will inform decision-making about the future of the scheme beyond March 2025,’ she said.

Dr Shepherd is working with Frimley ICB, which has the ACG system that is required to run this new GP funding model.

‘They’ve tweaked our model a little bit in the way they’ve calculated it to suit their own kind of practices. And they’ve taken the work we’ve done and assessed it against their own practices,’ he said.

‘It was reassuring to them that this model does actually give us the information they want and they are in the process of implementing it,’ he added.

How is this new GP funding model calculated?

The formula uses the ACG system, software from Johns Hopkins University in the US, which has evolved as a case-mix system, addressing the issue of measuring health needs in a population.

‘If you take a typical GP practice and list all the illnesses that each individual patient has, every patient has a different list of illnesses, which combine in different ways and different severities to impact upon the health system. It’s unbelievably complex; there’s almost an infinite number of ways in which different people’s illnesses can combine to impact the health system,’ Dr Shepherd explained.

‘The ACG system was an attempt to try and make sense of all this and capture the full range and different combinations of illnesses into a way of breaking the population down into a fixed number of groups that roughly correspond to a similar impact on the health system.’

Each month, anonymised diagnostic data is extracted from the 1.2 million patients in LLR, processed by Midlands and Lancashire Commissioning Support Unit, along with secondary care data, and then fed into the ACG system, which categorises each patient into one of 93 cells, each with a different level of need in the population.

‘Based on the cell a patient is in, we work out how many appointments that patient needs each year in primary care. Then, because we know how many patients are in each cell, we can work out how many appointments a practice should offer overall. And that’s our basic currency of need – how many appointments is a practice likely to need to offer given the severity of the illness in this population.

‘This is based upon individual patient-level data by actual diagnoses that doctors, nurses and other health staff entered into the patient’s records. It’s the best picture we can put together of the health of the population in real-time,’ said Dr Shepherd, who is presenting the model at the Health and Care Analytics Conference in July.  

A version of this article was first published on our sister title Healthcare Leader