New integrated care boards begin life next month facing an enormous agenda. Arguably top of the to-do list is co-ordinating a system response to the very real pressures posed by rising waiting lists and a daunting recovery programme. But they are also charged with driving better integration of services within health and between health and social care, while switching the focus to the health of whole populations and addressing health inequalities.
This needs to be done within extremely tight financial budgets and with significant workforce pressures. Enter the newly appointed ICB finance directors, who will play major roles in helping their systems to meet these challenges.
The system approach will see a complex structure put in place, with a range of new bodies and partnerships that is likely to be quite perplexing to the general public.
The new ICBs will sit alongside system-wide integrated care partnerships, place-based partnerships and provider collaboratives. So what is the specific role of the ICB in delivering this joined-up approach?
Claire Wilson has moved from Wirral University Teaching Hospital NHS Foundation Trust, where she was chief finance officer, to become the director of finance designate for the Cheshire and Merseyside Integrated Care Board. The board is one of the biggest ICBs in England by population and budget and covers a wide geographic area that includes the city of Liverpool as well as the more rural Cheshire.
‘It’s about facilitation and enabling,’ she says. ‘It is about creating the framework and conditions that the system needs to succeed on the triple aim of health outcomes, quality of services and financial sustainability.
‘That might mean setting the financial framework or financial incentives so that partners are enabled to do the best for the population,’ she continues. ‘Or it might be aligning our business intelligence functions across the whole system so that we are making really good, evidence-based decisions.’
Fundamentally, she says, it is about supporting a collaborative approach to the system’s challenges.
A different approach
Speaking to ICB finance directors generally, there is a conspicuous absence of the word ‘commissioning’. ICBs will take on CCG functions and the core of commissioning will remain – understanding the needs of local populations and co-ordinating services to meet those needs. But there is a determination to leave behind both the language and the mechanisms associated with the former internal market. The approach will be different.
West Yorkshire Integrated Care Board, for example – another sizeable system – has already blurred the boundaries between commissioning and provision in the run-up to the formal system launch in July.
‘We increasingly rely on our provider collaboratives,’ says finance director designate Jonathan Webb, former chief finance officer of Wakefield Clinical Commissioning Group.
‘Sometimes this involves CCG staff working alongside providers or having outposted staff and we benefit from having different voices in the system. We co-produce the commissioning strategy. It is not just CCG people coming up with a specification. We’ve moved away from that to a great extent.’
It is about generating consensus on what needs to be delivered and how best to do that. And the ICB role is to bring people together and co-ordinate a combined response. ‘We talk about having a system convener role,’ he says. ‘That language has been really useful as an informal partnership and I’m really keen to ensure we don’t break what works.’
The complete commitment to partnership working and consensus is clear in West Yorkshire when you look at the make-up of its ICB board. Its six ICB executive directors are joined by five non-executives (including the chair) as well as representatives from the system’s five local places and a local authority member. There are also representatives from acute, mental health and community providers, primary medical services and the voluntary sector, a director of public health and HealthWatch.
That amounts to 24 members in total and Mr Webb accepts it is not a typical board. ‘But every partner is around the table and this runs through our West Yorkshire committees and our five place committees, which mirror the membership structure we have at the West Yorkshire level,’ he says.
Decision-making in the run-up to the creation of the formal board has been on a consensus basis, including on how funds are distributed, and Mr Webb wants this to continue. Over time, the system may decide certain services are best co-ordinated and funded at a system level. But on day one of the new structure, ‘99% of the system’s allocation will be devolved to its five places’.
It will then be for places to decide how resources are split between acute, mental health and community services and how money will be spent within each programme.
‘We’ve revisited the needs-based formula at place level using NHS England data,’ he says. ‘However, we haven’t followed this to the letter as that would have involved some fairly big movements of money and this year wasn’t the year to do that. But we’ve incorporated the notion of a target place allocation into the way we are distributing money.’
Mr Webb says that initially, the amount of money being moved around is minimal – with changes capped at 0.25% of the allocation. But he insists this was an important signal.
‘If we are serious about population health management and health inequalities, we need to take account of what the Advisory Committee on Resource Allocation says is the right amount of money relatively to be spent in each place,’ he says.
Mr Webb adds that the system had already moved away from the old commissioner-provider relationships by dropping payment by results two years prior to the pandemic and before the temporary financial regime was brought in for the whole service. Its system of aligned incentive contracts has encouraged a sharing of risk across the system.
And while the approach shares similarities with the new national aligned payment and incentive approach, the national system’s use of a marginal rate as part of its elective recovery programme is viewed locally as a backward step. ‘We will have to look at how we manage the risk around this in 2022/23,’ he says.
At Cheshire and Merseyside, Ms Wilson also says that this year, in which clinical commissioning groups have been leading the planning process, is a transitional year.
It will also be allocating down to its nine places while it moves quickly to develop a resource allocation strategy that considers how it can allocate funds to drive the required improvements in health inequalities and maximise outcomes.
‘The contracts we are putting in place for 2022/23 will recognise an element of stability is needed,’ she says. ‘But we also want to move to something closer in line with the aligned incentive contract principles, which will enable us to move resources around the system to support elective recovery. So, if an organisation is unable to deliver on its elective programme for whatever reason, we’ve got a facility to enable mutual aid and support investment in capacity somewhere else.’
She says system partners, including the provider collaboratives, are working to develop the future operating model. ‘This will help us define what is delegated and determined at place and which services are planned and delivered at scale,’ she says.
Over time, some resource could be allocated at system level – although this is likely to be very small at first. ‘You might consider an elective recovery programme managed at scale, with provider collaboratives working as the delivery vehicles, rather than routing the money through place,’ she says.
She suggests the initial ‘hybrid’ approach will give the system stability and flexibility in its first year. However, the system – in fact the whole country – faces significant financial challenges.
‘All organisations have to deliver 1.1% as a minimum – that’s basically baked into the allocation [and national tariff guidance] as an implied efficiency,’ says Ms Wilson. ‘Cheshire and Merseyside then has to deliver 0.9% over that because of our convergence factor.’
This factor is being used to reduce overall NHS resource consumption to spending review 2021-funded levels and it is higher for Cheshire and Merseyside than the England average of 0.6% because of the system’s relative overfunding compared with its target allocation.
So, within the system, all organisations are having to deliver 2% as a bare minimum, while also covering any local pressures. On top of this, Covid funding has reduced by around 60% compared with last year’s levels and organisations are required to review infection prevention and control measures in line with new clinical guidance to respond to this. It is a huge efficiency ask at a time when services are also being urged to go the extra mile on elective recovery. Given staff vacancies and absences, this may mean additional spending on waiting list initiatives, overtime and more expensive temporary staffing.
And with the system assessed as being some £300m over target allocation, it could face years of minimal growth as it moves to its fair share of funding.
Given the tough financial context, how can systems make good on their ambitions to transform services, increase community provision and move towards prevention and addressing the wider determinants of health?
‘That is the big challenge,’ admits Ms Wilson. ‘We have to deliver on today and the particularly difficult financial situation we’re facing. And at the same time, we have to find ways to do the redesign and transformation work that will make the position more sustainable and deliver the impact that systems are set up to have, especially embracing its population health and health inequalities remit. The reality is there isn’t an either/or; we’ve got to do both.’
The opportunities will come from a collective strength and bringing all the system partners together to tackle the issues. In some ways, the challenge has always been the same for the NHS, but Ms Wilson is optimistic that the new collaborative approach will bring down some of the barriers that have hindered progress in the past.
In West Yorkshire, Mr Webb says it is all about giving signals and highlighting the small successes. ‘Last year we collectively constructed a £12m package for social care to bring forward the national living wage early to 1 December (from 1 April),’ he says. ‘This was seen as a really good thing to try to protect against attrition of staff across winter and losing them to better paid jobs in retail. We also put £1m into a voluntary sector warmer homes initiative.
‘Also, to show that population health matters, we have ringfenced the very limited £11m funding we’ve had this year for health inequalities and we are deploying that on the core20plus5 priorities.’
Ensuring this money is not just used to improve the bottom line is a further signal of the system’s intent to make progress even amid such pressures. But it is not just spending the money in a particular pot, he insists, but what is done with the money once allocated.
He cites recent work on health inequalities in waiting lists at Calderdale and Huddersfield NHS Foundation Trust (Healthcare Finance, March issue, page 10). This did not involve extra funding for the trust, but changing processes locally within existing funding levels to address inequalities in access to care.
Ms Wilson says the trick is working together for a common goal. There is an element of the ICB having a formal role in the system hierarchy – but only in terms of arrangements for accountability and governance.
Its system leadership role is more about facilitating a collaborative response to issues that need it. It is not a replacement regulator for NHS England and NHS Improvement, although interaction may increasingly be delivered through the board.
‘People in the system may talk about the ICS telling them to do something,’ says Mr Webb. ‘But that misses the point. We are all the ICS. The ICS is no more than the combination of everyone round the table.’
The system finance team
Both point to the flat-cash management costs cap and the fact that the ICB will need to deliver efficiencies alongside the rest of the system. However, with significant financial responsibilities and tasks across place and at system level, both anticipate these numbers broadly continuing to be needed.
In Cheshire and Merseyside, the plan is to agree an operating model for the finance processes and then design the structures to support this. ‘That detailed work can only happen legislatively from 2 July onwards,’ says Ms Wilson.
‘We will take a staged approach to how we form as a finance team,’ says Mr Webb. Four functions will be required on a West Yorkshire footprint. A financial accounting and financial services function, the members of which were identified in advance, will be joined by a system financial management function for an all-system view. A corporate financial management team will look after board and finance committee reports. And a financial strategy function will work alongside places.
While initially, existing structures will stay in place, some changes will need to be swift – Mr Webb has a first investment and performance committee planned for August, which means a team must be up and running.
Former CCG chief finance officers will move across as finance leads in the majority of the system’s five places.
In Wakefield, where Mr Webb was previously CCG chief finance officer, the system will try a different model for the place-level finance lead. Here, the place finance lead role was included in the job specification for the Mid Yorkshire Hospitals NHS Trust’s new chief finance officer.
There may well be opportunities to collaborate more widely as a system on financial activities, but Ms Wilson says this would be for the whole system to discuss.
While Cheshire and Merseyside’s five-year plan spells out the intention to look for opportunities for collaboration on corporate functions at scale, this doesn’t necessarily mean a shared services approach. Instead, it might mean exploring the potential to establish a single ledger, which would make reporting more straightforward, or to collaborate on costing. And it might mean building on existing procurement work to explore the potential to take further advantage of the system’s scale.
In reality, the system has been working towards this formal restructuring for years and Ms Proffitt, its director of provider sustainability, has been at the heart of that. But she is keen to see what can be delivered with the new arrangements once the new structures are established.
‘There is a here-and-now pressure with everything happening at once,’ she says. For her system, that means merging eight CCGs into the new board, creating board structures and getting the new executive team up and running. ‘But that will pave the way for something that is going to be really exciting,’ she says.
She believes the system has advantages – including a sensible number of organisations (four acute and a single community and mental health provider within the NHS) working across the patch with established collaborative working. ‘And we’ve got the data that shows us where we can go to try to improve the financial position,’ she says. ‘All of that is really positive.’
The system is assessed as being 6.5% over its target funding position in the current year, which could mean reduced growth relative to other systems in coming years as the whole country moves towards fair shares on allocation.
‘But we can’t look at that in isolation,’ she says. ‘We’ve got to think about how we are performing now. Yes, we are above target and we’ve got some significant challenges, including numbers of Covid patients that have exceeded the levels assumed in national planning guidance. But we’ve also got a lot of duplication and waste in the system.’ This includes having five trusts with similar infrastructure and back office arrangements. RightCare and Model Hospital data also show significant variation and potential inefficiency across the system’s clinical networks. Ms Proffitt says the provider collaborative will have a key role in addressing this.
‘We absolutely should be looking at a single clinical vision, a single workforce approach and being organisationally agnostic when it comes to our population’s needs,’ she says. ‘So it is not just about how we find more money to invest, but about putting resources in the right places and taking some of the waste and inefficiency out of the system.’
Addressing health inequalities will be a key priority, with major variation across a patch that includes Blackpool, the most deprived local authority area in England, and more affluent areas of West Lancashire. ‘Listening to the right voices and hearing the right messages will be essential,’ she says.
However, Ms Proffitt believes the service and efficiency improvements can’t all be done overnight. It will require a five-year plan and longer-term financial strategy.
The challenge will be to design a financial framework that supports the system and provides the right incentives to drive collaboration and support people out of hospital.
With 2022/23 seen as a transition year, the system is also looking to develop allocation mechanisms for the future that move resources to place. Clinicians are already involved in this work and the ICB is appointing a place finance director as part of its central structure to support this agenda.
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