A financial framework to support system working

by Lee Outhwaite

04 December 2020

Integrated care will demand wide ranging collaboration. And a finance regime will be needed to support this.

System working. Integration. Sustainability and transformation partnerships. Provider collaboratives. Integrated care systems (ICSs). All of them want to achieve the same thing; to break down organisational boundaries and provide better care for people.

Historically, the NHS has been good at creating and maintaining boundaries. The commissioner/provider split was a boundary enshrined in law, but we have also created our own between organisation types, clinical commissioning group areas and even between departments within a single hospital. Now, as we consider what the future NHS should look like, we need to work out how we foster further integration that enables us to better deal with the wider determinants of illness, complex comorbidities and frailty.

The HFMA has been thinking about this for the last few months and has just published a new report, setting out recommendations developed by members for the new financial regime in England. As effective system working is so important, a shorter report has been also been published, pulling out the recommendations in this area.

Nationally we need to acknowledge that local systems are able to make the big decisions needed to support their populations. But equally, those of us driving local systems forward, need to recognise that a national approach is needed so that system boundaries don’t become the new barriers to care in the NHS. We will need to work out how direct commissioning, cross boundary flows and tertiary provision all fit into a revised or changed landscape.

Local systems need to take on responsibility for their populations and change the long-held emphasis on institutions to focus instead on the populations those institutions serve. Providers should be encouraged to collaborate. Not just across acute, mental health and community, but with primary care as well.

This raises critical questions around the statutory basis for ICSs, how permissive the membership of the ICS should be and the role and future of direct commissioning. Proposals and options in these areas are included in NHS England and NHS Improvement’s recent discussion paper – Integrating care: next steps to building strong and effective ICSs across England.

Financial allocations will also need to be transparent. Everybody in the system needs to recognise what the funding is for and agree on how it is used. And people must be prepared to own, and manage, risks. In local government, the section 151 officer level accountability places a responsibility on the local council to operate within its budget. In the Department of Health and Social Care that accountability is held by the secretary of state. Perhaps that needs to change.

NHS England and NHS Improvement are seeking to build on the simplified payment approaches during the pandemic to introduce blended payments across the board. However this is implemented, we must recognise that local systems are at different stages in their journeys. Some will need support to do things differently, whereas others may feel held back by national guidance as they are already well developed.

We cannot take a ‘one size fits all’ approach. Places are different, relationships are different and population needs are not the same across the country.

We are not the only health system pursuing more integrated care. And there are lessons even from the US, despite its very different structure and funding arrangements. Kaiser Permanente (KP), for example, is a well-recognised, vertically integrated insurer and deliverer of care. And it is moving into areas that ICSs may also need to address including reducing the focus on acute care.

It talks about treating hospitals as cost centres and wanting to reduce the amount of work they do to the right level. It recognises that to deliver that requires investment in primary care, different long-term conditions management and health screening, and even housing and other issues sometimes.

This may be easy to say, but it is hard to do.

To support progress in England, we need to establish a financial regime that can really work for a 21st century health and care system. The institutional basis of how we’ve worked as a finance profession will need to change, and we’ll need to partner better with local government (and not just social care). 

In answering the next steps questions, there is perhaps a reciprocal question to government. How brave do you want to be? Then it will be up to us to grab the opportunity to work differently and make it a reality.


Lee Outhwaite is a member of the HFMA Policy and Research Committee