Convergence 2.0: lessons in integration

by Steve Brown

12 July 2018

Trust is paramount in system working and new payment systems may be important, but not yet, according to presentations at the HFMA Convergence 2.0 conference.

A year ago, the HFMA brought provider and commissioner leaders together for the association’s first Convergence conference. Twelve months later – with the second event now successfully concluded at the beginning of July – what more do we know about the move to system working and integrated care systems?

For a start, system working is no overnight solution to the challenges facing the NHS. Progress has been slower than maybe some would have hoped, but there is a clear consensus that it is the right way to go. Engagement is key – with staff and the public – and there are no short cuts to this.

At this year's conference, speaker after speaker talked about the absolute importance of trust between organisations working within systems. New payment approaches will be important (at least for some areas), but they aren’t the initial priority. And there were warnings that collaboration needed to extend beyond local system boundaries.Jim Mackey

Jim Mackey (pictured), chief executive of Northumbria Healthcare NHS Foundation Trust and former chief executive of NHS Improvement, said sustainability and transformation partnerships (STPs) had brought local organisations back into a room together. But there was still a lot of confusion around STPs and ICSs and this needed to be addressed. He said that ‘looking after your own institutions’ was still important, but this had to be done while also working effectively in a system. More clarity was needed around system working, with a clear idea of the purpose underpinned by a better understanding of ‘how the money flows around it, how accountability works and how performance works’.

He praised the finance function and the service in general for ‘stabilising finances’ following a ‘really hard’ few years and extreme winter pressures. But he said that the NHS needed to get better at reporting its overall financial position – rather than focusing on challenges in specific sectors. The system position – whether a local system or the whole national system – should be the focus of attention. Contrary to the media portrayal, while he acknowledged massive operational pressures, the NHS overall was in balance. Try to shift the negative narrative, he urged delegates.

Last year, eight areas were selected alongside two devolution systems (Greater Manchester and Surrey Heartlands) to lead work on ICSs. A further four areas were announced in May this year. Last year’s first ICSs all broadly had one thing in common – they were building on a history of collaborative working, which gave them all a head start.David Pearson

A number of these ICSs presented at the conference.  David Pearson (pictured) chair of the Nottingham and Nottinghamshire STP repeated the increasingly used phrase that ‘progress is at the rate of trust’ and insisted a common vision needs to be established before decisions can be taken about resources, capacity and structures. And he stressed that it was far from easy. The system had made ‘fantastic progress’ but there was huge activity below the surface to keep things working in a ‘challenging financial and services landscape’.

The STP has done some early work on new payment systems to support new models of care (see New payment model and Making the right connections Healthcare Finance July 2017 and July 2018). But Marcus Pratt, the STP’s programme director for finance and system efficiency, said there were no immediate plans to expand this. ‘It is not that we don’t think this is important,’ he added. ‘We really do, but we need to develop this in a very considered way,’ he said.Mark.Orchard

Dorset is a system that has so far resisted any sophisticated new payment system to underpin its system working. Mark Orchard, (pictured) finance director of Poole Hospital NHS Foundation Trust – part of the Dorset ICS – told the conference how the system had effectively replaced the tariff system locally with block arrangements. Flat cash settlements for providers in 2017/18 followed by a 1% increase for 2018/19 were agreed based on flat activity – a feat that has largely been achieved, although providers have seen an increase in the complexity of conditions patients are presenting with (see One vision, one NHS, Healthcare Finance June 2018). A series of intra-system control total offsets have been agreed for 2018/19 so that all bodies face the same cost improvement challenge.

Mr Orchard told the Convergence conference that because Dorset was effectively a self-contained system, what had worked for the county would not necessarily work in other areas. But his over-riding message was to keep things simple.Gary Andrews

NHS England and NHS Improvement have been doing some work on new payment approaches to support the new ICSs. And Gary Andrews (pictured), NHS England’s senior pricing development manager, unveiled an interim payment approach that has been made available to ICSs for the current year.

The blended payment mechanism includes ‘intelligent fixed payments’ – effectively block contracts that take account of transformation plans and demand changes as well as inflationary pressures – and two elements that aim to share risks. First, variable payments would reflect variations in activity from plan and would apply to all types of provider, not just acute. Then a risk share mechanism would look to share gains and losses incurred, for example, when providers are left with stranded costs.

This is not mandatory – and ICSs can pick and mix elements to suit their own local context. And, according to a quick run through the different ICSs, that’s exactly what they have done – although in reality, existing blended payment practices are just being matched to the new interim model.

So the real question is: how necessary are new payment approaches? An excellent piece of work from NHS consultancy The Strategy Unit underlines that risk and reward sharing mechanisms – potentially needed alongside new capitation-based payment approaches – are necessarily complex if you want them to work as intended.  In some areas, the ‘keep it simple’ approach might be all that is needed. In others – where flows are more complex – a transparent, rules-based system might still make most sense.

And even areas where current approaches are largely based on good relationships and trust may need a more formal approach in future to underpin their collaborative working.

There are still lessons that could and should be learnt. Scotland and Wales have no purchaser-provider split and less formal payment mechanisms. However the NHS Confederation believes in England we are moving towards the emergence of more strategic commissioning and it would be a ‘mistake to return to a closed system of allocations without significant local accountability’ (see Making the right connections, Healthcare Finance July/August 2018). This is another area where the service would benefit from more clarity – where are we actually headed with commissioning?Nigel Foster lscape

A final message from the conference came from Nigel Foster (pictured), director of finance at both Frimley Health NHS Foundation Trust and of East Berkshire Clinical Commissioning Group – a joint role that arguably sets a new standard in integration.

The Frimley ICS has chalked up some major improvements on the back of much closer working across the system (see One population, one budget, Healthcare Finance May 2018) – tackling clinical variation at the system-level, for example. But collaboration should not be implemented on a selective basis.

Mr Foster told the conference that the change in behaviour of staff has been ‘amazing’ in recent years as they have embraced more collaborative working within the system. But this had to be the new way of working everywhere, not just the new way of working within the defined system. Take the walls down and keep them down, was the take home message, don’t simply rebuild them around the system boundary.