System by default

by Steve Brown

06 February 2020

New planning guidance confirms system first approach

System working has been the clear direction of travel for the health and care services for a number of years in England. Systems will bring together local organisations to redesign care and improve population health, with the NHS long-term plan putting integrated care systems at the heart of achieving its vision.

There is little disagreement with the approach. Wales and Scotland already have system working up and running at least in structural terms – albeit covering much smaller areas than England – and Northern Ireland has a single health and social care board and area specific integrated health and social care providers. The more complex challenge in England arises from attempting to overlay a system approach on the existing statutory structure of separate commissioning and provider bodies.

The NHS operational planning and contracting guidance 2020/21 is clear that 2020/21 is another key milestone on the way to system working and introduces a new motto for the service to operate under and to be written large in every NHS boardroom across the country – ‘system by default’.

The guidance – summarised in a recent HFMA briefing – reaffirms the intention to formally establish integrated care systems covering the whole of England by April 2021. Even ahead of this, the implication is that all decisions need to be informed by what they mean for the system as a whole – putting the system first – not just for a specific organisation.

This is underpinned by a series of requirements, carrots and sticks.

If not already in place, systems will have to set-up system-wide governance arrangements – including a system partnership board with NHS, local government and other partners – to enable a collective model of responsibility and decision making. Systems will need to establish capabilities to fulfil their two core roles of system transformation and collective management of system performance.

They will have to make progress with population health management, service redesign, workforce transformation and digitisation – and ensure they have a sustainable way of funding these activities.

Then there is the new system collaboration and financial management agreement that clinical commissioning groups and providers will have to sign up to, committing them to open book accounting and describing how they will reach consensus on the use of financial and other resources.

We move closer to the one CCG per system plan with 74 CCGs merging in April, reducing the current number of local commissioners from 191 to 135. And capital and estates plans will also need to be at a system level – building on the recent years’ waves of bidding for sustainability and transformation partnership capital funding.

The financial framework also underpins the ‘system by default’ approach. The broadening of the blended payments as part of tariff arrangements is intended to support the transformation of care models – stopping the tariff from being the blockage to moving the delivery of services to different points in the pathway (although it is not clear how many areas followed the initial move in the current year to blended payment).

Perhaps most crucially, half of Financial Recovery Fund support for deficit bodies will be linked to system performance – encouraging systems to focus on their system-wide financial performance if they want to maximise the funds coming into the system as a whole. Systems can even choose to move beyond this 50:50 split, increasing the system-linked percentage.

There is also a recognition that debt and previous years’ overspends need to be addressed to enable local services to focus on future transformation rather on a historic hangover. CCGs with the biggest historic overspends will see their debt halved and discussions are ongoing about converting providers’ repayable loans into non-repayable public dividend capital.

For some systems, giving individual bodies more of a financial level-playing field – especially where debts have arisen because of historic underfunding – will mean a major obstacle has been overcome.

The planning guidance is very operationally focused and is undermined by the lack of detail about the provider cash situation and the absence of a long-term capital settlement, which will have to wait until the spending review later in the year. It will also find existing systems at very different stages in their development.

For some, the guidance will simply underline what they are already doing. In other areas, especially where there are historic funding problems, the organisational focus will be harder to lose. Non-executives are key to the change but, having been appointed to specific organisations and with few opportunities to work across systems, they may find the switch particularly challenging conceptually. 

Similarly, the new system agreement looks like it could be little more than a piece of paper committing all participants to ‘play nicely’. If a system needs that bit of paper to ensure individual organisations act in system interests, there is almost certainly a problem to start with.

Perhaps the other caveat about changing to a system focus is that local people mustn’t get lost in the move. ICSs will need to avoid becoming just another unit of administration and must stay focused on localities if they are to be successful.

But the guidance leaves the NHS in no doubt as to where NHS England and NHS Improvement’s focus will be going forward. Arguably the final piece in the jigsaw would be a regulatory system that also focuses on system performance rather than that of the organisation. The guidance stresses that this is also in the pipeline with a system oversight framework expected to be consulted on shortly. The clear intent is for systems to have a much greater role in overseeing themselves where they are mature enough to do so.

Getting that framework right will be crucial to shifting local managers’ eyeline beyond their organisation to the system performance.