Comment / Financial designs

01 June 2021 Steve Brown

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The establishment of integrated care systems (ICSs) as statutory bodies in England will create real opportunities to deliver more integrated care and optimise pathways. But there is a huge programme of work that needs to be undertaken before next April to create the right environment in which these new systems can prosper.Steve Brown

Much of this work is around governance and setting up new organisations. But the financial framework – how money moves around to support greater collaboration and a focus on population health – will also be vital.

There is broad agreement that the ‘old’ system of payment by results has had its day. In fact, in response to the Covid-19 pandemic, it has already been largely left behind, with block arrangements replacing activity-driven contracts. But NHS England and NHS Improvement have unveiled their plans to introduce a new system – based on aligned payments and incentives – from the second half of this year.

Participants at an HFMA roundtable to discuss the key principles needed in a system finance framework were clear that any future approach should be transparent and simple. There were still concerns about moves to ‘blended payment’ models, although the centre has now dropped this terminology.

In fact, there may be more agreement about future funding flows than people think. NHS England and NHS Improvement do want a default system that covers all of secondary care. But they are increasingly talking about flexibility and supporting ICSs as they develop local payment arrangements.

And their current proposals are already clear that contracts should over time be based on the local costs of delivering services rather than national prices.

Where everybody agrees is that payment systems must not be an obstacle to systems revising pathways to deliver better care and outcomes, and improve overall system efficiency. But this needs to go hand-in-hand with system oversight that really puts the focus on ICSs.

While there is support for the current year’s approach on system oversight, NHS bodies and ICSs are keen to see more detail and understand how the system will work in practice.

The move to systems could also provide an opportunity to rethink financial reporting. There is a significant level of variation in how the NHS reports its finances across the country. It can be nearly impossible to make meaningful comparisons of financial reports by different providers, because of the different approaches adopted and often the different definitions used.

Even with clinical commissioning groups – which share a common chart of accounts courtesy of all using the same Integrated Single Financial Environment – it is not always easy to compare and contrast.

And the report published by NHS England and NHS Improvement – a far cry from the detail that used to be provided on a quarterly basis by NHS Improvement for the provider sector – leaves a lot to be desired in terms of transparency.

While local system boards should have information presented in a format that best helps them to manage local services, there are surely opportunities to take a more standardised approach. At the very least, there could be some agreement on the metrics that all boards should be looking at and how they are presented.

There are real opportunities for systems to start to tackle health inequalities and to focus on population health. Relationships and a real collaborative culture across systems will be key to this.

But the underpinning architecture and governance arrangements must facilitate the new ‘system first’ mantra. April will come around fast and there is a lot still to do.