Feature / If the cap fits

03 October 2017 Seamus Ward

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Secret cuts to services. Bed closures. Rationing. These are accusations the NHS has to address, seemingly, on a more regular basis. Around a year ago, these fears were raised about sustainability and transformation plans (STPs). And, while these concerns remain, this year a new bête noir has emerged – the capped expenditure process (CEP).If the cap fits feature image

Mentioning the CEP to finance managers generally brings a blank stare, as many have never heard of it. This is undoubtedly due to the fact that the process applies to just 13 areas of England, some of which cover whole STPs; some smaller local health economies. But it is also because so little is known about it.

News of the CEP emerged only in early summer, even though NHS England and NHS Improvement launched it (with no fanfare) in April. Even now, information is limited to a few board papers and briefings put together by health unions and think tanks. Healthcare Finance contacted NHS Improvement and NHS England and both declined to comment. Many NHS organisations involved in the CEP did the same. 

So what do we know? It applies to 13 areas of England (see box) and is aimed at areas that have historically overspent their fair share of NHS funding and those deemed to be most at risk of breaching their budgets in 2017/18. The latter may be due to a failure to agree a cross-system plan or failing to agree a plan that fits within the available financial envelope. The available envelope is made up of clinical commissioning group allocations, adjusted for the CCG and provider control totals and any sustainability and transformation fund money.

The CEP is in line with the Next steps on the NHS five-year forward view statement that some health economies were ‘living off bail-outs arbitrarily taken from other parts of the country or from services such as mental health’. Some of the areas include trusts or clinical commissioning groups already subject to regulatory interventions and the CEP aims to align with these.

Siva Anandaciva, King’s Fund chief analyst (pictured), says that, initially, the areas were asked to think the unthinkable, some with the support of external consultants, broadly across three types of actions:Siva_ Anandaciva

  • Review and stress test existing plans  
  • Meet Next steps recommendations
  • Examine more difficult decisions.

As a result, proposed measures mixed controversial actions with the more mundane. They included the downgrading of hospitals, wards and services; further caps on agency spending; private finance initiative buyouts; selling surplus land; limiting or blocking outsourcing and patient choice; extending waiting times; and tighter controls on IVF treatments.

In Cambridgeshire and Peterborough, for example, local trusts and the CCG could not agree plans that remained within the available funding. The gap between the aggregate control total and the plans was £9.7m and, as a result the STP area entered the CEP. A Cambridgeshire and Peterborough CCG spokesperson says: ‘The Cambridgeshire and Peterborough health system has been recognised as one of the 11 most financially challenged areas in England, and is also part of the capped expenditure process.’

The CCG is considering several measures to meet its financial duties: 

  • A minimum 12-week elective wait, but retaining the 18-week referral to treatment standard
  • Helping practices avoid prescribing over-the-counter medicines and reducing prescribing of drugs of low clinical value
  • More consistently applying exceptional and clinical threshold policies
  • Reducing referrals to outpatients where this is of low clinical value.

‘We hope that these initiatives, along with our quality, innovation, productivity and prevention (QIPP) savings, will help to address the CCG’s financial pressures and risks,’ says the spokesperson.

Another STP – Devon – says it is working with NHS England and NHS Improvement on a balanced plan for 2017/18 as part of the CEP. This includes finding savings of £18m.

A spokesperson from the STP says: ‘Like other local systems around the country, we’re currently working to bring down spending levels to what they need to be. The annual savings the Devon system needs to make in 2017/18 have increased from £151m to £169m as a result of the CEP.’

Like many systems, Devon faces many challenges, says the spokesperson – huge growth in demand for health and social care, an ageing population, rising costs due to new treatments and medicines, and difficulty recruiting to core NHS and social care roles. ‘Big changes are needed to meet these challenges. We will clearly need to change some NHS services, some of which will require consultation, adopt more national best practice, for instance developing specialist centres to improve outcomes (for example, stroke), provide more care at home, review how we utilise our estates and facilities and better integrate health and care services.’

Progress report 

Deloitte was commissioned by NHS England and NHS Improvement to undertake a rapid financial review of the Eastern Cheshire local health economy to help stay within its means. A line-by-line review of existing spending and an assessment of the risk associated with local cost improvement programmes and QIPP productivity schemes also took place, together with benchmarking against NHS RightCare and Carter recommendations.

While some individual measures will, no doubt, be distressing to the patients affected, do the steps that we know are now being considered really add up to the radical savings programme the CEP was initially made out to be? 

The King’s Fund’s Siva Anandaciva detects a change in the mood music. In June, NHS Improvement chief executive Jim Mackey wrote a letter telling the CEP areas that savings measures under the process must not compromise patient safety or affect their NHS Constitution rights, such as on choice and maximum waiting times. As part of this ‘softening’ of the approach to CEP, Mr Anandaciva claims the reported aggregate savings targeted by the scheme fell from £470m to £250m.

Some of the proposals have been on the table for some time – such as property sales – and many of these, together with some of the more radical proposals, will not realise benefits in 2017/18. Service reconfigurations may require public consultation, while PFI buyouts and repatriating patients back from private providers will require negotiation and expense. Deferred demand will have to be met at some point.

‘There was a lot of activity between April and June – replanning, reprofiling – but in the post-June period the pressure on CEPs seems to have been turned down a bit,’ he says. ‘The message seems to be: “try harder on the things you are already doing”, but there seems to be less emphasis on more significant changes, such as closing a hospital site or selling off a parcel of land. That seems realistic – if you are putting together a land sale and want to get a good market price or if you are closing a hospital, you are not going to do it before the end of 2017/18.’

He says the perceived secrecy – which in turn raises patient and staff fear of behind-the-scenes deals and cuts – is a problem. 

‘The service should have learnt from the STPs,’ he says. ‘Everyone tells you that if you are doing significant system change, engage early and build on the public discussions and opinion, rather than them thinking you are developing plans behind closed doors.

‘I understand where NHS England and NHS Improvement are coming from – they can’t have some parts of the country doing their best to reach their financial targets, while there is a perception that others are not trying as hard but are being rewarded. The debate with the Treasury is that the NHS must demonstrate it is doing everything it can, but if that’s what you want to achieve, I think there are different ways of running that process.’

Mr Anandaciva says the CEP came as a surprise to many. ‘The process seemed to come out of nowhere. The two-year contracting round was supposed to create planning stability – once agreed they could get on with delivery, but a lot of people were blindsided by this new process.’

He adds that some CEP areas are uncertain why they were selected. ‘A few areas involved in CEP have told us they are unsure why they were chosen but not their neighbours who seem to be in a worse position.’ 

Nevertheless, he believes the CEP has been helpful in some ways. NHS Improvement and NHS England have acted almost like an old-style strategic health authority, he says. They have brought together commissioners and providers, pointed out where efficiency measures could be implemented quicker or planned spending deferred, for example. 

‘There is a benefit even by bringing commissioners and providers together to examine their QIPPs and CIPs. There’s a lot of benefit in bringing out the dead and understanding the scale of the problem,’ says Mr Anandaciva.

It has been a difficult process, drawing local and national media attention to potential service cuts. But perhaps exposing the scale of local issues – some of which may have been stuck at an impasse for years – and marking them for action by STPs, could be its legacy. 

CEP areas
The areas selected for the CEP include:

London

  • North West London
  • North Central London
  • South East London                                         

Midlands and East

  • Staffordshire
  • Cambridge and Peterborough

North   

  • Humber, Coast and Vale
  • Cheshire and Merseyside
  • Lancashire and South Cumbria     

South   

  • Sussex and East Surrey
  • Cornwall and the Isles of Scilly
  • Devon
  • Somerset
  • Bristol, North Somerset, South Gloucestershire

Other financial improvement schemes

Provider control totals All providers are offered a control total for each financial year, which they can choose to accept or reject. However, access to the sustainability and transformation fund depends on providers agreeing and delivering the control total. Control totals can be set to allow a year-end deficit. With the introduction of STPs, there is talk of indicative or shadow control totals for each STP area, which is a simple aggregate of the control totals of the organisations. However, there is no basis for enforcing control totals at the STP level, just at the level of the individual organisation.

Single oversight framework An NHS Improvement regulatory framework that assesses a provider’s performance against five domains: quality of care; finance and use of resources; operational performance; strategic change and leadership; and improvement capability. 

Success regimes This aims to support and challenge health economies with long-term financial and operational difficulties. There are currently three success regimes – in parts of Devon, Essex and Cumbria – and the focus is on short-term financial and performance improvement, medium and long-term transformation, including introducing new models of care, and developing leadership.

Financial special measures Intervention to support rapid financial turnaround in troubled providers and CCGs. It was launched as part of the financial reset in July 2016.

Financial improvement programme This is a voluntary scheme created by NHS Improvement to allow providers to buy in external support and advice to improve their financial position. Sixteen trusts in the first wave aimed to save £50m in the first year.

Supporting documents
23-25_Oct17_Capex final