Hewitt calls for 10-year capital plan and payment system review

The review, led by former health secretary and current integrated care board chair Patricia Hewitt (pictured), examined the oversight and governance of ICSs and was asked to recommend ways to give systems greater control, while making them more accountable for performance and spend.

Ms Hewitt said that ICSs represented the ‘best opportunity in a generation for the urgently needed transformation that we need in our health and care system. ‘Everyone wants them to succeed,’ she added. But changes were needed for systems to realise their potential.

With improving population health being one of systems’ four key objectives, the review report said the service needed to shift its focus upstream. ‘This will require a shift in resources,’ it said. ‘The share of total NHS budgets at ICS level going towards prevention should be increased by at least 1% over the next five years.’ It also called for the government to set ‘no more than 10 national priorities’ for systems to deliver and for a new framework for general practice primary care contracts.

A reset was also needed in the approach to finance, with a focus on creating health value, rather than seeing health and care as a cost. ‘NHS funding remains over-focused on treatment of illness or injury rather than prevention of them,’ the report said, ‘and ICS partners struggle to work around over-complex, uncoordinated funding systems and rules in order to shift resource to where it is most needed.’

Small, in-year funding pots with extensive reporting requirements should be withdrawn in favour of recurrent funding. The issuing of non-recurrent funding – for example for winter funding, which happens every year – leads to inefficient planning. Additional funding pots should only be considered in exceptional circumstances. And if they are needed, systems and organisations need to be given enough time to mobilise and wind-down funding. And restrictions and reporting requirements should be proportionate to the size of the funds.

The report said that current payment systems were not effective in driving value-based healthcare. Payment by results, which has been readopted this year for elective activity, could ‘help drive activity in a particular direction’, but it did little to incentivise the movement of resources upstream. And ICS partners struggled to ‘work around over-complex, uncoordinated funding systems and rules in order to shift resources to where it is most needed’.

Ms Hewitt called on NHS England to work with the Department of Health and Social Care, the Treasury and the most ‘innovative and mature’ ICBs and ICSs to identify the most effective payment models. This should consider:

• incentives for individuals or communities to improve health behaviours
• an incentive-payment-based model for local care organisations to take on the management of people’s health
• bundled payment models covering whole pathways
• payment by activity where this drives value for populations

These models should then be tested as quickly as possible.

The current capital regime was also criticised. Capital funding was insufficient. The system was inflexible in use. And the layering of different allocation and approval processes from different departments and agencies were a major barrier to improvement. Particular problems were highlighted with accessing capital across system boundaries.

Ms Hewitt recommended a ‘cross-government review of the entire NHS capital regime’ with any proposals then implemented from 2024.

Building on the review of capital allocation by Richard Murray in 2021, this further review should consider how the service could move towards a 10-year NHS capital plan. Initial freedoms over larger sums – for example for five years – could be tested within mature systems.

The system of delegated limits and approval processes should be streamlined and there needs to be much more year-on-year flexibility – the requirement to spend capital in the year it is allocated can lead to inefficient use of resources at the year-end. The review also called for clarification of the government’s position on use of private finance.

Other recommendations on finance include:

• developing a consistent method of financial reporting to show how much is spent from all public funds on prevention, population health management and reducing health inequalities
• aligning budget and grant allocations for local government and the NHS
• widening the scope for section 75 pooled budgets.

Matthew Taylor (pictured), chief executive of the NHS Confederation welcomed the review and called on the government to accept all its recommendations. ‘The focus on prevention is crucial for long term sustainability of both the NHS and more broadly to increase health and wellbeing of the population, and something for which we have long been advocating,’ he said.

Julian Hartley, NHS Providers chief executive, also highlighted positive elements, including the recommendations for multi-year funding and recurrent funding and the changes needed in the capital regime. But he also raised concerns that some recommendations could add complexity, ‘ for example, with auditing prevention spending and reframing the role of local government oversight’.