By Noel Plumridge | 30 January 2014
With ambulances queuing outside A&E departments and the frail elderly unable to leave hospital, there’s a growing need for health and social care providers to work together. But can turf wars and funding tensions be overcome?
At its core, it’s an endearingly simple notion. With the squeeze on public expenditure growing ever tighter, and pledges to protect ‘frontline’ services by concentrating savings on back-office waste and efficiency wearing thin, why not seek efficiency across organisational boundaries? As well as demanding slickness within organisations, why not also insist on sound ‘whole system’ working? Why not pursue integration?
Gaps between public sector bodies have long been a source of systemic inefficiency – in terms of duplication, confusion, poor communications and the cost of handovers – as well as frustrating service users. It’s some years since the ‘total place’ initiative revealed the volume of public assets within some communities, and the potential for using them more intensively.
However, over the last two years persistent local crises within NHS hospital and emergency care have grabbed government attention, even as Andrew Lansley’s reorganisation was seeking to distance ministers from operational NHS issues.
Why are ambulances queuing outside accident and emergency departments, is the increasingly troubling question? Why are elderly and other vulnerable patients finding themselves in hospital in ever increasing numbers?
The response to these questions, while pointing the finger at NHS management and GP surgery opening hours, is often also to cite the cuts in local social services budgets that prevent such patients being properly cared for at home.
Older, frailer people take longer to recover once in hospital, and often have complex combinations of conditions. So length of stay increases. Queues form. Emergency departments become clogged.
Not that any of these debates about the interface between health and social care are exactly new. Within the NHS in England integration has already been in vogue, often in the form of so-called vertical integration.
Another approach has been pursued by some NHS commissioners. A few clinical commissioning groups (CCGs) have sought a ‘prime provider’ who would in turn use sub-contracts to co-ordinate health services.
But why stop with the NHS? When Jeremy Hunt replaced Lansley as health secretary in 2012, Norman Lamb joined his team as care and support minister. Lamb has been instrumental, during 2013, in establishing a broader framework for integration, one that encompasses the NHS and social care, the voluntary sector and independent providers.
November saw the announcement of 14 integrated care ‘pioneers’ across England. Joint working across health and social care features prominently in their objectives, as does preventive care for the frail elderly. Lamb hailed the 14 as leaders of a ‘quiet revolution’ in the way care is provided.
Even more significant is the publication, in December, of details of the Better Care Fund – a material transfer of resources affecting the NHS and local authorities across England. First announced in the June 2013 Spending Review as the ‘Integration Transformation Fund’, and confirmed in the chancellor’s Autumn Statement, it means that by 2015/16 a total of £3.8bn transfers into pooled funds jointly controlled by councils and the NHS. The value of the transfer in 2014/15 is £1.1bn.
The pooled funds will operate under Section 75 of the NHS Act 2006 that provides the framework for joint governance arrangements between CCGs and councils. Access to the funds will require CCGs and councils to jointly agree plans for how the money will be spent, within centrally-imposed requirements.
The lion’s share of the Better Care Fund, at local level, is a defined transfer from mainstream NHS clinical commissioning group resources. Because CCGs and councils are far from coterminous, places with a relatively close boundary match give the best feel for its significance. In Walsall, for instance, the total value of the fund in 2015/16 will be £21.8m, with £19.3m drawn directly from Walsall CCG’s allocation. In Croydon the fund will be worth £23.4m, with Croydon CCG contributing £21.5m.
Expectations are high and the sums at stake are large, but a number of issues are causing concern.
There’s a fair consensus around the nature of the pressure that has been falling upon hospital emergency services, and indeed the NHS in general. It centres on growing demand from two key groups: people living with long-term illness, and the so-called frail elderly. Long-term illness, in this context, covers both mental and physical conditions, and includes disabling conditions such as arthritis and lower back pain as well as life-threatening diseases. As we live longer, we grow weaker: in our later years many of us acquire one or more conditions that require medical treatment and care.
It is widely accepted that care is better provided closer to home and that hospital admission should be a last resort. What remains a little opaque is the financial impact of investing in community-based health and social care and – the difficult part – disinvesting in hospital care.
‘Closer to home’ does not equate to cheaper, especially if that care relies upon a GP.
Even where there is a sound business case, it typically depends on hospitals releasing capacity. But the bulk of a hospital’s costs are usually tied up in staff salaries and in land, buildings and capital equipment.
So, for instance, there’s an excellent proven case for investing in liaison psychiatry, focusing on acute hospital patients who have dementia, to trim length of stay. According to a 2011 economic analysis, investing about £800,000 per year in this way at the City Hospital in Birmingham led to reduced bed use valued at £3.5m.
A benefit to cost ratio greater than 4:1 appears unanswerable. Converting it into cash savings is another matter entirely.
The Better Care Fund is not new money. The assumption is that most funds will be withdrawn from acute hospital contracts. Yet the politics of hospital bed reductions, let alone hospital closures, are difficult at any time. In the year before a general election few MPs would choose service reductions at their local hospital as a campaign platform. In this context the seemingly rational requirements of the Better Care Fund’s planning template appear, in the language of sports commentators, a big ask.
The template demands that NHS acute sector managers: ‘Set out the implications of the plan on the delivery of NHS services including clearly identifying where any NHS savings will be realised and the risk of savings not being realised.
‘You must clearly quantify the impact on NHS service delivery targets including in the scenario of the required savings not materialising. The details of this response must be developed with the relevant NHS providers.’
It’s not as if this is the only burden on NHS acute hospitals. While demand continues to increase, trusts are being asked to deliver an efficiency gain of at least 4% – much of it withdrawn automatically by reductions in the national tariff.
Many acute hospital finance directors estimate that the true annual level of cost improvement, allowing for changes in the tariff regime and commissioner-led care pathway changes, will be nearer to 6% or 7%. If the Better Care Fund imposes an extra 2%-3% in 2015/16, the overall efficiency aspiration begins to appear hopelessly incompatible with NHS hospital cost structures.
The next big unknown is how councils will respond. NHS England planning guidance for the Better Care Fund emphasises ‘right care, in the right place, at the right time’, and the June 2013 spending review established six national conditions for access to
the fund:
● Plans to be jointly agreed
● Protection for social care services (though not spending)
● Inclusion of seven-day services in health and social care to support patients being discharged and prevent unnecessary admission at weekends
● Better data sharing between health and social care, based on the NHS number
● A joint approach to assessments and care planning
● Agreement on the consequential impact of changes in the acute sector
However, this may not reflect the priorities of councils, many of which have been obliged to cut social care spending in recent years far more aggressively than any NHS organisation. Some council leaders, and possibly some ministers, perhaps see scope for an element of restitution. Besides, the culture of democratically empowered autonomy within local government may not sit easily with compliance with NHS England priorities and timetables.
So there are fears the fund may be used for other purposes. Not all councils accept the health imperative; many social care managers feel that social care objectives have been given low priority within existing joint teams. Councils have their own provider arms, or are loyal to former in-house services that have been hived off to social enterprises.
Beyond local turf wars, there’s the core funding tension. NHS services are free at the point of delivery; local authority services are means-tested. Any hint of charging for health care draws cries of anguish yet realpolitik suggests the current mix is not sustainable.
One director of adult social care, who wishes to remain anonymous, was asked in January what she foresees emerging from the Better Care Fund in her financially challenged borough. Her answer? ‘A right barney.’
It’s a response that points to two further issues. One is the truism, visible throughout the history of pooled budgets, that partnership working is much easier when there’s money to spend; much harder when there’s money to save. So, in today’s financial environment, many so-called local partnerships will be sorely tested, as the robustness and accountability of formal Section 75 agreements push tricky issues to the fore.
What if partners cannot, or will not, agree? In the event of non-agreement, who retains the funds? Some finance directors are whispering that failures to agree, or to comply with national conditions, causing NHS England to retain part of the 2014/15 funding, may not be altogether unattractive to ministers.
For the NHS has form, over the last three years, in amassing sizeable underspends (‘surpluses’) that quietly revert to HM Treasury. Surely the Better Care Fund isn’t an elaborate path to the same Treasury-inspired goal?
Writing recently, Chris Ham, the chief executive of the King’s Fund, identified four systemic NHS barriers that impede integration. All of these are determined at national level.
After the scandals such as at Mid Staffordshire that grabbed the headlines in 2013, inspection and organisational accountability are in vogue. Citing regulation by Monitor and the NHS Trust Development Authority, Ham suggests that the quest for financial sustainability can lead to trusts strengthening their balance sheets at the expense of the wider NHS.
Quality regulation overly focuses on individual organisations, he added, referring to the Care Quality Commission’s response to recent well-publicised hospital failures. Ham also claims the NHS tariff system rewards hospital admission and treatment, and that commissioning fragmentation – between CCGs, local authorities and NHS England – fails to promote integration.
However, there is perhaps a further barrier. The vision of integrated, person-centred services is attractive, necessary to meet the challenge of demographic and epidemiological change, and possibly even affordable. However, it supposes a steady and continuing withdrawal of funds from NHS acute hospitals. Yet such a withdrawal remains incompatible with public wishes, political desire and the hard reality of cost structures. So, in the quest for integration, where is the vision of a sustainable, 21st century general hospital?
Government’s expectations of integration are high and wide-ranging, but the practical and cultural obstacles are material and won’t easily be swept aside. And, with £3.8bn of hard cash to be allocated in 2015, there’s a lot at stake.
Noel Plumridge is an independent consultant and former NHS finance director
This feature was first published in the January/Febuary edition of Public Finance magazine
