Plymouth is a city of pioneers. In 2020, we’ll be celebrating the 400th anniversary of the Pilgrim Fathers setting sail to the New World on the Mayflower.
We in the health and social care sector in Plymouth like to think we are continuing that pioneering spirit as we navigate a new course towards integration.
With dwindling resources and ever-increasing demographic demands, we could not continue as we were and had to find new ways of working. So key partners – Plymouth City Council, NHS Northern, Eastern & Western Devon Clinical Commissioning Group and Plymouth Community Health (now known as Livewell Southwest) – are working together and have adopted the slogan ‘One system, one budget – the right care, at the right time, in the right place’.
We have four clear aims: to improve health and wellbeing outcomes; to reduce health inequalities; to improve people’s experience of care; and to improve the sustainability of our health and wellbeing system.
In finance terms, since 1 April 2015, we have been working under a section 75 (under the NHS Act 2006) agreement between Plymouth City Council and the CCG with a gross integrated fund of £683m (net £483m).
It has not always been an easy journey and there have been barriers to overcome, not least geographical ones. The city council and CCG are not coterminous organisations – the CCG’s focus stretches beyond the city into territory covered by Devon County Council.
However, it quickly became apparent that an integrated finance system was essential if integrated service provision was to work. To get there, we had to first tackle some technical complexities, chiefly different accounting systems and reporting requirements.
As accountants, we started from the premise that all available funds would be pooled. However, our legal colleagues pointed out that some functions are excluded. For example, for the NHS, all funding for acute surgical services, radiography and endoscopy must be excluded from the section 75 agreement. The local authority has to exclude funding for the appointment of a mental health professional, the safeguarding of children in care homes and the appointment of a director of social services.
As we were not able to pool all funds, we have created a workaround so that any funding that cannot be pooled is aligned, with equivalent governance and risk sharing arrangements in place for both pots of money. In simple terms, £ pooled + £ aligned = £ integrated.
Our cradle-to-grave integrated fund covers: public health; leisure services; housing; children’s services (including the dedicated schools grant); adult social care; primary care; community health services; acute provision; and running costs.
In other words, it’s all in there. We don’t know of any other integrated fund that has this breadth, with leisure and school funding included.
We’ve had to be mindful of the commissioner/provider split and not lose sight of the fact that specific grants can be received and accounted for only by the designated recipient. This has led to the added complication that grant funding for a service is accounted for in the aligned pot and the service provision in the pooled pot. The Better Care Fund presents another consideration as it has its own reporting requirements.
The council and CCG have widely different accounting conventions and reporting requirements. For instance, the CCG budgets a planned deficit, whereas the council has to balance the overall books at the end of the financial year. In accounting terms, we have also had to bring together two different cost-saving cultures – the CCG QIPP programme and the council’s transformation savings programme.
Governance arrangements have presented a further challenge. While we have not changed the governance of either organisation, we have set up the Plymouth Integrated Commissioning Board to oversee all aspects of integrated work.
Both organisations retain their independent scrutiny and audit committees. When there is a discussion or decision around funding, representatives of both are invited to participate.
The integrated fund is underpinned by our financial rules – which we call the financial framework – and a risk sharing agreement. The framework sits alongside the section 75 agreement, rather than being embedded within it, which gives us the flexibility to update it as we go along. The framework sets out the scope of the fund, responsibilities and arrangements for dissolving the agreement, statutory reporting requirements, budget setting, risk sharing and performance management.
On risk sharing, partners have agreed a risk share mechanism with a specified ceiling that acts as a ‘backstop’ to the agreement. The maximum value of risk to share by either partner is set at 0.5% of the applicable value – the net pool fund value. The maximum risk share due to each partner is proportional to the defined contribution to the applicable value (about 75% for the CCG and 25% for the council) and applies to both unplanned overspends and any savings, leading to a benefit share at the end of the financial year. In rough terms, the maximum additional risk to the CCG is £1.7m and £0.5m to the council.
However, the combined benefits are already greater than the additional risk, something that has manifested itself in a different dialogue regarding the Better Care Fund, contributions to joint equipment services and the rapid intervention care coordination team.
It’s important at the year-end to ensure we account correctly for the pooled fund in both sets of books and we have engaged with each organisation’s external auditors. Of course, we both need to maintain individual outturn positions and statements for the risk share and aligned funds.
The CCG has an inflexible mandated accounting ledger; it cannot be used to account for the local authority expenditure. The city council’s ledger is much more flexible but it is not the pooled fund host. Therefore, we are continuing to maintain two separate ledgers with journals between the two organisations to recharge fund activity with fully detailed analysis.
While there is no requirement to produce a consolidated annual statement of accounts, we do have a formal monthly joint finance report, which is used by both organisations to report financial performance. This is a major achievement in itself.
The voyage towards our integrated fund has been a challenging and sometimes choppy one, but we believe the new world we are beginning to explore together makes it all worthwhile.
