Society becomes more wholesome, more serene, and spiritually healthier, if it knows that its citizens have at the back of their consciousness the knowledge that not only themselves, but all their fellows, have access, when ill, to the best that medical skill can provide.— Aneurin Bevan 1942
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What Sustainability and Transformation Plans (STPs) will mean in practice will vary from one ‘footprint’ to another. What is clear across the board though is that STPs will fragment the NHS and have a major impact on services. Analysis by the i newspaper suggested STPs will lead to the closure of 19 hospitals, including 5 acute ones, and the loss of nearly 3,000 jobs due to plans for a more ‘agile’ workforce.
In addition, while STPs are expected to bring about collaboration across different organisations, they have to do this despite the fragmentation and organisational complexity brought about, for the most part, by the Health and Social Care Act (2012). Individual NHS providers are under considerable pressure from regulators to improve their organisational performance, which means focusing primarily on their own services and finances rather than working with others for the needs of the local population. (https://www.kingsfund.org.uk/topics/integrated-care/sustainability-transformation-plans-explained)
Changes to services
According to the Nuffield Trust, judging by the discussions they have had with STP leads and others, examples of ideas being considered include:
i) significantly changing hospital services, including
- where patients are cared for (e.g. a planned 20% reduction in the number of hospital beds);
- the partial or complete closure of community hospitals;
- the re-thinking of outpatient services (e.g. changing referral routes with direct access to some services, or having hospital specialists working in primary care settings); and
- the downgrading of some A&E departments and hospital sites, with emergency services split from elective (i.e. planned) care.
ii) significantly changing primary and community services, including
- a shift from individual general practices towards ‘at-scale’ federations of practices and other primary care specialists, responsible for 30,000 to 50,000 patients;
- the development of new models of care, such as various kinds of accountable care organisations
iii) significantly changing approaches to prevention and health improvement, including
- the use of social prescribing, i.e referral to non-medical support in the community, such as help with employment or with increasing physical activity. (See ‘Social prescribing’ in our Explanation of Terms for more details.)
iv) significantly increasing efficiency, especially
- closing the gap between funding and service costs (such as ‘reorganising’ or centralising pathology services or back office functions; eliminating unnecessary testing, and rethinking thresholds (such as the level of pain a patient experiences) before providing referrals or treatment.
(For more information, including views on whether these changes are feasible within the time scale or will bring about projected savings, see http://www.nuffieldtrust.org.uk/sites/files/nuffield/publication/nt_initial-learning-stp-process_web.pdf).
Findings from a 2016 study of 99 Clinical Commissioning Groups (just less than half those across England) show widespread concerns about the impact of STPs. Of the cutbacks planned over the next 18 months,
- one in three CCGs expect to close or downgrade Accident and Emergency departments, (According to the National Health Action Party, in 2013 there were 140 full A&E hospitals in England but STPs will mean that soon there will only be between 40 and 70 left (http://nhap.org/the-biggest-attack-on-the-nhs/),
- one in five CCGs expect to close consultant-led maternity services, forcing women in labour to travel further,
- more than half CCGs intend to close or downgrade community hospitals,
- 46 per cent of CCGs are planning an overall reduction of inpatient NHS beds,
- one-quarter expect job cuts in hospitals, and
- almost one-quarter expect to close inpatient paediatric departments. (http://www.telegraph.co.uk/news/2016/10/30/almost-half-of-nhs-authorities-to-cut-hospital-beds-and-third-to/)
Freedom of Information requests have shown that simply drawing up draft STPs has cost ‘footprints’ millions of pounds, money that has largely gone to private consultancy companies, like PwC.
On top of this, the British Medical Association (BMA) has said that implementing STPs will need significant capital investment. More than half of the 44 ‘footprints’ have told NHS England that they would each need £100 million up front in order to make changes. In response to Freedom of Information requests asking for estimates of the cost of implementing their STPs, replies from 37 ‘footprints’ give a total of £9.53 billion. It’s unclear where this money will come from, especially as much of the money allocated to the Department of Health for capital projects is being used to cover large hospital deficits.
According to the BMA’s chief, STPs
Changes to the workforce
The NS5YFV document states that the NHS will develop the use of less qualified and lower paid healthcare staff, such as physician associates (PA) and nurse associates (NA). The evidence showing the effectiveness of these roles is generally of poor quality and often anecdotal. Proposals to employ PAs instead of experienced nurses, for example, have been justified by some on the grounds that there are ‘too many professional limits’ on nurses by professional bodies. Currently, there is no mandatory registration for PAs or NAs although regulatory bodies are considering this. Both the British Medical Association and Royal College of Nursing have warned that PAs and NAs should not be used in place of fully qualified physicians and nurse but there are concerns that this warning will be ignored. And there are fears that these new roles may affect equality of treatment – that those patients directed towards PAs are more likely to be elderly and otherwise vulnerable, while other less vulnerable, more articulate patients will manage to see a doctor.
Opportunities for the private sector
STPs will open up new opportunities for the private sector. The NHS Partners Network, a trade organisation for independent (predominantly private) sector providers of clinical services, gives one indication of this. It notes that, as public funding is increasingly limited, the NHS will need to consider how it can supplement existing sources of funding with external investment: it points out that the private sector is well positioned to fund new or remodelled services. It is unclear if it’s referring to more Private Finance Initiative projects, known to cost the NHS dear, or the setting up of accountable care organisations. But it’s a matter of concern that at least one of the vanguard sites for NHS England’s STP programme is planning to set up a special purpose vehicle (SPV), essentially a new ‘shell’ company, in order to take on much of the planning – and in theory the risk – of providing services for the local health economy. (The use of SPV’s has been central to public-private partnerships like PFIs as a way of getting private finance – often at exorbitant rates of interest – to cover the cost of constructing new premises, and then to manage contracts for soft facilities such as cleaning or catering, often for excessive fees. The SPV generally takes over ownership of assets (such as the NHS building and/or land) until the loan is paid off.)
The NHS Partners Network suggests that the private sector can offer much needed extra capacity – for diagnostic services, for example, or for home health care and care home services to support patients’ discharge from hospital and avoid readmission – all without capital investment from the NHS. The Network also says that the independent sector can offer management, procurement and planning skills to those involved in developing STPs, and provide support with redesigning services – such as implementing new care models like Multi-Specialty Community Providers.
Information coming soon
Sustainability and Transformation Plans (STPs), like the Five Year Plan for the NHS that they aim to deliver, are being implemented both at speed and at scale. They have given rise to serious concerns, not only among those living within the ‘footprints’ but also from far more unexpected quarters.
For example, the former head of NHS England’s Commissioning Policy has described the timescale for drawing up STPs as ‘ridiculous’, ‘kind of mad’ and ‘shameful’: she suggested that hastily drawn up plans were likely to be about ‘blue sky thinking’ rather than reality and allowed no time for genuine patient involvement.
STPs have been described as “a marriage of two debts (health and social care)” and that “to respond to a funding crisis by reorganisation is at best foolhardy, at worst grossly negligent”. In addition, there are fears that STPs will bring about the demise of Clinical Commissioning Groups (CCGs) and general practice (http://www.pulsetoday.co.uk/views/blogs/stps-could-spell-the-end-of-general-practice/20033847.blog).
A study of 200 NHS Finance Directors found that 84% feared that the aims of STPs would not be deliverable and that the quality of services will decline.
A King’s Fund report based on interviews with senior NHS and local government leaders found, among other concerns about STPs, that the focus so far has been on planning, with footprint leaders fearing that they will not have the skills to implement the plans in practice. They were also concerned that plans have not been ‘stress-tested’ to see if the assumptions on which they’re based are sound. In addition, plans have been developed from the top down, despite the rhetoric about local ownership. Guidance from NHS England was said to be inconsistent, ambiguous and arrived late, if at all. Because deadlines for plans were tight, those interviewed said that it had been difficult to get meaningful involvement from patients and the public, local authorities, clinicians and other frontline staff. And it’s not clear who in future can be held accountable for how services are delivered, given new, collective or cross-boundary ways of working.
The Chief Executive of the NHS Confederation – the membership body for organisations that commission and provide NHS services – has claimed that while STPs are being called for at a time when funding is tight, they are not about cuts: rather, they are about “modernising services to match people’s changing needs”. However, others see that ‘transformation’ is about saving £22 billion by 2020 and that this will inevitably lead to hospital closures and cuts to local services. In addition, transformation could drain irreplaceable assets from local Trusts (‘surplus’ NHS land and buildings are having to be sold off in the name of ‘efficiency savings’, with money from sales going to the Treasury).
He also raised concerned that balancing the books is taking priority over patient care and the development of policies based on evidence. In a more recent statement, he adds that the STPs have been drawn up without proper consultation and are dependent on the ‘footprints’ securing up front capital that is not available. In addition, the plans are unravelling and the government appears to have nothing to put in their place.
The BMA is concerned that instead of offering a chance to address some of the NHS’s problems, such as unnecessary competition, expensive fragmentation and buildings and equipment often unfit for purpose,
He adds that the many problems facing A & E departments (such as staffing shortages and overcrowding) will not be resolved by cutting the number of hospital beds: patients don’t just disappear.
In all this, it’s local health systems (the ‘footprints’) that will have to take responsibility for the mismatch between demands for improvement and inadequate funding. And as the Centre for Health and the Public Interest points out,
At least one clinical commissioning group (CCG) – City and Hackney – has raised the issue of whether the local process for developing a STP is undemocratic. CCGs are legal entitities set up by the Health and Social Care Act of 2012 with the apparent aim of ensuring clinical leadership in decision-making. Proposals for the North East London footprint’s STP (covering seven local CCGs including City & Hackney) would allow decisions on the plan to be made, behind closed doors, by just two CCG chief officers, so removing both public scrutiny and clinical control, with the voices of the other CCGs in the ‘footprint’ excluded. At the same time, when drawing up an STP, it’s not clear whether those on the boards of new ‘footprints’ such as North East London (which are not legal entities) have the authority to trump the decision-making of CCGs (which are).
Analysis by the Nuffield Trust finds that moving care out of hospital – a key element of STPs – will be extremely difficult to realise. ‘Shifting the balance of care’ towards the community requires appropriate resources, such the right workforce in the community. But, for example, there are currently shortages of doctors and nurses working in primary care, and many GP practices are closing. Looking at a number of existing initiatives that aimed to avoid hospital admission or make it easier to discharge patients from hospital, the Nuffield report states that only a minority were able to show savings and some were likely to increase overall costs. They state that while out-of-hospital care may be better for patients, it’s unlikely to be cheaper for the NHS in the foreseeable future. It concludes that is unlikely that the aim of moving care out of hospitals will be extremely difficult to realise without additional investment in out-of-hospital care.
Similarly, a report by the National Audit Office concluded that there is no convincing evidence to show that integration of health and social care saves money and reduces hospital activity.
A critical review of STPs by the School of Health and Social Care, South Bank University points out that there are almost no examples in STP documentation where the costs of the STP process itself are set out. Exceptions to this are North Central London and Surrey Heartlands. If the figures that these STPs provide are typical the critical review that at least £5m per year will need to be spent per STP, amounting to a total annual sum of at least a quarter of a billion pounds.
The NHS England’s Five Year Forward View (FYFV) that set out plans for the NHS from 2015 to 2020 estimated that the NHS would need an extra £30 billion by 2020 to deal with growth in healthcare need, the emergence of new treatments, and so on. Of this figure, the FYFV suggested that the government should provide £8 billion, while £22 billion could be found from within the NHS through further ‘efficiency’ measures’. In effect NHS England was demanding ‘productivity gains’ of 2-3% each year between 2015 and 2020. This is highly ambitious compared with the kind of efficiencies achieved by the wider UK economy or the health care systems of other countries. These ‘efficiencies’ may also bring safety risks in a service where every ounce of fat has already been cut.
Analysts have calculated that instead of the £8 billion asked of the government, total health spending in England will rise by only £4.5 billion in real terms between 2015/16
Of the £22 billion that the Five Year Forward View expects the NHS to achieve through ‘efficiency savings’, these are to be found, for example, by
- restructuring the NHS (again) through introducing new models of care that share similarities with Accountable Care Organisations (ACOs) found, for instance, in the US. ACOs aim to reduce costs by bringing in economies of scale and introducing higher thresholds for treating patients, although the evidence for reduced costs is mixed;
- restructuring the NHS workforce through bringing in new, more ‘flexible’ roles carried out by less qualified, cheaper staff, and weaker rules about pay and conditions (such as a significant reduction in real term salaries for many staff); and
- reducing red tape and reduced waste.
A report by the Centre for Health and Public Interest (CHPI), published in May 2017, assessed seven key assumptions on which the plans for achieving the efficiency savings were based and found them to be unrealistic. Key findings are that:
- The vast majority of this year’s up-front funding earmarked for transforming NHS services (£1.8bn out of £2.1bn) has instead been spent on reducing hospital deficits. This leaves only £300 million available for the NHS to invest in achieving its efficiency targets.
- Last year hospitals were only able to find recurrent cost savings of 2.8% and yet average targets of 4% and 4.2% have been set for this year and next. NHS Improvement has admitted that targets of 4% in previous years were unrealistic.
- A 1% pay cap on NHS staff wages will be hard to maintain with national average earnings expected to grow by 2.9% a year and inflation at 1.9% a year. A 0.9% real wage cut amidst 6% staff shortages is unlikely to hold.
- Social care is expecting a funding shortfall of £3.5bn by 2020/21. Less social care provision will mean longer stays in hospital for older people who are well enough to leave and higher costs being passed onto the NHS.
Efficiency savings are to be ensured by a carrot-and-stick approach: in 2016 NHS England directed that the NHS in England will be divided into 44 new ‘local health systems’ or ‘footprints’ and that each will produce a ‘Sustainability and Transformation Plan‘ (STP). Each footprint will show in its STP how it will transform the way it plans and delivers health and care services in line with the FYFV. But most importantly, each ‘footprint’ is expected to show how it will cut expenditure and stay within budget through, for example,
- moderating ‘demand’ (reducing patients’ use of services),
- increasing productivity (cutting the budgets for service providers, reducing the pay bill, reducing the number of hospital beds etc), and
- generating income (potentially from private patients or selling land).
The Health Secretary has made it clear that Trusts must balance their books or their governing boards could be removed. An extra £1.8 billion ‘transformation fund” for the NHS that George Osborne announced for 2016-17 is only available to NHS trusts that promise to meet a huge range of demands, including moving to ‘seven-day services’. It’s feared that even if footprints can meet NHS England’s demands, much of the funding they might receive will have to go on reversing financial deficits.
In May 2017 secret NHS England plans were circulated among top NHS officials suggesting a new way of cutting costs called the ‘capped expenditure process’. NHS spending is to be capped in about 14 areas of England where there are the biggest NHS deficits and where financial targets are unlikely to be met in 2017-18. In these areas, NHS leaders have been told to ‘think the unthinkable’ and introduce changes that are usually avoided as too unpleasant, unpopular or controversial not least because they will impact on the quality of patient care.
- lengthening waiting times for planned care, even if this breaches the standards set out in the NHS Constitution.
- stopping NHS funding for some treatments, such as those considered ‘low value (…); delaying the funding of some newly approved treatments; and extending the limits on IVF treatment
- Closing wards and theatres, reducing staff while trying to maintain enough emergency care capacity to deal with winter pressures
- Closing or downgrading services
- Selling NHS estate such as land and buildings.
- Stopping prescriptions for some items,
- Cutting financial support to patients with serious, long-term medical problems and disabilities.
NHS Providers, the organisation that represents NHS Trusts, has responded by saying the proposals represent the biggest threat to the NHS’s ability to treat patients since it was set up in 1948:
“Some of the proposals could challenge fundamental expectations shared by NHS staff and the public about what the health service is there to provide. We can not do that without a full and proper debate”.
To find information about planned cuts to NHS services in your area, and what you can do about this, visit https://healthcheck.nhsfunding.info/fundournhs.
updated November 2017
‘We Own It’ provides a straightforward way of writing to your local councillors to ask them to ensure that your local Sustainability and Transformation Plan is made public, and urge them to refuse to sign or cooperate with it. See https://weownit.org.uk/act-now/stp-plans.
Despite massive re-organisation of the NHS as a result of the Health and Social Care Act of 2012 (HSCA), more radical change is now taking place, providing a further step towards privatisation as well as the means to implement cuts.
The latest restructuring is based on the benign-sounding idea of ‘integrated care’. But this is not integrated care in the sense of joined up care that’s carefully planned around individual patients. Instead its about a group of service providers (and maybe commissioners) combining to provide almost all services for a defined population.
The emergence of this kind of integrated care can be traced to the World Economic Forum (WEF), which describes itself as the International Organisation for Public-Private Cooperation, “providing a platform for the world’s leading 1,000 companies to shape a better future.” In 2012 the WEF carried out a project looking at the financial sustainability of national health services due to factors like “the growing burden of chronic disease” and “raised patient expectations”. The project lead was Simon Stevens, then Vice President of the United Health group (a transnational corporation based in the USA), and its report was co-authored by McKinsey (a global management consultancy firm also involved in drawing up the HSCA of 2012).
The preferred strategy put forward by the WEF report was to deliver more services with fewer resources, primarily by shifting health systems towards ‘integrated care’ – in effect reinventing the delivery of health care by introducing models of care that ‘manage demand’ more effectively and eliminate inefficiencies and waste. This strategy now informs the approach of NHS England (NHSE).
NHSE’s The Five Year Forward View and new models of care
Simon Stevens moved from United Health to become Chief Executive Officer of NHSE in April 2014, just six months before it published its Five Year Forward View (5YFV). This document promoted integrated care, describing how the delivery of NHS services was to be completely and rapidly redesigned through new models of care that dismantled traditional organisational boundaries – such as those between the NHS and social care, or between community care and hospital services.
The main models of care outlined were:
- The Multispecialty Community Provider (MCP) model, in which GPs and other community based health practitioners (e.g. district nurses, pharmacists) form an organisation that provides most out-of-hospital care for a registered list of patients, with a delegated responsibility for managing the health service budget for their registered patients. This would bring so-called ‘horizontal’ integration.
- The Primary and Acute Care System (PACS), where a single organisation provides GP and hospital services, together with – for example – mental health and community care. These were described as similar to the Accountable Care Organisations seen in other countries like the USA.
These models of care were supposed to provide a way of improving quality while cutting costs ( although evidence is mixed from the USA about the impact of ACOs on quality and cost). Both MCPs and PACs were to be funded by a ‘whole population budget’. This is a fixed or lump sum that will be paid to providers to cover the cost of almost all healthcare services for a defined population, over a set period (probably 10-15 years), irrespective of the care that is actually needed or provided: treatments will be limited to what is affordable within the budget.
The first step towards implementing the redesign of the NHS was taken at the end 2015 with NHSE selecting 50 pilot or ‘vanguard’ sites to introduce the new care models programme. Then, at the beginning of 2016, before these vanguard sites were fully up and running – and certainly before any evaluation had been done – NHSE produced a new directive. Called “Delivering the Forward View: NHS planning guidance 2016/17 – 2020/21“, it required the creation of new local health systems, each of which would develop a Sustainability and Transformation Plan (STP) that would put the FYFV into practice.
New local health systems or ‘footprints’
The directive Delivering the Forward View – for which NHS England has no legal authority – required the setting up of 44 new ‘local health systems’ or ‘footprints’ across England in what it called ‘place-based planning’ (i.e planning to cover an entire health area rather than a single organisation). ‘Footprints’ were to bring together ‘clinicians, patients, carers, citizens, and local community partners (including the independent and voluntary sectors), and local government through health and wellbeing boards. These new local health systems – the boundaries of which may roughly mirror those of county boundaries – are expected to transform the way that health and care services are planned and delivered for local people. The populations that they will cover range from 300,000 (for example in West, North and East Cumbria) to nearly three million people (as in Greater Manchester). On average they will incorporate three or four local councils and about five Clinical Commissioning Groups (CCGs). But ‘local health systems’ will not be responsible for all planning eventualities and it is recognised that different footprints will have different needs.
These ‘footprints’ share some similarities with the old Strategic Health Authorities (SHAs) that were abolished by the Health and Social Care Act (2012) although SHAs were not expected to make financial savings. Now, cutting costs is the first priority.
A further difference is that, unlike SHAs, ‘footprints’ have no statutory basis or accountability and so are not subject to the same level of scrutiny.
At the time of publishing Delivering the Forward View, there were no legal or other structures that connected the organisations or people involved, no procedures for dealing with disagreements, and little planning expertise among those expected to meet NHS England’s demands (expensive consultancy firms had a field day). And although NHS England could compel health care organisations to comply with their requirements, this was not the case for those bodies responsible for social care – local councils – that were also part of ‘footprints’.
Even so, each ‘footprint’ was asked to produce – with scant notice – a five-year Sustainability and Transformation Plan (STP), showing how local health and social care services will become financially ‘sustainable’ and transformed in line with the Five Year Forward View by 2021.
Sustainability and Transformation Plans (STPs)
In response to Delivering the Forward View, ‘footprints’ were to draw up their draft STPs with considerable secrecy: they were told by NHS England that they could not make their plans public. As NHS England’s Director of Commissioning Operations for North Midlands is reported as saying
Nonetheless, despite the secrecy, a number of STPs were leaked or some details became known through Freedom of Information requests. Then, eventually (December 2016), each footprint’s draft STP was published (see https://www.england.nhs.uk/stps/view-stps/), although not necessarily with the relevant appendices giving the important financial details. (These details, when available, were usually pretty impenetrable.)
STPs have to cover all areas of activity currently commissioned by CCGs and NHS England, including specialised services and primary medical care. They also have to ensure better integration with local authority services, including prevention and social care – and who would argue with that? But at heart, STPs have to:
1. Improve sustainability by achieving financial balance: Each ‘footprint’ is expected to cut expenditure and stay within budget through, for example,
1. Improve sustainability by achieving financial balance:
Each ‘footprint’ is expected to cut expenditure and stay within budget through, for example,
‘Delivering the Forward View‘ argues that “local NHS systems will only become sustainable if they accelerate their work on prevention and care design”, including the implementation of the new models that increase out-of-hospital care proposed by the FYFV.
Of these priorities, plans for ‘sustainability’ are given the most weight: Of the £1.8 billion earmarked for STPs for 2016/17, a total of £1.6 billion was to be made available to those ‘footprints’ whose plans met the financial control targets agreed with NHS England. In contrast, just £200 million was available for plans to improve efficiency, such as the introduction of new models of care.
Overall, STPs were to become the single application and approval process by which cash-strapped ‘footprints’ would have access to ‘transformation funding’ from 2017/18 onwards. But if an STP failed to show sufficient ‘financial discipline’, not only would the ‘footprin’ be denied access to this funding, it could be put in special measures and have its leaders replaced.
STPs were also to be assessed on additional measures besides finance, such as
- whether they will expand the use of integrated personal budgets (especially for maternity, end-of-life and elective care);
- whether they support the national roll out of the Healthy NHS programme to improve the health of the ‘footprint’s’ workforce; and
- how they will facilitate the implementation of ‘seven day’ services.
iii) Lack of legitimacy
Until recently, the nature and extent of changes that STPs were to bring about would have had been introduced or supported by government white papers, formal public consultation, policy guidance, primary legislation and statutory instruments. In contrast, the transformation of the NHS that STPs and the new care models programme they introduce are only by order of the Chief Executive of NHS England.
What’s more, some of the changes being introduced are at odds with existing legislation:
On top of which, the development of each STP was led by an ad hoc group of people drawn, for example, from CCGs, health service providers and local authorities: as an organisational body, the ‘footprint’ has no formal existence, no legal authority. Nonetheless, NHS England (itself not a statutory body) expects them to impose decisions on organisations that do have statutory authority and accountability (such as CCGs and local authorities). For example, in March 2017 Simon Stevens (Chief Executive of NHSE) told the House of Commons Public Accounts Committee that
We are going to formally appoint leads to the 44 [Sustainability and Transformation Partnerships]. We are going to give them a range of governance rights over the organisations that are within their geographical areas, including the ability to marshal the forces of the CCGs and the local NHS England staff.
In addition, as non-statutory bodies, the new ST Partnerships are not required to undergo internal or external audit. Consequently,
Decision-making is likely to become less transparent. Public consultations, board meetings and formal, open ways to make decisions and to challenge them are likely to be replaced or subverted by backroom deals and horse-trading. (http://blog.policy.manchester.ac.uk/posts/2016/09/the-nhs-reform-reorganisation-and-the-risks-of-rushing-into-changes-without-proper-scrutiny/)
iv) Lack of public involvement and consultation
NHS England, CCGs, NHS foundation trusts and NHS trusts are all under a duty to make arrangements to involve patients in:
- the planning of commissioning arrangements (NHS England & CCGs) or provision of services (NHS foundation trusts and NHS trusts);
- the development and consideration of proposals for changes in the way those services are commissioned/provided which would have an impact upon the range of services available or the manner of their delivery; and
- decisions affecting the operation of those commissioning arrangements/services which would have such an impact.
However, patient involvement in the development of STPs before their submission to NHS England was minimal (see our page on Patient engagement and consultation) In addition, STPs were not developed by CCGs, local authorities or other bodies that are under statutory requirements to consult, but by a new organisational form – a ‘footprint’ – that had no formal existence. This means that their obligations and accountability are unclear.
iv) Lack of financial credibility
There are growing doubts about the credibility of STPs as cost saving measures. In 2017, a review of the 44 ‘footprints’ by the British Medical Association found the claim that STPs would save £26 billion from NHS and social care budgets to be unrealistic:
- most savings depend on the injection of capital up front in order to update or build new health facilities – but this money is not available. It’s estimated that, collectively, ‘footprints’ will need £9.5 billion of capital funding to create the infrastructure necessary to deliver the STPs;
- In the UK there is virtually no evidence to suggest that the large scale reshaping of hospital services will improve NHS finances;
- Although most STPs claim that they can cut costs by moving services out of hospitals, research suggests otherwise, especially within five years;
- to be in line with NHS England’s five year plan, public health and prevention have to be priorities for STPs. However public health and prevention are now the responsibility of local authorities, whose budgets have been seriously cut in recent years;
- it’s expected that savings can be made by providing more care in the community, but many STPs don’t consider where funding for extra work in the community will come from.
In addition, many STPs have been drawn up in large part (and presumably in their own interests) by private consultancy firms like PwC. By the end of 2018, research based on Freedom of Information (FOI) requests found that STPs spent at least £26 million on consultants, with 11 of the 44 STPs each paying over £500,000 on fees. (The total figure is likely to be much larger as some STPs failed to respond to FOIs) – money taken away from providing patient care. The same research identified that STPs created around 550 new, non-clinical jobs, costing £32 million a year: 316 of these jobs attracted annual salaries of up to £142,500.
Accountable care systems and accountable care organisations
Subsequently, Next Steps on the Five Year Forward View (NS5YFV), published by NHSE in March 2017, required ‘footprints’/STPs to morph into Sustainability and Transformation Partnerships (ST Partnerships) to implement the STPs and create integrated (or accountable) care systems.
As with ‘footprints’, these Partnerships have no statutory basis: according to the NS5YFV, they “supplement rather than replace the accountabilities of individual organisations”. How they work will vary across the country – although the government’s preferred ways of integrating services is first through ST Partnerships evolving into accountable care systems (ACSs), with some of these eventually becoming accountable care organisations (ACOs).
In essence, while ACSs can take many different forms, what they have in common is a defined population, a uniform payment system and a focus on health outcomes. NHSE describes an ACS as a locally integrated health system (possibly a part of a ‘footprint’), within which NHS organisations – often in partnership with local authorities – take on collective responsibility for the health of a defined population and the resources to deliver care services, while making savings – for example by targeting patients at risk of avoidable hospital admission. An ACS is expected share savings, as well as risk and any losses, across the system.
ACSs are expected to have more control over the operation of the health system in their area. They are part of a more general shift required by NHSE towards ‘demand management’. This means creating a health service that operates on a fixed budget (based on a set amount per head of the population in a defined area) and controls access to services by limiting treatments to what ‘affordable’ within this budget. This approach runs counter to the basic principle of the NHS – to provide appropriate treatment to all, based on clinical need.
In June 2017, Jeremy Hunt had announced the first eight ‘shadow’ ACSs, as a step towards more integrated care. The eight pioneer ASCs will have to determine what accountable care means for them and shape it out of existing independent organisations (https://www.hsj.co.uk/sectors/commissioning/the-commissioner-next-steps-for-stps-part-1-towards-accountable-care/7016284.article) They will be expected to take the strain off A&E departments, invest in general practice and improve access to quality cancer and mental health services. They have, in principle, agreed a draft Memorandum of Understanding (MOU) with NHSE that will, among other things, sign them up to
- reducing the growth of use of NHS services, and
- achieving a single financial control system – something the MOU acknowledges will “inevitably be bumpy in terms of its impact on the financial position of individual organisations”.
According to the British Medical Association, the main difference between an ACS and an ACO is that, with ACOs, there is a single contract with a single provider that will make most of the decisions about how to allocate resources and design care for its local population, including decisions on changing the method or point of service delivery. This single provider could be an NHS organisation or a private company that may sub-contract other providers. Both sit outside current legislation. With both ACSs and ACOs, individual health care organisations within the scheme are asked to set aside their own interests for the good of a wider system. This may prove difficult, especially as some providers within the system will be private companies whose agenda will be incompatible with this approach. There are also indications that ACOs have found it difficult to develop governance arrangements that are able to hold their partners to account as a collective.
A major element of NHSE’s FYFV is the increased use of IT – e.g. to prevent admissions and support out of hospital care. And both ACSs and ACOs are heavily dependent on software and information technology, for example to store patients’ records, enable the sharing of patients’ data across health care systems, or collect data relating to treatment costs and revenue margins etc. Recent research on ACOs in the USA has found that over $100 billion has been spent on such technology over six years, without any notable return on investment: there is no change in the quality of care or the cost of care that the ACOs provide. Physicians are also increasingly dissatisfied with the software they have to use to support safe, evidence based care. Apparently, one-third of the organisations in a Pioneer ACO Program in the USA are dropping out because, despite their investments in software and information technologies, they are unable to quantify the quality of care and financial risk for managing patients in the ACO.
For more information, see our page on ACOs.
… and private sector involvement:
Updated August 2017
An increasing number of NHS Trusts are setting up wholly-owned, private subsidiary companies (SubCos) to which they transfer Trust assets (such as services, including staff, or property).
What is a SubCo?
A subsidiary company or SubCo is a company (or a state-owned enterprise) that is owned by, or controlled by, another company or organisation (the parent company).
A SubCo can be a publicly traded company, which means
- it can be traded on the open market;
- its shareholders are the owners of the company and have a final say in the decisions taken by the company; and
- it has greater access to financing than other companies.
A SubCo is a separate legal business that allows the parent company to be isolated from risk: any losses made by the SubCo do not necessary transfer to the parent company. Having said that, to maintain its reputation, the parent company may have to pay for the subsidiary’s debts, even if it has no legal obligation, and it could be liable for damages if a subsidiary violates the law.
NHS Foundation Trusts have had the authority to set up wholly owned subsidiaries since 2006, with little oversight from NHS Monitor (now NHS Improvement). However, NHS Trusts, unlike Foundation Trusts (FTs), are not independent legal entities and have had to apply for permission from NHS Improvement (NHSI) to create SubCos. (For simplicity, in what follows, and unless specifically talking about FTs, we use the term ‘Trust’ to refer to both FTs, and those NHS Trusts with permission to set up SubCos.)
Until recently, the option to set up SubCos was little used. Now, the situation is changing rapidly. By March 2018, 42 Foundation Trusts had either set up, or were in the process of setting up, SubCos. This expansion may have been quietly prompted by NHSI. It also seems it’s been made easier by changes in legislation. The Health and Social Care Act (HSCA) of 2012 allowed FTs to sell off assets, even those needed for what are called “Commissioner Requested Services” (or essential health services). In the initial period following the HSCA, interim arrangements were set up to protect these essential services and the buildings used to provide them, but this transitional period expired in April 2016. The expansion of SubCos may also be a response to the Carter Review (2015), which sought to drive efficiency through the sharing of administrative functions across NHS bodies within an area, which some SubCos aim to do.
NHS SubCos vary in size (both in terms of turnover and number of staff transferred) and the services they offer. So far, services include facilities, estates and property, GP services, procurement, respite care, medical services such as diagnostic or pathology services, equipment management, pharmacy, IT and back office functions. Both the extent of services and the number of staff involved is growing.
Many NHS SubCos are wholly owned subsidiaries, where the Trust owns all the shares and retains control over major decisions. But although the subsidiary’s Chair may be a member of the Trust Board, the SubCos might be run predominantly by staff employed from outside the Trust because they have a commercial background.
Not all NHS SubCos are wholly owned by Trusts. For example, Viapath is a company set up by Guys and St Thomas’ Foundation Trust as a joint venture with Serco to provide pathology services. It is majority owned by the NHS (66.6%).
A Trust can directly award a contract to its SubCo (i.e. without having to tender) as long as 80% of the business that the SubCo provides is to the parent Trust.
Why set up SubCos?
The key reasons given for setting up subsidiaries are
- to reduce expenditure;
- generate income;
- improve services;
- manage risk;
- provide savings through ‘efficiencies’ and economies of scale;
- gain ‘regulatory advantages’ (e.g. tax reduction); and
- provide access to equity, borrowing and other external investment.
A SubCo can be seen as a way of reducing a Trust’s deficit and complying with NHSE’s agenda for rapid ‘transformation’: separating the management of the SubCo from the parent Trust Board means that ”a SubCo has more control and is able to drive its own agenda more swiftly”. A SubCo can also be used to seek business in new areas, join with another body in a separate venture (for example, to provide back of house services across a number of Trusts), and bid for other services.
NHS SubCos, savings and ‘efficiencies’
i) Value Added Tax (VAT) savings
Unlike an NHS body, a private company working for the NHS can reclaim some of the VAT it’s charged. Being able to exploit this tax loophole appears to be the main stimulus for some NHS Trusts to set up SubCos. This is despite clarification from the Department of Health and Social Care that Trusts should not enter into tax avoidance arrangements and that any VAT savings made should always be merely a by-product of setting up a SubCo. But as one Labour Lord has pointed out, “It seems perverse that NHS bodies are spending energy reducing VAT payments when HMRC itself has stated that the cost will come out of public expenditure”.
ii) Transferring NHS staff to a SubCo
Usually, when an NHS service or department is transferred to a SubCo, its existing staff members are also transferred. This happens under TUPE regulations, so that staff remain on the same terms and conditions that they had with the NHS. However, the length of time staff retain their original terms and conditions can vary between SubCos. What’s more, TUPE agreements do not come with a cast iron guarantee: terms and conditions can be altered by the company by arguing that there have been economic, technical or organisational changes. If NHS terms and conditions improve, it may not be clear that transferred staff will see the same improvements.
Where SubCos will clearly make savings is with the employment of new members of staff – in almost all cases they will not be on the same terms and conditions or have the same pension arrangements as the staff they work alongside who have transferred from the NHS. In addition, transferred staff on NHS terms and conditions who get promoted may find that they have to accept the terms and conditions of those directly employed by the SubCo. It’s likely that this kind of two-tier workforce will have a negative impact on team-work and staff morale.
NHS SubCos and NHSE’s ‘transformation’ agenda
According to NHSI, the activities of SubCos may include managing financial assets and selecting, acquiring or disposing of assets. In fact, tens of millions of pounds of assets appear to have been transferred out of the NHS through SubCos. Business cases are often not available but Northumberland, Tyne and Wear is an exception in revealing that they have transferred land and buildings worth £33.5 million.
There are particular concerns about the motives behind such transfers, given the current pressures on Trusts to sell parts of their estate following the Naylor Review. For example, tax expert Richard Murphy suggests that setting up a SubCo could be a step towards the sale of NHS buildings and the service contracts associated with them.
These concerns are heightened by the fact that SubCos are expected to have a commercial bias rather than a public sector ethos. For example, while it’s part of an NHS Trust, the main purpose of an Estates and Facilities department is to provide support services. In contrast, as a SubCo, it enters into a trading relationship with the Trust.
Setting up a SubCo to supply Estates and Facilities services provides a way of speeding up the ‘transformation’ and ‘modernisation’ of the service: the SubCo has more control over a specific area, and can drive its own agenda more quickly and efficiently.
As Grant Thornton (a consultancy company keen to promote SubCos) points out, the SubCo can grow by offering its current services to new clients. They also see SubCos as likely to develop new services, such as Strategic Estates Management, which they claim is becoming more important with the move towards new care models such as Integrated Care Organisations.
ii) New care models
SubCos may play an important role in the introduction of the new care models called for in NHSE’s 5 Year Forward View and subsequent ‘Transformation and Sustainability Plans‘. For example, NHSI says that, with the advent of new care models, they anticipate that SubCos will become more common as vehicles to hold contracts – or even to deliver care -on behalf of one or more NHS FTs.
iii) Privatisation and commercialisation
Stephen Barclay, Minister for Health, has denied that SubCos constitute privatisation, while NHS Providers suggest that in many cases SubCos are being set up to avoid outsourcing to the private sector and to keep staff ‘within the NHS family’. But whatever the reasons given for setting up SubCos, they still transfer the assets of the NHS to non-NHS bodies that are vulnerable to take-over by the private sector. Significantly, Grant Thornton notes that Trusts may come under pressure to sell their shares in a SubCo, especially where the Trust is in deficit and the SubCo has high value assets. They advise that NHS SubCos must have a fully developed exit strategy that should include plans for the transfer of services, people and intellectual property rights.
The vulnerability of SubCos to privatisation is heightened by their deliberately commercial nature. As the Health Estates and Facilities Management Association (HEFMA) flags up, a SubCo is not just legally different to an NHS Trust, with different rules; it has to have a different mindset and behave like a business. As a private company, the directors of a SubCo have to promote the interests of the company – interests (especially in the case of a joint venture) that may not always be the same as those of the parent Trust.
According to Grant Thornton, one of a SubCo’s key aims must be to create a commercial culture that includes, for example, redefining patients as customers, and “raising the profile of finance among clinicians to see the benefits from their ‘profits’ as these are invested into the service.” They suggest that NHS staff transferred to the SubCo may find creating this culture difficult and so the subsidiary might need to recruit new people who have commercial expertise, particularly to senior positions.
Concerns about NHS SubCos
Concerns about SubCos include:
- The lack of scrutiny and public consultation (for example, see what happened with Gloucershire Hospitals NHS Foundation Trust);
- Weak long-term protection of pay and pensions for those transferring to new companies (for example, any change in the way that the SubCo operates could put transferred staff at risk, despite TUPE arrangements);
- The majority of new staff will be employed on less favourable contracts, outside Agenda for Change terms and conditions, with no access to the NHS Pension Scheme. (This may affect the long-term viability of the Pension Scheme overall, as well as individual employees);
- The creation of a two tier workforce, with staff carrying out the same work but having different terms and conditions, is likely to undermine morale and cohesion;
- The absence of clear information about the future of NHS SubCos;
- The possibility of transferring clinical staff and services to SubCos;
- Increasing commercialisation of the NHS is likely to mean a loss of the NHS ethos that underpins services;
- With SubCos, there are many unanswered questions about accountability and conflicts of interest;
- The VAT loophole reduces money to the Treasury, which then has less money to fund the NHS;
- Less transparency and accountability: as a private company, a SubCo can refuse to provide information about its practices (eg its terms and conditions for new staff) on the grounds of commercial sensitivity;
- SubCos provide the means for selling off NHS assets (such as land) to commerical third parties;
- SubCos further fragment the NHS, and insert yet another layer of management structure;
- SubCos provide new money-making opportunities for consultancy firms while removing vital resources from cash-strapped NHS Trusts. For example,
- The Clatterbridge Cancer Centre trust on Merseyside, spent £661,335 on setting up a firm called PropCare, with the help of consultants Hill Dickinson and KPMG.
- Gloucestershire Gloucestershire Hospitals trust spent £403,000 establishing Gloucestershire Managed Services, with a further spend of £15,000 likely.
- The Royal Free trust in London has also used an estimated £400,000 of its budget to set up a SubCo, though in April 2018 its board has yet signed off the creation of the company involved. (figures from Unison).
updated June 2018
Health and social care services are two sides of the same coin, even if the NHS has had a higher public profile. Roughly one in three people have some kind of relationship with social care services, which provide care, support and safeguards for those in our communities with the highest need, as well for as their carers.
The Department of Health has called for the integration of health and social care systems, partly to deal with increasing pressure on services faced with inadequate funding. NHS England expects the NHS to make £22 billion of ‘efficiency cuts’ by 2020, while money for adult social care fell by nearly a third between 2011 and 2016. A further £6.1 billion will be taken from councils by 2020.
There have been several moves over as many as 20 years to integrate health and social care, including
- the transfer of £2.7 billion from the NHS to local authorities over the four years to 2014-15, to promote better joined-up working (the 2010 Spending Review),
- the creation of the Better Care Fund in 2013, which required NHS clinical commissioning groups and local authorities to pool some of their funding and produce joint plans for integrating services. In 2015-16, the total pooled was £5.3 billion. The Better Care Fund is not new money and most of it comes from the NHS, withdrawn from hospitals in the hope that better services in the community will lead to fewer people being admitted for acute hospital care.
- the publication of the Five Year Forward View (FYFV) by NHS England (NHSE) in 2014, with plans to achieve a financially sustainable and integrated health and care system, through e.g. new care models, by 2020. The FYFV outlined seven new care models that ‘integrate services around the patient’, including, where relevant, social care. These models are currently being developed across England, initially through ‘vanguard’ test sites, with the highly optimistic aim of saving £900 million and reducing growth in hospital activity from 2.9% to 1.3% by 2020-21.
- NHSE’s Delivering the Forward View (2015) that carved the NHS in England into 44 ‘footprints’ (Sustainability and Transformation Partnerships), each charged with improving the integration of health and social care services within its borders.
The barriers to integrating health and social care are considerable. To begin with, England has legally distinct health and social care systems. The Department of Health and Social Care determines health and adult social care policy, while the Department for Communities and Local Government is responsible for local government finance and accountability.
Health and social care systems are also funded differently, and may serve different populations. Local authorities within a ‘footprint’ fund social care services while health services are funded on the basis of the size of the lists of patients registered with GPs. Not all residents within one of the new ‘footprints’ will be signed up with a local GP (for example, as the boundaries for GP practices are being dissolved, individuals may choose to sign up with a practice that happens to fall within a different ‘footprint’). This means there are situations where there could be no health service funding for unregistered patients who are, at the same time, eligible for local authority social services. For this reason alone it’s hard to see how health and social care services can be integrated.
In addition, the NHS is free at the point of use, while social care is means tested and only free for those with a high levels of need and few resources. Funding for social care is especially complicated, with at least five different funding streams, including funds raised by local authorities, funds granted by central government, funds transferred from the NHS, and contributions from service users or the benefits system. NHS England also has four separate means-testing arrangements – for residential care, domiciliary care, NHS continuing healthcare and benefits such as attendance allowance.
In England, local authority funding, including funding for social care has, until recently, come from four main sources: central government, business rates, council tax, and fees and charges. In 2010, almost 80% of local authority money came from central government grants Since then, government funding to local authorities has not only dropped dramatically, but grants are no longer allocated according to an annual assessments of needs. There will be no reassessment to reflect changing need or deprivation until 2020. And by 2020, the government plans to decrease if not discontinue central grants, leaving local authorities increasingly reliant on local business rates. These will no longer be pooled centrally and then redistributed, which will inevitably mean widening inequalities between different regions.
In addition, there has been increasing privatisation of social care provision, with a significant growth in private companies seeking to profit from running residential and nursing homes and the provision of domiciliary care. This has not only impacted on those in need of social care (through, for example raised resident:staff ratios), but also on the workforce. Many of those working in social care are less valued and paid less than those in the NHS. They may have seen the end of sick pay, an increase in zero-hour contracts and receive pay at less than national wage rates. At the same time, care home operators threaten to shut up shop if they have to pay the living wage, and over 25% of care homes say they could go out of business in the near future because of rising debt.
Many argue that in order to bring about the integration of health and social care both need to be fully funded and that social care needs to be brought into the public sector, provided on the basis of need and free at the point of use.
In the current scenario however, there is little to no robust evidence to show that integration leads to better outcomes for patients. The Department of Health and the Department for Communities and Local Government have not tested this kind of integration at scale and can’t show that any ‘success’ seen so far is sustainable or due to integration. There are some international examples of successful integration (for example, what’s known as the Canterbury model of integrated care in New Zealand) but this has been achieved in the context of very different legal and organisational environments.
Plus, according to the National Audit Office, there is no compelling evidence to show that integration of health and social care in England leads to sustainable financial savings or reduced hospital activity. There are some positive examples of integration at the local level, but so far there is no evidence of systematic, sustainable reductions in the cost of care as a result of integration.
On top of which, embedding new ways of working across organisations can take many years due to the different cultures and working practices that exist across the NHS and local authorities – even where there is strong commitment, integration may take as long as 20 years. NHSE expects huge strides towards the integration of health and social care services within a faction of this time scale.
It’s expected that a costed, 10-year plan for social care will be published by the government in November 2018, to go alongside its 10 year plan for the NHS.
Current proposals for integrated care, through new care models such as Integrated Care Systems and Integrated Care Organisations (ICOs) (previously called Accountable Care Organisations) raise a number of concerns.
Human Rights issues
NHS England’s proposals for integrating care are based on capitation-based payment systems, including ‘integrated’ or whole population budgets (WPBs) These fund services for a specific population over a specified period for fixed sum. Populations are defined according to registered patients lists, rather than by geographical area (the way in which universal care has been ensured up until now).
In addition, despite the minimum delivery standards set out in contracts, WPBs provide an inducement to raise treatment thresholds or ration some services in order to minimise costs, irrespective of the care that is actually needed. Capitation funding has been a feature of NHS local allocations since the 1970s and today is the basis for funding of CCGs. But the WPB approach to capitation funding – especially in the absence of adequate levels of funding – flouts the duty of government to care for all in society.
In these ways, introducing WPBs as the payment system to underpin integrated care potentially contravenes the NHS Constitution and is fundamentally at odds with an NHS based on the principle of social solidarity and the values of equity and universalism.
Governance, accountability and legal issues
ST Partnerships are introducing radically new ways of delivering care with scant public involvement or any meaningful consultation. This is despite the inevitable changes these new care systems will involve, and despite current law (HSC Act 2012) and statutory guidance.
Simon Stevens, CEO of NHSE, has said that he will give ST Partnerships governance rights over organisations within their local health system, including bodies such as CCGs or local authorities with statutory responsibilities. Currently, ST Partnerships (and the integrated care systems they may evolve into) are, by NHSE’s own admission, not statutory bodies: they have no legal power to make decisions without referring these back to partner organisations. The Conservative Party Manifesto of 2017 proposed changes by secondary legislation – without public consultation or Parliamentary scrutiny – to allow ICOs to operate.
ST Partnerships are introducing radically new ways of delivering care with scant public involvement or any meaningful consultation. This is despite the inevitable changes these new care systems will involve, and despite current law (HSC Act 2012) and statutory guidance requiring commissioners to directly involve the public in commissioning arrangements (such as plans to transform services and proposals to change procurement and contracts). ACOs and ICSs are presented as local bodies working in partnership with local communities but, in reality, they will be run as businesses with little accountability to local people. This is in breach of the NHS Constitution, which commissioners have a duty to promote. According to the Constitution, the NHS is accountable to the public, to communities and to the patients that it serves.
The HSC Act 2012 gave clinical commissioning groups (CCGs) control of most funding for healthcare services at the local level. Even though there has been no amendment of legislation so far, ICOs will transfer many of CCG responsibilities, including some commissioning of services, to potentially new organisations and these may not be NHS or local authority bodies. In addition, NHSE’s draft contract for organisations (Integrated Care Providers) commissioning and delivering the services on behalf of an ICOs shows that the contract holder could be a consortium of companies or even a Special Purpose Vehicle. This could give the private sector (including multinational companies) a significant role in the planning and commissioning of services, as well in as their delivery. There are some indications that ICOs will issue a ‘prospectus’, suggesting they intend to attract private sector funding.
Funding to run NHS and social care services is being significantly cut. Yet the Naylor Review, to which the government appears to be committed, estimates that the infrastructure necessary for new models of care will require around £10 billion of capital investment in the medium term. The review suggests that about £2 billion of this can be raised by the sale of NHS assets, notably land and buildings owned by NHS providers in the acute sector, while facilitating the building of 26,000 new homes. Naylor observes that, currently, even though their assets might be “of greater benefit in another part of the healthcare economy”, providers such as NHS Foundation Trusts tend to keep assets to fund their own interests and are unlikely to sell what they own to support others with different statutory responsibilities. However, Naylor sees that the introduction of ICOs will overcome this conflict of interest, persuading acute providers to invest their property assets in primary, community and mental health services as part of a collective responsibility within an ICO. According to the British Medical Association, land or building sales will be conducted through public/private partnerships (Project Phoenix), effectively undermining the social ownership of NHS assets while allowing private companies to profiteer from these.
Many ST Partnerships have used private consultants (e.g. McKinsey, Deloitte and PwC) to develop plans in order to meet the requirements of NHSE’s Five Year Forward View, including plans for new care delivery systems. It has been estimated that by February 2017, at least £17.6 million of NHS money had been spent on consultancy fees.
Some analysts fear that new ways of delivering care, especially ICOs, will provide a structure that, in future, could help facilitate the replacement of the NHS by private health insurance. Whilst the NHS as a whole is far too big to sell in a single transaction, ICOs will offer discrete local systems with budgets big enough to attract investors and potential takeovers, or – if the political circumstances allowed this to be considered – with organisational forms compatible with the US health insurance market.
There is little robust evidence from pioneer programmes in the UK to support the introduction of ACOs or ICSs to the NHS: by NHSE’s own admission, these programmes have been of short duration and provided only small sample sizes.
Ribera Salud hospitals that set up ICOs (or ACOs) in Valencia, Spain claim to have higher patient satisfaction rates, lower staff absenteeism, shorter average lengths of patient stay, lower waiting times and lower capitation costs than competitors. However, clear evidence is hard to find: reliable financial and contract information is limited, and there are serious concerns about the objectivity of data from the Ribera Salud company.
ACOs are usually associated with the US healthcare system, and may have influenced the drive towards ICOs in the UK. However, there is mixed evidence about the performance of US ACOs (still in their early days). In addition, the very different contexts in which the NHS and US health care system operate (not least the different levels of funding), and the lack of a standard model of care makes it difficult to extrapolate from the US experience or learn from cross-national experience more generally. As researchers from Manchester Business School put it, “Care is needed to avoid unwarranted inferences that this [ICO] policy will deliver the claimed benefits of lower costs whilst maintaining sustainable quality.”
ST Partnerships (and their successors, ICSs and ICOs) are expected to rely heavily on the co-operation of all their member organisations. Yet in September 2017, a survey showed that only one of 56 organisations involved in ST Partnerships believed that full joint working would be achieved in the next five years.
ICSs and ICOs will also have to accept a new form of financial control (a ‘system control total’) in which financial risk is shared across the whole local health system: individual providers within the system must set aside their own interests and allow any surpluses they make to be used to offset losses that have been run up elsewhere within the system. Failure to keep to the overall control total will mean no transformation funding from NHSE for the entire system. In effect, each provider will police the spending of its partners. As, increasingly, many providers within ICOs or ICSs could be private companies whose first priority must be to make a profit, they are unlikely to put aside their own interests for the good of the whole, especially as some NHS providers will be in deficit. Alternatively, this system runs the risk that public funding will be used to support private companies operating at a loss.
There are indications that one of the ways in which an ICS or ICO will reduce costs will be through ‘transforming’ its workforce. As the private consultancy firm McKinsey (2009) points out, STP plans, “provider efficiencies” are the biggest way to cut costs. With staffing the biggest cost for providers, the new set ups are likely to have reduced numbers of doctors and nurses. Instead, new digital technologies will be introduced, and new roles, such as lower paid, lower skilled physician- and nurse-associates. It ‘s feared that nationally agreed pay levels and NHS terms and conditions of work will be undermined as members of staff are transferred to employment by ICOs and offered locally negotiated employment contracts.
New systems for delivering care, like ICOs and ICSs, are being introduced at breakneck speed, without robust evidence, and in the absence of meaningful public involvement and consultation, parliamentary scrutiny or appropriate legislation. In addition, they are already beginning to allow private corporations new roles and powers to shape the NHS in their interests.
No one can deny the need for acute, primary care and community NHS services and social care to be fully coordinated. However, this will not be achieved by fragmenting the NHS. Nor does coordination require commercial contracts and the involvement of corporates. The introduction of new care delivery systems such as ICSs and ICOs must be opposed.
Instead, as campaigners such as Keep Our NHD Public argue, the success of a truly coordinated system of health and social care requires:
- Increased funding of the NHS and personal social care to ensure that coordination can deliver improved patient services rather than be the disguise for ‘efficiency savings’ and cuts;
- Personal social care provided on the same terms as health, free at the point of use and paid for from public funding, as in Scotland;
- Full public involvement and meaningful consultation;
- Robust piloting of future plans for coordination with in-depth, independent evaluation;
- Clarity on the governance and accountability of decision making bodies;
- New legislation that
- protects Bevan’s founding principles of the NHS;
- ends the marketisation and fragmentation of the NHS; and
- re-establishes public bodies and NHS services that are accountable to Parliamentand local communities.
Information on this page of the patients4nhs website comes from the Resources section of Keep Our NHS Public (see section on Accountable (Integrated Care Organisations and Systems). You can find a range of articles there, as well as references to support the statements made above.
As mentioned on other pages, NHS England (NHSE) has divided the English NHS into 44 local health systems (‘footprints’), now described as Sustainability and Transformation Partnerships (ST Partnerships). Initially, NHSE expected at least some of these Partnerships to evolve into what were then called Accountable Care Systems (ACSs), and that many of these would evolve into Accountable Care Organisations (ACOs).
In 2018 NHS England renamed ACSs as Integrated Care Systems (ICSs), arguably because the term ‘accountable care’ had become rather toxic. But there was increasing confusion about what ‘integrated care’ meant and it was being interpreted differently in different places. Attempts to pin down ‘integrated care’ and the systems that were to provide this have been frustrating: NHSE and NHSI appear to change terminology when their plans become unpopular or ‘generate unwarranted misunderstanding’.
Accountable Care Systems
Accountable Care Systems (ACSs) were introduced by NHSE as partnerships between Clinical Commissioning Groups (CCGs) and providers such as NHS Trusts, GPs and community healthcare providers within an STP. These partners were expected to work together through, for example,
- setting up collective decision-making and governance structures – not easy, given that, as an ACS was not a statutory body, it couldn’t replace the individual accountability of the organisations within it that were statutory bodies (such as NHS Trusts);
- sharing their workforce and facilities, ‘where appropriate’;
- agreeing how to share risk and gain;
- agreeing a performance contract with NHSE and NHSI to deliver rapid improvements in care and performance; and
- managing funding for a defined population through a ‘system control total’ (see below).
In return for providing ‘joined up, better coordinated care’, it was claimed that ACSs would have more control over their funding and the operation of the health system in their area. In reality, ACSs provided a means by which national bodies (the Treasury, the Department of Health, for example) could assert more control, especial with regard to finances and performance.
A central feature of ACSs (and now a part of ICSs) was that they were largely funded by new ‘capitated payment’ arrangements, such as a ‘whole population budget’ (a fixed payment to the ACS to provide specified services for a defined, geographical population, for a set period of time). There are deep concerns, in the context of inadequate funding, that even if there are minimum standards in place, this type of payment system provides an incentive for rationing or for raising the threshold at which patients are offered treatment, irrespective of the care needed.
NHSE’s ambition was for ACSs to cover half the population of England by 2020, something it acknowledged would be a complicated transition, requiring a staged implementation.
First wave of ACSs
By 2017 there were 10 pilot or ‘shadow’ ACSs across England, where NHS Trusts, local councils and others, including private providers, came together to manage resources collectively and deliver services to a specific population. Services could include hospitals, community services, mental health services and primary care, but could also involve social care. Four further ICSs were selected in 2018.
These shadow ACSs agreed, in principle, a draft Memorandum of Understanding (MOU) with NHSE, that signed them up to
- finding ways to control the uptake of services (or “more assertively moderating demand growth”);
- meeting quality targets;
- setting up appropriate governance, and
- accepting significant changes to how finances were controlled.
Each individual organisation within an ACS had to remain accountable for remaining within the ‘financial control total’ set for them by NHSE and NHS Improvement to ensure that that any financial deficit that providers had was reduced to zero. Agreeing to deliver a control total was a condition of access to the Sustainability and Transformation Fund.
The introduction of financial control totals for all NHS providers in 2016/17 (regardless of whether they were in deficit or not) meant a dramatic extension of central control. These controls govern how an organisation uses its own reserves, and enforce a range of other conditions from the centre (ie NHSE and NHS Improvement) – for example, they dictate how to manage things like annual leave and short-term sick leave as well as issues of financial management.
But in addition, in order to facilitate the pooling of resources across providers within an ACS, these providers also had to be accountable as a collective for achieving a ‘system control total’ (equal to the sum of the control totals of all organisations within the system). The MOU acknowledged that this new approach to financial control will “inevitably be bumpy in terms of its impact on the financial position of individual organisations”.
Change of name to Integrated Care Systems
New planning guidance from NHSE and NHS Improvement (NHSI) published in February 2018 clarified that they had changed the name of ACSs to ‘Integrated Care System’ (ICS) – apparently as it gave a more accurate description of the work that these systems did.
As some have suggested for ACOs, new systems like ICSs mean considerable changes to the role of Clinical Commissioning Groups (CCGs). CCGs remain responsible for
- ensuring that ICSs are commissioned in order to provide maximum value;
- setting the required population-level outcomes; and
- holding ICSs to account for delivery.
However, providers (NHS or private) within the ICS could take on the delivery of, or contracting for, NHS and local authority funded health and care services.
ICSs – like ACSs – are expected to focus on
- managing population health (e.g. improving the health of a defined group, rather than focusing on individuals’ health needs),
- delivering more care through redesigned community and home-based services,
- taking collective responsibility for financial and operational performance, and
- ‘more robust’ arrangements between organisations within the system.
Instead of operating as separate bodies, each organisation within an ICS has to sign up to a plan for operating as a single system that incorporates relevant CCGs and providers, and establishes a common approach to matters such as income, expenditure, workforce, and activities. This focus on an overall system (rather than individual organisations within a system) allows NHSE and NHSI greater oversight or control.
For example, spending across ICSs is tightly controlled by NHSE and NHSI. ICSs are expected to produce a plan that will deliver its ‘system control total’ (“the aggregate required income and expenditure position for providers and CCGs within the system” as decided by NHSE and NHSI). Failure to draw up appropriate plans or comply with a system control total will mean loss of access to funding. Notably, organisations within an ICS will be responsible among themselves for resolving any disputes arising from the ‘system control total’.
Integrated Care Providers
NHSE wants ICSs to be delivered by an Integrated Care Provider (ICP), a single lead provider that has been awarded an Integrated Care Provider contract (the contract is currently under consultation as plans to introduce it were challenged by MPs and a judicial review, not least on the grounds that it required new regulations and public consultation). This contract gives the lead provider the task of both planning and providing services for up to half a million people within a specific area for 10-15 years, These huge contracts that may be worth billions of pounds can be held by a private company.
While private companies have until now sometimes struggled to make enough profit from providing individual NHS services and so had begun to retire from the field, budgets available for whole systems like ICSs will be large enough to attract private investors. By becoming a ‘lead provider’ with a single, long-term contract to set up and manage an entire system, a private company – providing that they stay within the terms of the contract – will be in a position to make decisions, for example, on spending, and on the nature and location of services, and to sub-contract with a range of other providers.
What is the relationship between ICPs and ACOs?
According to the Government’s response to the recommendations of the House of Commons Health and Social Care Inquiry into integrated care, the ICP was previously known as an ‘Accountable Care Organisation’.
Arguments against ICPs
A coalition of health campaign groups argues that the introduction of ICPs should be stopped, not least because
- such a move ignores the real roots of poor integration, namely the market in health services created by the Health and Social Care Act;
- the IPC contract not only opens the NHS to further privatisation and fragmentation, but if a private company holding a contract crashes (think of Carillion), a wide range of health services would be put at risk;
- the contract holder may not be a public body, so it would be less accountable to local communities – an ICP only has ‘a duty to engage’ local communities, compared to NHS statutory bodies’ ‘duty to consult’;
- ICPs would reduce transparency – for example, an ICP would not be subject to Freedom of Information requests, and would not have to give the public access to Board meetings or minutes, by citing ‘commercial confidentiality’;
- the new contract could change general practice, with many GPs being brought in under one ICP. This could mean patients have further to go to see a GP, and find they have less continuity of care.
Instead, campaigners argue:
- That the Government brings forward legislation to end the failed NHS contracting system and to re-nationalise the NHS: the only sound basis for service integration.
- That, in this context, there is a guarantee that any organisation tasked with delivering integrated care to patients will be a statutorily protected NHS organisation i.e. an NHS body not open to private providers, underwritten in legislation underpinning these undertakings (see below).The Government commits to sufficient funding and staffing for safe health and social care, and
- That Social care be brought back into public provision, free at point of use.