STRATEGY LEADS NETWORK
POLICY UPDATE
Saffron Cordery
Director of Policy & Strategy,
NHS Providers
15 January 2015
What’s changed since we last met in September?
• Two major strategic think pieces published: Five Year Forward View
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and Dalton Review.
Party Conferences showed extra but insufficient forward funding
commitments to NHS and fact that NHS will be at forefront of General
Election
£2 billion extra in the Autumn Statement offset by very stretching
tariff
Demand has taken a big jump up whilst performance and finances
have taken another big step down
Most members now struggling with staffing vacancies / agency cost
and impact of social care funding reductions
Political focus on performance rising as figures drop and election
nears…translating into ever greater regulatory micro-management
Overall mood music
Seriously under the cosh on demand, money, performance
and regulatory overreach…
…but at least we now have a top level five year forward view
we can all align behind, however difficult its delivery will be.
What will we cover?
Today and 2015/16
1
Five Year Forward View
Dalton Review
2
5
6
3
Current performance, regulation and performance management
4
2015/16 finances & planning, tariff & Autumn Statement £2bn
FT Pipeline and segmentation
General Election 2015
What will we cover?
Today and 2015/16
1
Five Year Forward View
Dalton Review
2
5
6
3
Current performance, regulation and performance management
4
2015/16 finances & planning, tariff & Autumn Statement £2bn
FT Pipeline and segmentation
General Election 2015
NHS England 5 year forward view
A PRAGMATIC TOP LINE
FIVE YEAR FORWARD VIEW
(Oct 2014)
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“A compass, not a map”
“A view that recognises we
don’t know what the money
will look like so it will be
about putting choices on the
table, not the final word.”
FOUR KEY MESSAGES
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NHS has to change: we can’t
carry on as we are
Getting serious about
prevention
Moving to new models of care
Closing the financial gap
through a mixture of NHS
savings and extra funding
An enabling framework for change
Building on existing early
boundary pushing…
Federated primary care practices with extended
services
Integrated teams focused on improving care for highrisk populations
Named clinicians and improved care co-ordination
across settings
Emerging consolidation of services (e.g. stroke) ;
ongoing reconfigurations (e.g. Manchester; UCLP)
Co-commissioning of primary care and specialised care
…to
consistent implementation
of new models of care
Multispecialty groups that employ GPs, consultants,
nurses, pharmacists and other roles to deliver care outof-hospital care
Vertically integrated hospitals, with new business
models, dissolving the boundary between primary &
secondary care
Accountable care organisations: groups of providers
jointly accountable for achieving a set of outcomes for a
defined population
Specialised centres of excellence acting as lead
providers, responsible for integrating pathways and
developing networks…
CCGs invited to apply to co-commission services
Lots of opportunities…lots of questions……
Good
Questions…
Focus on prevention, citizen
empowerment and healthy
choices
Does funding follow cocommissioned services?
Focus on LHEs, blurring
line between primary and
secondary care, integration
Raid on provider surplus?
Tough on specialised
commissioning
Hard choices on funding put
on the table, potential for
local flexibilities
Who drives change?
NHS achievements
acknowledged
Is the scale of ambition
deliverable and how will it
be delivered?
What will we cover?
Today and 2015/16
1
Five Year Forward View
Dalton Review
2
5
6
3
Current performance, regulation and performance management
4
2015/16 finances & planning, tariff & Autumn Statement £2bn
FT Pipeline and segmentation
General Election 2015
Dalton review
Thesis
Providers need wider range of
organisational forms to meet current
challenges
Four key messages
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Excessive variation in care quality
one of a range of difficult
challenges faced by providers
Existing way of doing things no
longer sustainable: change required
Use of a wider range of provider
organisational forms can be one
way of meeting provider challenges
Providers and NHS system leaders
need to systematically work
through how we can get wider take
up of these models
Dalton review
Models…deployable at an enterprise, group of
services or service level
• Locality based single or multi-site trust
• Federations (e.g. UCL Partners)
• Service level chain (e.g. Moorfields)
• Joint venture (e.g. GSTS Pathology; SWLEOC)
• Management/operational franchise (Circle at
Hinchingbrooke was the main example )
• Geographically dispersed multi-service chain (e.g. BMI)
• Vertically integrated care organisation (Tameside)
Opportunities and questions
Opportunities
Questions
Spotlight on range of
possible ownership
models and benefits
How much provider
appetite for new
models?
Focus on resolving FT
pipeline blockage
Is the statutory sector
capable of required
change?
Welcome emphasis on
simplifying transaction
approvals
How far does change of
org form per se address
provider challenges?
Desire to use report to
catalyse change
How will credentialing
and system of
consequences work?
What change might the review drive?
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Greater use of wider range of ownership
models at enterprise and single service /
groups of services levels
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–
JVs
Networks crossing enterprise boundaries
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Greater use of management franchise model
post election in more intractable FT pipeline
cases (more private sector?)
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Transaction approvals process speeding up
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Creation of management chains
The power and impact of example, experience and
perceptions of success in driving this type of
change.
What will we cover?
Today and 2015/16
1
Five Year Forward View
Dalton Review
2
5
6
3
Current performance, regulation and performance management
4
2015/16 finances & planning, tariff & Autumn Statement £2bn
FT Pipeline and segmentation
General Election 2015
Activity going through the roof
‘ Our A&E was built to see 120 patients a day. We are now averaging 160.’
(Trust CEO)
‘It’s like Narnia – a perpetual winter with no Christmas’
(Newsnight)
% year on year increases
Anonymised DGH, Oct 2014
Pressure showing in performance
Size of the provider sector deficit is
increasingly unsustainable
Aggregate financial position for NHS provider sector
Sector is heading
for over half a
billion deficit in
2014/15
Costs escalating
• Growth in
demand
• Staffing
increases &
agency spend
• Under delivery
of CIPs
Surplus
/ Deficit
(£m)
2012/13
2013/14
2014/15 est.
Financial pressure spreading across the
sector
Estimated financial position Q2 2014/15
160
141
140
120
Number of 100
providers
in deficit
• FT sector YTD
net deficit alone
is over 4 times
higher than plan
at £254m
80
66
60
40
• EBITDA margin
18% behind plan
25
20
0
2012/13
• 141 providers in
deficit,
representing
58% of the
entire sector
and 81% of all
acute hospitals.
2013/14
2014/15
Performance / finance issues spreading
To ambulance, community and mental
health sectors as well as acute trusts
To Trusts / FTs across all 4 sectors that
• Have never had financial or performance
issues before
• Are patently well led
• Would be in anyone’s upper quartile
A system wide issue but still not fully
accepted across the NHS system leadership
Political timing vs General Election
Presenting dilemma for triumvirate: how to
regulate / performance manage when tide is
going out in run up to election?
Increase in regulatory action / micro-management
8 FTs had regulatory action applied and none
lifted in 2013/14
Monitor
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“Supporting” challenged health economies / institutions
10 FTs / Trusts in Special measures
11 challenged health economies five year planning consultancy support
14 triumvirate star chambers
11 FTs under investigation and 7 under consideration
30-40 phone calls last week from triumvirate and Secretary of State
5 PMIU visits to FTs/trusts
What happens when 30-40% of sector is in some form
of regulatory intervention?
To note, in case you have missed
Francis and Care Act
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Statutory duty of candour, 27 November
Fit and proper persons test, 27 November
False and misleading information, April 2015
New sanctions for ‘wilful neglect’, still in Lords
New CQC enforcement guidance, April 2015
CQC ‘scores on the doors’ – out for consultation
Francis Review of whistleblowing – due Jan/Feb 2014
What will we cover?
Today and 2015/16
1
Five Year Forward View
Dalton Review
2
5
6
3
Current performance, regulation and performance management
4
2015/16 finances & planning, tariff & Autumn Statement £2bn
FT Pipeline and segmentation
General Election 2015
2015/16 Tariff Headline Measures
• 3.8% efficiency deflator
• 1.9% uplifts for pay and price inflation.
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Pricing therefore down 1.9% overall
Marginal rate for emergency admissions
increased to 50% (+£90m)
Marginal rate for specialised services over
baseline at 50% (-£170m to £220m)
0.35% uplift for mental health mentioned
but not included in tariff (parity of access)
£80m for mental health access target
delivery: £40m via tariff and £40m via
central distribution
“This reflects our expectation that 2015/16
will require a further exceptional effort from
all parts of the sector, to respond to the
financial challenge.”
2015/16 Tariff Impact
• Even if NHS providers meet the 3.8% efficiency requirement, if
costs increase as expected over 2015/16 by the end of 2015/16
approximately 50% of providers would be in deficit with a net
deficit of £510m, which is similar to the expected position at
the end of 2014/15
• If NHS providers do not meet the 3.8% efficiency factor and
achieve savings of only 3%, which is recognised in the NHS
England Five Year Forward View as a stretching level of
efficiency, approximately 76% of NHS providers would be in
deficit, with the net deficit reaching £1.1bn
National Tariff objection mechanism
Background
• Statutory consultation on national tariff allows providers to object (before 24 Dec 2014) on “the proposed
method for calculating national prices in 2015/16”
• Can object to the data, method and calculations used to arrive at national prices. The prices themselves and
the rules that apply to them once set (e.g. marginal rates) are not grounds for objection.
• Objections can come from CCGs and ‘relevant providers’ (FTs, licensed independent providers, NHS trusts
and unlicensed NHS providers who provide services covered by a national price)
What is the impact of objecting?
• Objection mechanism triggered if 51% or more of providers (by number or % of tariff income) object. As
simple as ticking a box, but can have significant impact as Monitor are likely to be risk-averse and refer the
National Tariff to the CMA who will either uphold the method or propose changes
• Upside is improving tariff by sending a message to centre on impact of their proposals on patient services
• Downside is delay to tariff; uncertainty over outcome; incurring legal fees of referral; the budget pressure
being made up in other ways even if tariff prices change
What are we doing?
• Workshop with FDs on Fri 12th to talk through proposals in depth
• Have committed to share more widely across membership: Detail on the process; voting intentions;
grounds members will use to object
• Board has agreed we must stay neutral on the issue and not incite objections. Decisions are for individual
boards, but NHS Providers will honour a mandate when votes are cast & will continue longer term work on
reforming the objection process to make it more sensitive
Autumn Statement £2bn funding announcements
Proposals to be agreed
at NHS England Board
today
£1.95bn funding added to the NHS baseline, however, £250m per annum primary care spend that is
sourced from Libor ends after 4 years
Diagram source: HSJ
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£1.1bn to CCGs on a
redistributive basis
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£0.3bn to
specialised –
overweighted but
due to NICE and
recouping 14/15
deficit. New
marginal rate still in
place
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£100m to other bits
of direct
commissioning
2015/16 – Where Has This Left Us?
• Funding gap of c£1 billion remains
• No extra winter pressures funding
• Pressures faced:
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Demand increases
Better Care Fund
3.8% tariff efficiency factor
Specialised commissioning marginal rate
Extra staffing costs
Reducing CIP opportunities
Large CNST premium rises for those with poor claim record
• What does this buy on provider finances and operational
performance?
o Risk of expectation mismatch
From “The Perfect Storm” to “The Hurricane”?
2015/16 Planning Guidance
• Published on 19 December
• Key elements of approach:
o Tripartite: as much joint as possible, as little separate as possible
o 5YFV focussed
o Strong emphasis on CCG / provider alignment including rigorous tripartite testing on
number / assumption alignment
o Role modelling the new national / local relationship
• Four part guidance:
o 5YFV implementation – including Vanguard sites
o Nuts and bolts guidance - common planning priorities and timeline
o Details from each bit of tripartite eg NHSE on CCG allocations; Monitor and TDA
annexes
o Templates and technical stuff
• Note: NHSE/ TDA: 1 year plans; Monitor 2 year plans.
What will we cover?
Today and 2015/16
1
Five Year Forward View
Dalton Review
2
5
6
3
Current performance, regulation and performance management
4
2015/16 finances & planning, tariff & Autumn Statement £2bn
FT Pipeline and segmentation
General Election 2015
Three FT authorisations, first two community FTs
Congratulations to…..
• Royal United Hospital Bath NHS Trust
• Derbyshire Community Health Services NHS Trust
• Bridgewater Community Healthcare NHS Trust
In addition…..
• Bradford District Care Trust and Oxford University Hospitals NHS
Trust start the authorisation process
• Monitor likely to be considering at least five more applications
in the next few months.
A new TDA six part segmentation with
allocation of trusts to segments expected January
Credible plans for FT
within 2 years
Credible plan for FT
within 4 years
Can become
standalone FT within a
timeframe to be
decided*
Being acquired the best
option
Franchise/management
contract
Needs a plan*
* Trust can only remain in this segment for a defined period, no car parking allowed
What will we cover?
Today and 2015/16
1
Five Year Forward View
Dalton Review
2
5
6
3
Current performance, regulation and performance management
4
2015/16 finances & planning, tariff & Autumn Statement £2bn
FT Pipeline and segmentation
General Election 2015
General election outcome?
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NHS will have very high profile but
quality of debate likely to be very
low!
650 seats; 325 to form a majority
Three trends to watch:
o UKIP peels off Con votes: Con
losses in Con / LAB marginals
o SNP does well in Scotland at
Labour’s expense
o Lib Dems keep more seats than
national share suggests
Hung parliament by far most likely
outcome:
o Con/Lab seat share short of 325
o Other party seat share likely to
rise
o Key, as in 2010, will be exact
maths of seat numbers
Higher probability of:
o More complex rainbow coalition
o Greater political instability
Sporting Index UK General Election Spread Betting Seats Market at
13/12/14
The next parliament – “from one to three”
• 5YFV posits significant rise in
difficulty of provider strategic task
• From keep operational ship upright
with CIP driven Nicholson
Challenge
• To:
o Keep operational ship upright
o Find completely new way to deliver
share of £22bn savings
o Co-lead your local health and social
economy and your institution’s
journey to new models of care
The next parliament – “from one to three”
• Two key processes already
under way:
o 5YFV implementation
o 2015 Spending Review
• NHS Providers objectives:
o Appropriate provider sector
involvement
o Realistic size of task and
delivery trajectory
o Clear focus on what support
and changes providers need to
deliver
o New national / local
relationship
Examples of issues we’re thinking about
and being asked to think about – a step up
5YFV implementation
• What role might NHS providers play in getting serious about prevention?
• What segmentation do we use in moving to new models of care?
• What does “not one model nor a thousand” actually mean?
• How would a Transformation Fund work and what’s the NHS providers contribution?
• What support do NHS providers need to move to new models of care?
Spending Review
• What can providers contribute to £22bn savings, on what profile and in what areas?
• What does a different approach to realising savings look like, given that the pay
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freezing, salami slicing, CIP driving approach has been largely exhausted?
What radical areas of change do we need to collectively drive e.g. workforce?
What do we need from NHS system leaders to realise the required savings?
What are the pro’s / con’s of varying degree of engagement in savings identification?
Both
• If we’re being asked to represent NHS providers at these tables, what is our member
mandate, how do we exercise it and how do we communicate?
Six quick things to note from NHS Providers
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New branding
Programme for Next Parliament
Race equality case study document
Full member survey results coming shortly
Two things for today
Providing for the future: A Programme for the next Parliament
Leading by example:
The race equality opportunity for NHS provider boards
New drive on race equality
• Workforce race equality standard
• The case for change
• Importance of board level leadership
Emerging practice: 10 case studies
• Building a diverse board and senior leadership
team
• Creating a more inclusive working environment
• Opening up the talent pipeline
• Meeting the needs of diverse communities
Common themes
• Understanding the data
• Encouraging open conversations with staff
• Devising a comprehensive strategy
• Establishing a new focus on talent management