HFMA Convergence Conference 2017


A clear consensus emerged over the three days of the HFMA Convergence Conference – that integrated working was the way ahead. This is integration both within the NHS so that place-based collaboration replaced the Lansley model of competition, quite probably in an Accountable Care Organisation (ACO) of some sort; and between the NHS and its partners, particularly in local government. Here are our notes from sessions which touched on these themes.

Chris Ham - King’s Fund

Lay of land Integration arguments are coming to fruition. Recent election messages: people want hope not fear – they’re concerned about hard Brexit - don’t want more austerity - have reduced respect for authority. 150,000 EU nationals work in health and social care combined. Unlikely that we will see any controversial legislation, leaving us to work within ‘the Lansley Legacy’. Will be less STP bravery. Social Care green paper will be less radical – less chance now to use public spending differently.

Organisations never in my 42 years of involvement have things ever been so diffused/confused, but there’s no appetite to streamline. STPs are seen as a workaround to make the best of a bad job… shift towards place based working makes sense. All requires collaboration in opposition to aims of Lansley. Regulatory systems have been slow to adapt – still based on organisations, not place / system. Most STPs are combinations of small systems – STPs ‘aren’t it’.

Accountable Care Organisations (ACOs) The term ACO is a recent Americanism, but it is just new language for an established approach. Evidence for ACOs themselves is mixed - Kaiser Permanente (N California) is one of the more positive examples although there is no single or best model. ‘Population Health Systems’ would be a better title. 

See Leading across the health and care system just published by the King’s Fund.

Making STPs work for your communities

Charlotte Moar (Programme Director – Transformation and Efficiency, NHS England) and Zephyn Trent (Assistant Director, Strategic Finance, NHS Improvement) and Matthew Style (Director of Strategic Finance, NHS England).

NHS England

Background context: we’re all living longer. 40% of NHS expenditure is on over 65s. 70% of inpatient beds are used by long term conditions, 30% of the population account for 70% of total health and social care spend.

STPs are seen as the vehicle to address these issues. This year NHS England will:

  • appoint STP area leaders
  • form the first accountable care systems (announced in June 2017)
  • publish metrics at STP level.

The eight initial accountable care systems announced in June 2017 are:

  • Frimley Health including Slough, Surrey Heath and Aldershot
  • South Yorkshire & Bassetlaw, covering Barnsley, Bassetlew, Doncaster, Rotherham, and Sheffield
  • Nottinghamshire, with an early focus on Greater Nottingham and Rushcliffe
  • Blackpool & Fylde Coast with the potential to spread to other parts of the Lancashire and South Cumbria at a later stage
  • Dorset
  • Luton, with Milton Keynes and Bedfordshire
  • Berkshire West, covering Reading, Newbury and Wokingham
  • Buckinghamshire.

There is also a new devolution agreement in Surrey Heartlands, similar to the existing one in Greater Manchester. This agreement will bring together the NHS locally with Surrey County Council to integrate health and social care services and give local leaders and clinicians more control over services and funding.

Accountable care systems are STPs, or groups of STPs which can demonstrate the following (detail taken from NHS England website)

  • Agree an accountable performance contract with NHS England and NHS Improvement that can credibly commit to make faster improvements in the key deliverables set out in this Plan for 2017/18 and 2018/19.
  • Together manage funding for their defined population, committing to shared performance goals and a financial system ‘control total’ across CCGs and providers. Thereby moving beyond ‘click of the turnstile’ tariff payments where appropriate, more assertively moderating demand growth, deploying their shared workforce and facilities, and effectively abolishing the annual transactional contractual purchaser/provider negotiations within their area.
  • Create an effective collective decision making and governance structure, aligning the ongoing and continuing individual statutory accountabilities of their constituent bodies.
  • Demonstrate how their provider organisations will operate on a horizontally integrated basis, whether virtually or through actual mergers, for example, having ‘one hospital on several sites’ through clinically networked service delivery.
  • Demonstrate how they will simultaneously also operate as a vertically integrated care system, partnering with local GP practices formed into clinical hubs serving 30,000-50,000 populations. In every case this will also mean a new relationship with local community and mental health providers as well as health and mental health providers and social services.
  • Deploy (or partner with third party experts to access) rigorous and validated population health management capabilities that improve prevention, enhance patient activation and supported self- management for long term conditions, manage avoidable demand, and reduce unwarranted variation in line with the RightCare programme.
  • Establish clear mechanisms by which residents within the ACS’ defined local population will still be able to exercise patient choice over where they are treated for elective care, and increasingly using their personal health budgets where these are coming into operation. To support patient choice, payment is made to the third-party provider from the ACS’ budget.

In exchange, ACSs will be offered by regulators:

  • Delegated decision rights in respect of commissioning of primary care and specialised services.
  • Devolved transformation funding package from 2018, potentially bundling together national funding for GPFV, mental health and cancer.
  • A single ‘one stop shop’ regulatory relationship with NHS England and NHS Improvement in the form of streamlined oversight arrangements, including an integrated performance framework for NHS providers and commissioners.
  • Ability to redeploy attributable staff and related funding from NHS regulators to support the work of the ACS.
As we move towards ACS, it is important to strengthen STP governance so that local areas can: work within existing legal frameworks to support STP leaders and ensure STPs make the best decisions.

NHS Improvement

Commenced with a summary of the 2016/17 position for NHS provider organisations.  

  • £791m deficit, (£211m worse than plan, £1.7bn better than previous year).
  • 228/238 providers signed up to control totals.
  • £3.1 bn of CIPs delivered of which 798m is non-recurrent.
  • Sanctions (fines) levied on providers by commissioners reduced to £99m, £209m less than previous year.
  • Agency staff costs reduced by £700m compared with 2015/16. Overall spend £2.9bn.
  • BUT 21% increase in delayed discharges/transfers of care.

Finance has an important role to play in successful partnerships.

  • Clarity of purpose.
  • Parity between partners.
  • Transparency.
  • Engagement across organisations and partners.
  • Dependency – their success will be your success.
  • Stamina – no quick fix.
  • Resources to support the partnership.
  • Capacity and capability to work through the issues.
  • Clear arrangements in place which are legal.

Matthew Style

Returned to work with the health sector after a career in central government at HM Treasury and most recently Department of Communities and Local Government. Emphasised the importance of understanding each other’s world and finding ways of working together – LG and NHS finance teams need to reach out to each other.


Don’t ask for permission. Legal framework is already in place so local systems are encouraged to look at what they can already do.
Blurring the boundaries – the future role of commissioning

Ben Collins, Project Director, King’s Fund.

NHS Internal market (tariff and purchase/provider split) had been effective in a particular set of circumstances but that time is close to ending. Drivers for this change include austerity, growing population, plus high profile problems caused by market failures eg Uniting Health.

Case study on Canterbury in New Zealand where co-operative working has led to a range of improvements.

Transaction costs of market now massively outweigh the benefits so we need to rethink.

Mark Britnall – KMPG (former NHS CEO).

Focus on Israel which has a very cost effective health system (Clalit) mainly due to aligned digital systems creating good knowledge on the proportion of population likely to have problems.

His key points for achievement of accountable care:

  • Accountable care takes will, skill, time and persistence.
  • Structures and care process redesign will help, but workforce development is crucial.
  • ACOs will collapse under own weight unless smart IT supports them.
  • Population health is all about being wise before the event – not after it.  Segmentation and stratification is key.
  • You have to give providers a way out before you give them a way in (!)

Accountable Care System Workshop

Nigel Foster (DOF East Berkshire CCGs), Sam Burrows (Director of Strategy Berkshire West ACS).

Helpful and clear explanation of what’s going on in this area. Two different, but neighbouring ACS: West Berkshire and Frimley Health. 

Both areas explained that this development is very much part of an ongoing journey, with no major organisational change anticipated in the short term. However, there are many more subtle changes which will lead to closer working, for example Nigel Foster about to become joint DOF of acute trust and CCGs. Stressed importance of strong relationships and sensible geography in order to take things forward.

As ACS exemplars, they had received a small amount of additional funding to help establish the organisations.  However, they hadn’t yet agreed whether ACS would receive additional ‘people’ resources from NHSE/I or how new arrangements for joint regulation would work.

Bob Alexander, Executive Director of Resources/Deputy Chief Executive NHS Improvement

The NHS is good at identifying the opportunity for savings through initiatives such as Carter, but this opportunity needs to turn into plans and most importantly to delivery. Initiatives such as GIRFT look promising but we need the right numbers in order to track it. This might involve further central performance management.

The NHS is currently using short term solutions to underpin the fire break – even I think it is old school! This may have reinforced the dependency culture, which we need to guard against and causes problems with perceptions of regulatory style. Longer term we have to find a way of making sure accountabilities at system level work appropriately. Will need some help from the frontline with ideas for how this might work and feel.

Finance Directors often have a key role in ensuring the delivery of quality – would be good to see a director of finance and quality role.

Distributed leadership - we need to feel accountable for partners. Will need to blur the commissioner/provider split. What is important is getting autonomy back for system – early FTs had autonomy which has largely disappeared recently. Need some thinking of what earned autonomy means when there are few £s around. Regulation of such a closed market could and should be different – the current setup is too complicated.

Bob’s comment on ACO – we don't fully know what it is yet. Might look like a successful foundation trust with ‘bolt on’?

Greater Manchester Story - Steve Wilson

Devolution provides the impetus to move forward, even though 95% of what is needed could be delivered without it. It’s about using the totality of public services to drive economic development and (mutually reinforcing) improvements in health and well-being. Core principles remain the same. About right level of decision making, will still be national/regional/local bits.

Mayor has no formal power, but Andy Burnham’s previous experience and democratic mandate should have an impact. Easy to focus too much, though, on £6bn health as opposed to whole £22bn public spend.

There is strategic commissioning plus tactical elements by subsidiary bodies. As an Accountable Care System (ACS) we will have ten forms of ACO, responsible for ‘from the place’ health services. There will be capitated outcomes based contracts between strategic body and place-based contacts (alliance/single provider).

Recent tendering process led to ‘preferred provider’ for Manchester Health and Care which commissions. Salford, for example, is different… 

Transformation fund of £450m makes a big difference, allowing for a signed investment agreement in each locality. 

Capital: talking to LAs about how to use their PWLB access to get capital cheaper than is possible through the NHS.

Caroline Gullery (Canterbury, New Zealand) 

My job is to tell you that you are all on the right track. District Health Boards broke funder-provider split in 2001-02 in New Zealand, but we forgot to change any behaviours. Pre-2007 Canterbury was probably worst deliverer in the country, 30% off targets. Now bed days have declined despite population growth. 

‘What’s best for Agnes?’ (a typical user) is our motto, which we’d use for example to look at our falls prevention… key target is to reduce >75 long stays in hospital

Lots of data suggesting shifts to community, preventative etc. has made financial sense. Have cracked ensuring information is available to all across the system.

How do you go on this journey? We don’t do pilots, we just do. Built ‘coalition for change’, consultatively. We have an Alliance model – good faith contracting – everyone loses or everyone gains. The approach works ‘irrespective of structures’.

Jo Buckle – Health Actuary  

Block contracts are wrongly called ‘capitation’ in NHS. ACS suggests risk-based cover for whole population. Saying ‘you should made decisions sub-optimal for organisation if it is to benefit of whole population’ won’t be sufficient.

Need to understand the financial risks, define the population, define the services, and set the baseline.

Understanding risks: need to address in contract terms – may impact CCGs, councils, both… Be explicit in contract. NHS and council have different sets of risks, indicating one problem. Economic and political risks. Even if you can’t quantify them, can you know them?

Defining the population: in eg USA models, I can count the population to be dealt with by how many are enrolled, not so simple here... One example had three different counts in same tender document.

Defining the services: from population health perspective rarely defined correctly – tends to just set out what is provided now. We don’t have benefits process… narrow definition is OK, but say capitating >65 pop won’t work. And we often lack data on services, we need it at code level.

Risk adjustment: underlying health need of population affects propensity to require health services – not the same as supply side ‘what is offered?’ Unit costs risk/volatility risk/utilisation risk/population mix change risk... comes to lot of risk. A proper risk adjustment would take that and pass to CCG – eg increase in percent over 65. Then can’t afford the same things to be offered/so pick up points in population… same thing as ‘predictive modelling’. 

We don’t have integrated care records (even within NHS, let alone social care though that would be nice) and consequently don’t have population risk adjustor, then means can’t calculate savings as can’t distinguish risk adjustment pop forecast need for actual costs.

Set the baseline: to calculate savings you must have numbers, riskiness of population plus record of how money spent. In absence of that, savings are made up. You may not be able to get more money (if government hasn’t given) but may need to adjust service offer… Savings need to be calculated over a long timeframe.

True capitation contracts will have ‘risk corridors’

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