HFMA: financial framework must support system working

In its response to the Hewitt inquiry into the oversight and governance of ICSs, the association said that integrated care board goals were long term and these needed to be supported by a financial system that looked beyond the current year. ‘The short-term nature of financial flows makes long-term investment challenging,’ it said.

The association also highlighted difficulties created by funds being held back from ICB allocations and released during the year, arguing that this did not support system working. ‘Recruitment and establishing new models take time,’ it said. ‘In-year revenue allocations do not provide the funding certainty needed to make long-term plans with confidence. When funding is unclear, individual NHS bodies will focus on internal need rather than working with partners.’

The capital regime also creates difficulties – particularly the lack of flexibility in using capital allocations across different financial years, which can mean funds aren’t always spent on priorities. ‘The capital departmental expenditure limit remains an annual hard limit on the amount of capital expenditure the Department of Health and Social Care group can incur,’ it said. ‘This results in perverse behaviours at the year-end as supply chain and other issues outweigh other considerations when money must be spent or lost.’

There are already moves towards a longer-term financial system, with ICB revenue allocations issued for two years covering 2023/24 and 2024/25 alongside core capital allocations. The recently published payment system proposals also cover a two-year period.

The ICS review is being led by former Labour health secretary Patricia Hewitt, now chair of the Norfolk and Waveney Integrated Care Board. Commissioned by health and social care secretary Steve Barclay and chancellor Jeremy Hunt, the review is considering how the oversight and governance of systems can best enable them to succeed, balancing greater autonomy and robust accountability.

In particular, it is looking at the options for reducing the number of national targets that ICBs should have to deliver and how the role the Care Quality Commission can play in system oversight.

‘Integrated care systems and boards provide a great opportunity to switch the focus to population health and to really start to address health inequalities,’ said Emma Knowles, director of policy and communications at the HFMA. ‘But they also need the right financial framework in place to enable them to plan for the long-term. They need to be given time to deliver and the tools to be able to look beyond the horizon of the current year.’

Innovation will be key to transforming services. But the association warned that this could be limited by financial constraints. Double funding could be needed during pilot and transition phases, and without funds to enable this, there would be a ceiling on what can be achieved. The HFMA’s recent NHS financial temperature check survey revealed finance director concerns that programmes tackling health inequalities and targeting prevention and population health management were most at risk from current financial pressures.

The association also highlighted current VAT rules as a barrier to joint working between the NHS and local authorities. And it called for central bodies to make it easier for local organisations to share data – with a national approach to clarifying the legal and governance arrangements more efficient than taking local approaches across the whole country.