HFMA summer conference: more work needed on contracting

The fund’s chief economist told the conference in London, which was also being broadcast virtually, that the Health and Care Act made some specific changes to the NHS finance framework, particularly around procurement, the payment system and capital limits. But it also would have a wider impact on the climate in which NHS finance operates. 

However, he said that suggesting the act had brought an end to the purchaser-provider split was not strictly accurate. ‘We keep talking as though we are abolishing the purchaser-provider split,’ he said. ‘We are abolishing the statutory purchaser-provider split, but you will clearly still get purchaser-provider dynamics in the new world.’

Mr Anandaciva (pictured) described this as a ‘contractual’ purchaser-provider split. However, he said that the act and related guidance was largely silent on contracting. Other countries making progress with integrated care, such as the United States and parts of Spain and Germany, had tried to support integrated care through contractual models rather than structural changes.

‘Five to 10 years ago, I saw a lot more work being done on things like capitated outcome contracts and longer-form contracts,’ he said, acknowledging that not all of this went well. ‘But the development of things like primary and acute care systems were supported by huge amounts of thinking about contracts.

‘I just don’t see that same thinking happening,’ he added. ‘I think we will reach a point in the next year or two where the structures have ossified and people know broadly what they are doing, and it will be time to bite the bullet and ask if we are going to start letting five-year population health management contracts or not. Do we have the information and knowledge to do that?’

Mr Anandaciva described contracting as one of five building blocks that make up the NHS financial architecture. The others are: allocations; payment; regulation; and financial management. The act allows for the introduction of a new national payment system, although he said the wording was unhelpful.

‘It really does give you this idea of a national tariff and I think we are moving about as far away from a national payment system as possible,’ he told delegates. The reality would be much more plural forms of payment, with organisations paid for different services on block contract, fee for service, prospective case-based payments and the more recently introduced aligned payment and incentive approach.

On allocations, he said there was a clear intention to allocate as much funding to systems as possible – with proposals around specialised commissioning showing just how high the ambition is in this area. Mr Anandaciva said he was concerned that, as central funding pots are replaced with local allocations, local finance leaders would be given a ‘lot of accountability without necessarily having a lot of power’.

There would also be changes in the regulatory approach with the centre focusing more on system oversight and system leaders broadly managing everything beneath system level.

Mr Anandaciva identified four core purposes for integrated care systems. These included: improving population health outcomes; tackling inequalities; enhancing productivity and value for money; and helping the NHS support broader social and economic development. However, he said it would be a mistake to think that the finance role was just about enhancing productivity.

All the international evidence suggested finance could be a major driver of change in improving population health and tackling health inequalities. ‘And people feel in some of those systems, particularly around tackling health inequalities, that financial levers aren’t in the right place.’

Mr Anandaciva pointed out that there was still uncertainty about what collaboration could deliver. The government’s own impact assessment of the act had highlighted ‘mixed evidence’ on whether collaboration can provide cost savings or definitive health improvements. He called for recognition that the changes were about improving value, not saving money.