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Quarter of CCGs facing financial 'difficulty'

About a quarter of clinical commissioning groups are facing “real difficulty “ in “making ends meet” this financial year, the NHS England finance director has said.

Paul Baumann was speaking at the Commissioning conference in London on Wednesday.

He set out NHS England’s requirement for all CCGs that they make a surplus of at least 1 per cent, spend at least 2 per cent of their budget non-recurrently, and hold a contingency reserve of at least 0.5 per cent.

Mr Baumann said: “The latest [CCG] plans, submitted in May, show the CCG sector as a whole is broadly meeting these aspirations.

“But, more troublingly, about a quarter of CCGs are having real difficulty making ends meet, with little or no reserves to fall back on.

“In quite a number of cases [there is] also a significant underlying deficit to deal with. There’s plenty of risk in that context that a number of them will tip into the red, if ambitious [efficiency] and activity reduction plans aren’t delivered, or if [there are] problems in the wider health economy for which they are responsible.”

Mr Baumann said overcoming those problems would require a significant effort.

He also highlighted the importance of commissioners sharing risk.

He said: “Many organisations will conclude they need to arrange some form of risk sharing, alongside [their own] ability to forecast the icebergs as we go along.”

The former NHS London finance director said there was not “one right answer” to risk sharing arrangements.

He said: “We’re certainly not proposing to organise this centrally. We’ve seen approaches between [different] CCGs, and between NHS England and CCGs, ranging from relatively narrow collaboration on specific initiatives and full risk pooling for major services contracts.

“I would commend to you all of those things.”

Mr Baumann was pressed on the confusion and errors in 2013-14 commissioning allocations, particularly due to uncertainty about the split of specialised services responsibility between NHS England and CCGs.

In recent months CCGs have complained about being informed at short notice that their 2013-14 budgets are smaller than they had expected, or that they were responsible for services they had not anticipated. However, there have also been transfers in the opposite direction, from NHS England to CCGs.

Mr Baumann said these issues came about due to the complexity of disaggregating primary care trusts’ budgets. He added: “It is massively complex and frankly we’ve all been surprised [at] the difficulty of getting that tied down.

“The key point is it’s a shared problem. This has not been dumped on one side of the CCG/NHS England divide.”

He said commissioners had to “work as quickly as we can” to move funding to “the right place to match the expenditure as we think it’s going to fall”.

Mr Baumann said: “We’re making quick progress, though we’re still some way off.”

He said: “I’m absolutely committed to ensuring this doesn’t become a thing which ruins individual [organisations’] plans or leaves us with major difficulties in 2013-14, but it is a big challenge.

“The one reassuring thing is we haven’t suddenly invented whole set of patients or treatments [which would require additional funding in the NHS overall], so the totality of this ought to be self-financing.”

Readers' comments (18)

  • Given the lack of timely data to mange on due to the slow progress of CSU support being designed and implemented it is no surprise that CCGs are at risk.

    What is a surprise is the lack of urgency across the board in demanding the service most have been taxed for since April.

    I guess not knowing your position means failure will not be preceeded by any period of worry or depression.

    Frogs and rising water temperature come to mind.

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  • Roy Lilley

    Doesn't this tell us CCGs will have to be bigger - merge. That takes us from CCGs to CCTrusts. If that sounds like PCGs and PCTs, it's because it is!

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  • Great to see the £0.6 billion specialislised commissioning baseline being discussed on this stage with Paul. This has to this point felt like a well kept secret, leaving CCGs feeling explosed at a local level despite excellent joint working with the NCB/ LATs to move through this.

    Added to the fact that we are still not yet legally entitled as CCGs to seek patient identifiable data from providers on the very activity they are invoicing us for, this feels like contracting with one arm behind our backs at times.

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  • As auditors are currently still making a meal out of closing PCT budgets, a lot of London CCGs do not yet HAVE budgets, let alone know if these are adequate!

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  • I thought that the NHS Assembly voted to move towards correcting the distance from target issue for many CCGs - there was a workshop and a vote. Then December came and the announcement was "flat allocation" again. Why ask the Assembly to vote and then completely disregard the considered opinion? Are the quarter of CCGs facing financial difficulty the same as the PCTs who were most distant from target allocation when the pace of change was frozen (for now the 3rd year). Being distant from target, year on year, accumulates lack of investment in health economies and they become more efficient through necessity until there comes a point when they can't innovate any more and services become rationed - again through necessity. In the meantime, perhaps less efficient health economies who find themselves in the enviable position of being positively above target get allocation as the same percentage of their previous large allocation. I thought that the Assembly made the bold move to support reallocation appropriately in a Robin Hood style move towards fairer allocations. Who made the decision to disregard the Assembly clear and considered steer towards fairer allocation? NHSE did in a private Part 2 session at their Board Meeting in December. No agenda published, no minutes available. Hardly an open transparent process to decide how to allocate £65 billion of public healthcare resources. I hope that CCGs will be more insistant on a transparent process this year.

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  • Anon 12:26
    If NHS England ever allows CCGs to access patient identifiable data they won’t be allowed to use it in support of contract reconciliation (unless NHSE belatedly comes to it’s senses and allows the earth to start spinning again)

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  • @Anonymous 12:31 PM - London? That'll be PB's old patch then. Lucky he's in charge!

    On a separate point -- to the editor - is there any possibility that someone could get the Tippex out and correct the multitude of typos in the above!

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  • Bring Flory back, Baumann needs to go.

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  • Annon 2:35pm.

    Sadly I fully support. Confidence lost in the current NHS CB finance leader - no visibility to the wider service, and no visible grip on the issues in hand.

    Insiders may see something different? All I seem is a vacuum where there once was grip and control.

    The finance profession at a local level are losing all credibility in the eyes of our CCG clinical leaders and provider peers, so I am afraid to say he must go - for the sake of the profession. Where are HFMA on this??

    Spec comm baselines
    PropCo baselines
    [...] baselines
    patient identifiable data
    capital (lack of)
    [insert]

    Flory, or any number of the previous non-London SHA DoFs could answer the call. Sadly, the current "big brain" has lost his way seemingly.

    Where is the NCB Board on this?

    Must we repeat 2005/6? (and take NHS finance back 10 years in the process)

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  • Mr Baumann said "we're still some way off".

    Honest, if nothing else.

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  • Hands up if you are in a CCG and have a 1% surplus AND 2% headroom available to be deployed non-recurrently AND 0.5% contingency available to cover in year risk... and a "clear and credible plan"... Really, really.

    Keep your hands up if you are also investing the 70% non elective admissions tariff "gain" in admission avoidance schemes also.

    Keep them up if you have signed contracts with all key providers and in turn, they know how much of your population activity belongs to you and how much belongs to the carbuncle.

    Mythology?

    If we say it often enough, maybe it will become true.

    Btw, if you still have your hands up i can only assume THAT is where the "special baseline" is buried... Coz it ain't sitting with me and mine sorry. In fact, I think the bank of (NHS) England owes me

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  • it'll be ok, as I am assuming the CB are operating by their own rules. just a shame that the central % will be pencilled in to bail out the LAT budgets when they realise that in all the "confusion" CCGs have spent the money they were allocated in the first place ... well, wouldn't you have done? with the best of intentions of course.

    He said "The one reassuring thing is [suggestions to complete this sentence below.]"

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  • 5.38 agree with your list and add

    Gp IT budgets devolved to ccgs

    Inadequate csu, with different internal audit

    Conflict of interest with LAT system oversight role and direct commissioning

    Silly running cost constraints

    Silly procurement rules

    Confused transfer of provisions/balances and legacy issues

    No idea about recurrent allocation process and resolution to current sticking plaster (risk share)

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  • All goes back to 3 things:

    - A lack of independent assurance about the disagregation of PCT budgets, with many howlers made (You will witness a counterproductive disinvestment in primary care to 'recreate' the 3.5% cushion Bauman speaks about because it did not move from PCTs in proportion to primary care contracts budgets.)

    - A lack of formal version control between the information rules, and specialised definitions, and that original budget splitting to keep the money in line with the funding obligations.

    - A lack of clarity about transferring pre-commitments and funding obligations (major developments and primary care premises being 2 clear examples)

    As a result there are CCGs struggling and there are Area Teams with unachievable cost savings requirements.

    Sadly it wont be self financing as those parts of the system who are currently quiet, who have an overallocation - and may not recognise it - will plan and spend their money in line with their statutory mandate. So the 'unders' will evaporate and the 'overs' will be insoluble. Trouble ahead.

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  • 1:54 - agree last observation. During Q4 shadow period last year the theory of "self financing" to quote PB worked, as a theory. Since then, committments have been made against funding allocated (not a crime really) and in many cases legally binding expenditure contracts formalised.
    Therefore you are spot on - the over funded baselines will indeed have evaporated in the main, leaving the under funded baselines (LAT spec comm, plus other LAT and CCGs as appropriate) exposed. My neighbouring LAT is looking for £70m fundng baseline recovery last time I checked, and had signed contracts assuming full recovery! Others will be similar.
    At the end of May we were all asked to balance system budget planning assumptions through "potential transfers" in the ledger but this was NOT the same as agreement. We were explicit on this. It felt like a "Yes, minister" sketch to be honest as the exercise was simply so that the centre could be assured of balance against the £100bn national budget. No-one should be assured at all as we locally agreed side emails explicitly confirming that we did not agree!
    This will crash. Sorry.
    Today, no-one knows REALLY where they are financially, but when this has fully unwound - presumably end of the year when budgets become irrelevant and actuals become real and audited - individual organisations (and their CFOs, often inexperienced, for no direct fault of their own) will be exposed sadly.
    You could not make this up.

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  • The" potential transfer" in the ledger needs to be clearly answered isn't this hiding a 600m problem?
    With everyone colluding. What happened to openness and transparency. Oh that was yesterday's Francis report.

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  • unsurprising ...

    slight of hand and the masking of underlying deficits by the former PCTs

    the allocation fiasco with not one organisation seemingly having the intended money to buy the services for which it is responsible.

    No information for month one to show the true position

    oh and a loss of capacity and capability out of the system at just the time it is needed to steady the ship.

    an unholy mess and even a bit worse than i thought it was going to be.

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  • OK,

    Our plan has a 1% contingency. We have other reserves elsewhere. We have a 2% non-recurrent top slice. We have contracts agreed with our primary suppliers.

    Major risk is spec comm but we are already seeing reductions in some acute contracts to match.

    If you keep a calm head and don't work in Croydon then it isn't that bad.

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