Your essential update on health for the week

HSJ Catch Up

This weekly email gives HSJ subscribers a vital update on the biggest stories from the last week in health. If you have been out of the office or otherwise just too busy to keep up, HSJ Catch Up will ensure you are still in the know.

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May to form government in hung parliament

At the time of writing, Theresa May has just announced she will form a government – despite the Conservative Party losing. It is the largest party in the House of Commons with 318 seats and will work with the DUP (10 seats), but not establish a formal coalition.

Junior health ministers David Mowat and Nicola Blackwood were among the government frontbenchers to lose their seats.

Health secretary Jermey Hunt retained his seat, but but as yet we do not know who will be in Ms May’s new cabinet.

The prime minister said Brexit negotiations will start as planned on 19 June.

NHS leaders ‘think the unthinkable’

Closing wards and services, blocking choice of private providers, systematically extending waiting times, and stopping some treatments are all being considered under a national programme targeted at the health economies with the highest overspends.

The controversial measures are currently being discussed privately by national NHS England and NHS Improvement officials, with senior local NHS leaders, as part of the new “capped expenditure process”. The principle of the process, introduced this year, is to “cap” NHS spending in the targeted areas so that they meet control total budgets in 2017-18.

NHS leaders from areas covered by the process have been told to examine “difficult decisions” and “think the unthinkable”, including modelling changes which are normally avoided as they are too unpleasant, unpopular or controversial. HSJ has spoken to senior officials in most of the areas.

No proposals have yet been formally approved or rejected, sources said, but ideas under consideration across several areas include:

  • Limiting the number of operations carried out by non-NHS providers so the funding stays within the NHS.
  • Systematically drawing out waiting times for planned care, including explicit consideration of breaching NHS constitution standards.
  • Stopping NHS funding for some treatments, including extending limits on in vitro fertilisation, adding to lists of “low value” treatments, and seeking to delay or avoid funding some treatments newly approved by National Institute for Health and Clinical Excellence.
  • Closing wards and theatres and reducing staffing, while seeking to maintain enough emergency care capacity to deal with winter pressures.
  • Closing or downgrading services, with some considering changes to flagship departments like emergency and maternity.
  • Selling estate and other “property related transactions”.
  • Stopping prescriptions for some items, as suggested by NHS Clinical Commissioners earlier this year.

The end of PbR?

The national payment tariff used by the NHS has long been criticised for its perverse incentives and tendency to discourage collaboration between local organisations.

But now there seems to be a significant shift away from this system, with trusts and their commissioners increasingly agreeing to some form of block or risk share contract.

In some cases, this involves a maximum cap on the annual value of the contract, while in others it seems to mean marginal rates being applied above a certain activity level.

Either way, it’s clear that many providers are now willing to contemplate a more joined up approach, rather than maxing out their activity to hit their own growth plan.

Analysis by HSJ suggests one in four acute providers are now mostly contracted through some form of block payment or risk share by their main commissioner, up from one in six trusts last year.

It suggests a 28 per cent increase in the cash value of block contracts in 2017-18 compared to 2016-17, with the shift driven by 10 trusts that have made a major move away from the national tariff in 2017-18.

The private sector is not best pleased about all this – block contracts effectively freeze them out by making commissioners unable to buy services from alternative providers – and they may well be right to warn of growing waiting lists for elective care.

They also point to communications issued by national leaders in March 2016, which said block contracts should not generally be used for electives.

But things have moved on quite a bit since then, with Simon Stevens saying he’s “entirely open” to health economies coming off tariff.

Ian Dalton returns

As one of the biggest teaching trusts in the country, with a turnover of more than £1bn, Imperial College Healthcare Trust needs someone with serious leadership credentials to be its next chief executive.

Tracey Batten, who has led Imperial since April 2014, announced in January she would be returning to Australia this year to be near her family.

Ian Dalton is to return to the NHS to run the London trust, after three years as president of global government and health for BT Global Services.

Mr Dalton was chief operating officer and deputy chief executive of the NHS Commissioning Board before it became NHS England. Before that he was managing director of provider development at the Department of Health, where he was responsible for the foundation trust pipeline. He has also previously worked as chief executive of NHS North of England and of two hospital trusts.

Sustainability’s big winners

HSJ finance correspondent Lawrence Dunhill has carried out a detailed and illuminating analysis, laying bare the impact of the £1.8bn “sustainability” element of the “sustainability and transformation fund” during 2017-18. The NHS financial regime was turned on its head in 2017-18 in a Treasury driven bid to ensure the provider side deficit reduced and the system balanced overall.

Huge sums were effectively held back in the £1.8bn fund and £800m withheld in clinical commissioning group budgets. The £1.8bn was dished out in a fairly ad hoc and translucent fashion. Lawrence’s analysis reveals the trusts which won and lost the most; and the areas of the country which were winners and losers too. So much for an evidence and fairness based allocation formula.

Examining the distribution of the STF shows that while, as intended, it bumped more trusts into surplus, it also apparently had the effect of rewarding trusts which were already in relatively good financial health (not necessarily the aim), and may have rewarded those with better care quality: contentious since some would prefer to help those in the most trouble provide equitable high quality healthcare.