HSJ’s weekly email briefing on NHS finances, savings, and efforts to get the health service back in the black

One day left to go

By the time this week’s Following the Money reaches your inbox, the NHS will have less than one working day left to get 2016-17 contracts agreed. Any clinical commissioning groups and hospitals that haven’t reached agreement by Monday lunchtime will be going into arbitration.

I’m going to go out on a limb and suggest that (unless that deadline is subject to last-minute revision) the arbitrators look like they’re going to be pretty busy. Certainly, negotiations are going to go up to the wire.

Speaking to HSJ on Wednesday afternoon, NHS Improvement finance supremo Bob Alexander called on commissioners and providers to have a “really strong push” ahead of arbitration day to “either finalise definitively or get closer to agreement”. This sounds like a pretty restrained level of ambition.

That said, given the gulf that existed between commissioner and provider negotiating positions at the start of this month (when few contracts were signed, and some offers were still non-existent or “unrealistic”), it represents progress.

Mr Alexander, NHS Improvement’s executive director of resources, did confirm that more deals had been agreed since the central bodies began chivvying people along earlier this month. But there still wasn’t a sufficient number of contracts formally agreed.

What he says correlates with what HSJ has heard elsewhere. Umbrella group NHS Providers said its members had reported some progress, but this was not universal and many trusts were saying that more progress was needed locally.

(Some clinical commissioning groups, meanwhile, have reported that they were instructed at the last minute to add 3 per cent elective growth into their contracts for 2016-17.)

HSJ’s readers were (characteristically) more blunt, with one commenting (anonymously, of course): “Strong push? Bob needs a bloody miracle!”

The signs are that in many areas this year there just isn’t enough money or enough time to get contracts nailed down before arbitration ensues. However contracts do ultimately get resolved, there will be some repercussions to deal with shortly afterwards: The first question is, what has to give if more money is needed to get acute contracts nailed down? The second is whether commissioners and providers can get past the animosity generated in this year’s contracting round to reach agreement on sustainability and transformation plans (due about two months from now).

Serenity, tranquillity, peace

Meanwhile, a heat map analysis by HSJ finance correspondent Lawrence Dunhill has provided a useful set of clues as to where that STP planning process is going to be most tricky.

Using financial performance figures for the first nine months of 2015-16, Lawrence has calculated the combined bottom line performance as a proportion of allocations in each of England’s 44 “STP footprints”.

Given that this was 2015-16, it’s obviously shades of red across the country, but even within this there is huge variation in the scale of challenge. Interestingly, the widest variation between areas is constrained within the relatively narrow geography of the shire counties in the south of England.

Cambridgeshire and Peterborough recorded the worst financial performance in the country – with a combined deficit of 13 per cent. Not far to the west of that beleaguered health economy, however, Buckinghamshire, Oxfordshire, Berkshire West, and Gloucestershire recorded the best financial performances, with Gloucestershire even managing a 1 per cent surplus.

It would be unwise to use last year’s financial performance as a straightforward guide to what’s going to happen in 2016-17 – there was a lot of non-recurrent stuff that happened last year, and there have been some big shifts in allocations since then.

But it’s definitely an important part of the picture. I can’t reproduce the map in this email, but it’s well worth visiting the HSJ website to have a look.