Analysis: Distressed health economies' leaders doubt books will balance

HSJ interviewed bosses of organisations in seven of 11 areas which were earmarked for extra help by Monitor, NHS England and the NHS Trust Development Authority in February. The programme aimed to bring together commissioners and providers across each area to draw up five year plans to overhaul their unsustainable and sometimes poor quality services. They were given substantial nationally funded management consultancy support.

• ‘Challenged’ areas recovery plans demand integration and reconfiguration

HSJ can reveal that, for some, while the “challenged health economies” process has accelerated proposals for new forms of integrated services, it has also confirmed the need for centralisation and closure of some hospital services. Meanwhile, three areas told HSJ they had not been able to confidently resolve how to close their funding gap.

Cumbria Clinical Commissioning Group chair Hugh Reeve said his area would only get “two-thirds or three-quarters of the way” to balancing, under its plans. He said the county’s NHS had a “structural deficit”, which it was “struggling” to work out how to close, as a result of running “small hospitals across a very wide geographical area”.

St George’s Healthcare Trust chief executive Miles Scott was similarly doubtful. “As it stands, plans are unlikely to deliver the financial targets of all the organisations when you add them all together, and therefore something is going to have to give,” he told HSJ.

The leader of a CCG in a third challenged health economy, who did not want to be identified, said that while their plans would “significantly address” their challenges, they would not deliver all the savings needed.

“My honest appraisal is that [our plans] will be affordable if… our allocation is brought in line with our target allocation,” he said. If this did not happen, services would improve but “remain unaffordable”.

Leaders speaking to HSJ set out major national financial and policy changes that could help their area succeed. Leaders in Cumbria, Eastern Cheshire, Leicestershire and Devon all called for changes to payment and incentive rules to reward shared goals, such as better treatment in the community.

Eastern Cheshire CCG chief officer Jerry Hawker said removing “perverse incentives”, like rewarding increased hospital activity, was needed to “completely break down… traditional provider silo mentality thinking”.

Meanwhile, Tower Hamlets CCG chair Sam Everington said funding and payment systems should take into account more local cost factors, such as north east London’s high population turnover and increased “pathological age” because of illness.

“A 65 year old pathologically in Tower Hamlets is more like a 75 year old… in a more affluent area,” he said.

Nene CCG chief executive Ben Gowland’s call was for the national oversight bodies to work together and in the interests of whole health economies rather than to examine, or support, single bodies. He said the scale of service changes needed in his patch meant financial benefits would not “fall uniformly evenly at any point in time on all the organisations”. Organisations might then be required to do things that were not in their immediate best interests, but would help the health economy as a whole, he said.

He said it would be “beneficial” if NHS England, Monitor and the TDA continued to work together as they had in the challenged health economies programme. Last month’s NHS Five Year Forward View said they planned to do so.

The challenged economies are: Devon, south west London, north east London, Cumbria, eastern Cheshire, Staffordshire, mid Essex, Cambridge and Peterborough, Leicestershire, Northamptonshire and East Sussex.