This is HSJ’s fortnightly briefing covering quality, performance and finances in the mental health sector. Feedback and comments are welcome, so please feel free to email me in confidence.

Set out in black and white

So Lord Carter’s long awaited efficiency review of mental health and community trusts has finally made it out of the door, with the headline figure being that the £17bn-turnover sectors can make more than £1bn of annual savings by 2020-21.

This is a lot lower than the £5bn a year of efficiencies Lord Carter flagged up in the £52bn acute sector – but still a massive target to aim for.

The new review also says further work is needed to include outcomes and activity in mental health contracts.

In late 2016 NHS England and NHS Improvement told commissioners and providers to move away from “unaccountable” block contracts and link a proportion of payments to outcomes and new waiting time targets.

This was set out in black and white in the national tariff proposals for 2017-19, saying commissioners and providers must move to either capitation or episode of care contracts.

The outcome based contracting conundrum

So it is interesting to read in Lord Carter’s report that only four per cent of mental health providers use episodic payment approaches, with a further two per cent using capitated approaches. (A capitated contract differs from the traditional block contract by having specific outcome requirements for payment).

It would seem, coming towards the end of quarter one of 2018-19, that very few trusts and clinical commissioning groups have moved to new payment approaches. And with nine and-a-bit-months left to go, it does not seem unfair to suggest they are unlikely to do so before the end of the tariff period.

At the time national mental health clinical director Professor Tim Kendall said moving to the new contracts was “eminently manageable” and would free up cash to implement the Mental Health Forward View.

So the outcome based contracting conundrum is why has there not been more of a shift?

Get out of jail free

The tariff did offer a get-out-of-jail-free card to clinical commissioning groups and providers, when it said they could develop an “alternative payment approach consistent with the rules for local pricing and existing policy to move away from poorly specified and evidenced contracts”.

This seems to have allowed everyone to carry on with the status quo – although there are a few notable exceptions such as Oxfordshire which has had an outcomes based contract for adult mental health services since 2015.

What is clear is that the current block contracting of mental health services does not work for the sector. It leaves mental health trusts extremely vulnerable when their acute neighbours are on payment by result tariffs which can suck income out of the system when demand spirals.

The Mental Health Forward View was very clear in recommending that “there must be no more unaccountable block contracts for mental health”.

But some leaders fear that moving to outcomes based contracts will be nearly impossible because of the difficulty in choosing which outcomes to measure.

This might be why NHS England and NHS Improvement have quietly let CCGs and trusts continue with the status quo, despite the early optimism.

But a long term solution to funding mental health has to be found.