CCGs secure block contracts worth £1.5bn

The deal, led by Liverpool and South Sefton clinical commissioning groups, is a significant shift away from the payment by result tariff, which pays providers based on their activity levels.

The six providers will receive 1 per cent real terms growth in 2017-18 compared to their outturn income in 2016-17. The contracts will then increase by 1 per cent in 2018-19. They are worth a combined total of £750m a year. The deal will only cover locally commissioned services, so will exclude specialised services income.

The providers are:

• Royal Liverpool and Broadgreen Hospitals Trust;
• Aintree Hospital Foundation Trust;
• Mersey Care FT;
• Alder Hey Children’s FT;
• Liverpool Heart and Chest Hospital FT; and
• The Walton Centre FT.

The move is aimed at sharing risk across the health economy to help encourage cooperation and service transformation.

The organisations sit within the North Mersey footprint, and are also seeking a joint financial “control total” as part of the sustainability and transformation plan process. This is despite the area feeding into the wider Cheshire and Merseyside STP.

Tom Jackson, chief finance officer at Liverpool CCG, told HSJ: “This will help enable us to share risk and start some proper conversations around sustainability and transforming services. It won’t be the final answer but it gives us some stability and a strong starting point.”

He said a significant rise in activity levels above the contract value would “trigger a conversation” between the partners, but these would follow the “principle of working together to address the issues jointly”.

There has been an increase in the use of block contracts for NHS elective care in recent years, but local health leaders are now increasingly looking to include non-elective care as well.

Concerns around this shift have been raised by the independent sector, as well as some legal experts who believe dropping the tariff system breaches the terms of the Health and Social Care Act 2012.

However, NHS England chief executive Simon Stevens said last autumn that national leaders are “entirely open” to local organisations agreeing non-tariff based contracts.

Katherine Sheerin, chief officer for Liverpool CCG, said: “This two year deal is testament to the strong collaboration that has developed across our complex and diverse health system, with providers and commissioners acting as one to address the challenges we will face in the years ahead.

“We have been able to secure growth in NHS provision for the next two years; providing financial stability for providers and a solid platform for delivering whole system transformation and long term sustainability, aligned to the Healthy Liverpool programme.”

Southport and Formby CCG and Knowsley CCG, which commission a small proportion of their services from the six providers, have also signed up with slightly different terms, HSJ understands.

Liverpool’s community services are subject to an ongoing procurement process, so are not included in the deal.