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

There’s been no official word yet on the outcome of the contracting round, but I’m hearing that around two-thirds of contracts were signed off by the 23 December deadline.

Apparently there’s then a group of provider-commissioner pairs which are close to agreeing a deal, with ongoing input from regional directors, while a smaller group is heading towards inevitable arbitration.

The proportion of contracts signed is roughly the same at the comparable stage in the schedule last year – though in previous years that was around March. But with the much tighter timescales and the requirement to agree contracts for both 2017-18 and 2018-19, this is better than many expected.

So everything’s fine then? Well, not necessarily.  

As has happened with the sustainability and transformation plan, the problem may just have been kicked further down the road.

With the STPs, the whole idea was to draw up genuine plans to reconfigure and reshape services, and start some of those difficult discussions about closing services and reducing staff headcounts.

But as the media narrative quickly turned STPs into ‘Secret Tory Plans’, the need to publish the work began to take priority over substance.  

With a few notable exceptions, this has largely resulted in five-year plans which state the bleedin’ obvious or – as one local leader put it – are full of “motherhood and apple pie”.

Controversial ideas have been kept in the cupboard a little longer, saved for another day.

The same mindset is likely to have been a factor in the contracting round – with the need to meet the tight timescale and avoid the wrath of the regulator taking precedence over genuine planning and agreement.

Providers will also have realised the increased pressures on CCGs – with their own efficiency requirements ramped up – while there has also been some evidence of greater collaboration and risk sharing between the two sides.

Ultimately though, the very limited funding envelope means many providers will face mammoth and unachievable cost improvement plans next year.

But that’s a problem for another day.

One-year deal

Apparently some areas have also been allowed to agree one-year contracts, with an indicative value for 2018-19. This is likely to include some of the vanguard areas preparing to launch multi-specialty community providers in April 2018.

Allocation wrangling

Contracting headaches were exacerbated in some areas by late changes to CCG allocations, which meant some local commissioners saw their planned income reduce by up to £10m.  

NHS England insisted the reductions were neutralised by the new payment tariff, as many of the prices paid would also reduce. But CCGs weren’t buying this.

Commissioners in the North were particularly aggrieved with a combined reduction of £75, especially as CCGs in London will get an extra £24m between them.

NHS England has agreed to soften the blow by limiting the impact to 0.5 per cent of allocations – but this will still be difficult for some to swallow.

Further punishment

Another week, and another NHS Improvement scheme to persuade trusts that they really, really, need to hit their financial target for 2016-17.

Last month, the regulator confirmed that trusts which better their control total will receive a revenue bonus payment, and now it wants to give those trusts “preferential access” to capital funding. (In case you missed it before Christmas, those capital funds are set to be even more depleted than expected).

This of course means struggling trusts face further punishment – not only missing out on sustainability and transformation funding, but also on potential investments on their estate.

As one HSJ reader pointed out, the policy risks “penalising the populations in struggling areas to benefit for those in the better provided areas”.  

Jeremy Hunt told BBC Radio 4’s Today programme that the NHS needs to replicate the excellent care delivered in some areas right across the country.

So might it not be a better idea to offer greater resources and preferential treatment to the struggling trusts, perhaps with the condition that any extra money can only be invested in out-of-hospital care and transformation programmes?