In year changes
There are a number of immediate improvements which could be made to the administration of control totals and STF this year.
- A realistic A&E trajectory for the performance element of the STF
Providers had agreed a local trajectory with NHS Improvement, but instead are being judged for the trajectory outlined in the Next Steps on the Five Year Forward View* for the release of the performance element of the STF.
- Not double penalising providers who do not sign up to a control total or who miss their targets
Too many policy and funding decisions are now affected by whether a provider has signed up to a control total and met their targets. For example, trusts which had not been able to sign up to a control total at the start of the financial year were unable to access capital funding to improve emergency department streaming. Providers in the most financially challenging positions should not be penalised twice.
- Flexibility in assessment over whether a provider has met their control total
As we have seen with the destabilising events of quarter 1, such as the cyber attack and the terrorist attacks, trusts are not always in control of variances in their financial plan. A more proportionate and flexible approach must be taken if a trust ends up missing its control total for a reason clearly outside their control.
- Adjustments to the incentive and bonus scheme
The incentive and bonus schemes are not currently delivering for providers. They exacerbate the financial gap between trusts in the system, and do little to improve the underlying financial challenges of the sector. National system leaders might wish to look at options which reduce the marginal gains to below a pound for pound gain, or even remove this entirely. Any unallocated element of the STF needs to remain in the sector if it is to continue to improve its financial position.
Given the current strategic context of rising cost and demand, set against historic low levels of funding increases and a growing financial gap, the withdrawal of the £1.8bn after 2018/19 would simply put providers back to square one, putting the sector on a trajectory towards a £2bn plus deficit again. The £1.8bn of sustainability funding has now become a key part of provider financing. We therefore need a clear commitment for it to be maintained beyond 2018/19.
However, as highlighted by the variety of views expressed in our survey and roundtable, there is no immediate obvious solution to replace the current direct allocation matched to a control total. There are clearly challenges with the current framework but also well-recognised challenges with the alternative of mainstreaming in to CCG allocations or the national tariff.
As NHS Improvement, NHS England, the Department of Health and the Treasury consider policy options in the future, the following principles need to be considered:
- Any model needs to maximise benefit to the provider sector
Given tight financial squeeze, the £1.8bn is vital to the sustainability of the provider sector. We have to find a way to minimise the inevitable leakage away from providers which might occur if funding is mainstreamed through CCG allocations and the national tariff.
- Enabling local autonomy and ownership
The erosion of provider autonomy through the current system cannot continue indefinitely. Any future allocation/distribution should allow trusts to work toward greater autonomy, particularly if they are high performing. This will be the only way to facilitate and support providers being active participants in their STP.
- Supporting the system not just the institution
For some local health economies, individual control totals are seen as a barrier to system working. We need to develop a framework that strengthens the growing focus on STPs as well as the performance of individual institutions. What is right for one organisation might not be right for a system, and the financial framework needs to enable this balance.
- Consultation with the sector
Control totals were introduced without proper, formal or frontline consultation or engagement. It is key that any longer-term system is designed in consultation with the provider sector, rather than imposed on it. This will be the only way to build the required credibility and transparency.