- The NHS financial architecture is undergoing significant transformation. Following the interim arrangements introduced in response to the COVID-19 pandemic, the pace of NHS England and NHS Improvement’s planned shifts towards both system working and payment system reform has accelerated.
- Providers are positive about the opportunity to improve health outcomes, reduce health inequalities and promote sustainability via system working. It is widely agreed that the allocation and distribution of funding at ICS level can support these aims.
- Well-established payment and contracting processes between providers and commissioners will change in 2021/22. The introduction of blended payment models across most secondary care services will be based on providers’ cost bases, rather than national tariff prices. This is a major departure, particularly for acute trusts whose contracts have previously been based on the payment-by-results framework.
- To maximise the chances of success, NHS England and NHS Improvement needs to:
- be absolutely transparent in its decision-making
- recognise different levels of ICS maturity by providing operating parameters that establish a clear direction of travel, while still allowing more mature systems to continue developing their own governance arrangements
- clarify how the financial framework will align with the regulatory regime to define and reward good performance, as well as supporting those in deficit to return to a sustainable financial path
- make sure the new financial framework works for providers of all type across acute, ambulance, community and mental health sectors
- listen to providers, ensuring that the pace of change and expectations placed on them are realistic given ongoing operational pressures.