Carrot or stick? What we can tell about the Government’s approach to the NHS

Government departments, and their corresponding non-departmental bodies, have an unenviable task in needing to be firm but fair in their policy and funding decisions. Nowhere is that truer than for the Department of Health and Social Care, NHS England (NHSE) and NHS Improvement (NHSI). Faced with a public service that has an unparalleled level of public support attached to it and a budget widely acknowledged to fall short of the demands facing it, some difficult decisions have had to be taken by NHSE and NHSI in particular in deciding how to approach NHS finances.

In the two bodies’ most recent planning document, ‘Refreshing NHS plans for 2018/19’, there’s clearly been some use of the carrot and the stick in setting out how NHS organisations will stick to the money allocated to them in the next financial year. The document seems to imply that if health economies fall into line with NHSE’s and NHSI’s ideas, there will be more money available to them (the carrot), but there is a consistent warning that if they don’t this money will be withheld, and further penalties could be imposed (the stick).

This carrot and stick approach is linked to the creation of another piece of NHS jargon. Many people in the health sphere are now familiar with Sustainability and Transformation Partnerships (STPs), and fewer will know that STPs were expected to develop into Accountable Care Systems (ACSs) and then Accountable Care Organisations (ACOs – the organisations feared to be an attempt to bring a US-style health system to the UK).

But before the general public or even most NHS staff had wrapped their head around this progression, the document confirms that ACSs have now been renamed Integrated Care Systems (ICSs) and all STPs will be expected to become ICSs. This means that the CCGs and Trusts which currently make up STPs will eventually translate into ICSs – and the eight areas which had already been lined up to become ACSs, along with the devolved systems in London and the Surrey Heartlands, will become ICSs once they’ve put the right plans in place.

While the sheer volume of abbreviations makes the process difficult to follow (and arguably is not conducive with explaining to the public as the end-users how the NHS will function), the real complexity will come in what ICSs are expected to do. All ICSs are going to have to agree a system-wide financial control total, meaning that all of the organisations in their area have a spending cap. Individual organisations can deviate from this as long as the whole ICS area still meets its target, and with the agreement of NHSE and NHSI. So, if one CCG has a £10 million deficit, it’s fine as long as one or two others have surpluses that can balance it out. If the ICS meets its control total, it will be able to access additional funding from the Provider Sustainability Fund, although it’s been emphasised that this access shouldn’t be planned for at the beginning of the year. However, the document makes clear that CCGs will have to resolve any disputes about financial discrepancies between themselves – essentially passing the responsibility onto each area to make good with the resources they’re allocated.

There are several problems with this. As has already been made clear since the creation of STPs, some areas have been in worse financial and operational situations than others since the beginning and have struggled to resolve their issues. Others – with Manchester and Surrey Heartlands being key examples – have enjoyed well-functioning, integrated working relationships across commissioning boundaries for a number of years, and were well-prepared to develop STPs, ICSs and so on. Those that had been working in a more siloed manner and were suddenly told to embark on a minimum of five years of close collaboration had to start at the beginning and have further to go before they can agree on a control total across several organisations.

The difficulty with this is if these STPs then fall into a vicious cycle of being unable to make decisions and improvements locally, they cannot access funding which would help them to make further improvements – stalling them and preventing them from becoming ICSs. NHSE and NHSI haven’t made clear yet when all STPs will be expected to become ICSs, but that presents a further risk that if areas are forced to work together before they’re ready, there could be some serious tensions bubbling close to the surface.

There are questions to ask about why such a firm attitude is being applied to a system clearly under immense strain. One answer is that the Government has steadfastly refused to take a new approach to the NHS to end years of austerity, despite suggestions that Theresa May would look to break with David Cameron’s way across her government and improve public services to benefit the ‘Just About Managing’. Additional funding instead only comes in relatively insignificant amounts when things are positively dire, and without looking to reach an agreement on what would provide a genuinely sustainable long-term approach. Jeremy Hunt has said he would like to see ten-year funding settlements for the NHS – but with a Health Secretary whose future is doubted every time there is a reshuffle and a Prime Minister who many argue is effectively house sitting in Number 10, a radical change in direction is unlikely.

Thought will also be given to the demands for additional funding that would come from other government departments if health received a significant real-terms funding increase – schools and prisons are just as likely to be in the headlines as hospitals. But with the next Comprehensive Spending Review due in 2020, when there could well be a new Conservative leader looking ahead to a 2022 election, perhaps NHSE and NHSI have their eye on the long-term goal, and what they need to do to win favour in the short term.