STPs: the answer to the system's problems or doomed to fail? Part 2

Following a brief hiatus as a result of the General Election we are once again looking at the Sustainability and Transformation Partnerships and analysing whether they will transform the NHS or simply disappear without a trace. Part 2 looks at how the financial structures of the NHS are likely to cause problems.

The Challenges Posed by NHS Financial Structures

The Sustainability and Transformation Plans have now become Sustainability and Transformation Partnerships. Whilst practically this makes no real difference it does send a signal as to their current status: STPs are no longer about planning, they are about action and working together.

The NHS is based on a traditional purchaser-provider split model. This has clear benefits when it comes to financial control and decision making. Healthcare leaders have begun to suggest, however, that this type of model leads to friction between commissioners and providers and disincentivises joint decision making.

The Five Year Forward View is clear – the tradition boundaries between primary and secondary care will have to change if we are to deliver care differently:

“Over the next five years and beyond the NHS will increasingly need to dissolve these traditional boundaries.”

The STPs are the vehicle to delivering this pledge. The ambition is clear: create a system of accountable care organisations that are responsible for local population with seamless boundaries between primary and secondary care. All very straight forward. Or maybe not.

Leaving aside the structural and administrative problems this creates, the current financial system of the NHS is not designed to support this type of system.

Tariff based healthcare systems, like the NHS, break down healthcare in to units of activity that can be measured and then reimbursed accordingly. The purchaser-provider split means that the system is organised with the budget holder on one side and those carrying out activity on the other. Those carrying out care are incentivised to treat as many patients as efficiently as possible and those holding the budgets are incentivised to seek out the most efficient suppliers and maximise the amount of activity that can be carried out with their budget.

This type of system does, however, incentivise those carrying out care to carry out more and more activity. The more patients through the door the more revenue that follows. Care providers want more patients coming to them. This can lead to conservatism; where a fundamental change in the delivery of healthcare can achieve efficiency of improved patient outcomes, providers may be resistant, as it could mean a loss of revenue for them.

The tariff system and the practices that come with it are now ingrained in the way the NHS behaves. Shifting to a totally new way of working will be challenging. There are a number of issues that will need to be addressed.

Firstly, how will care providers be paid? Payment by Results has been much criticised for being payment by activity and not payment by results. But it provided the NHS with a system of measuring activity and rewarding trusts accordingly. In primary care the system remained closer to a block contract operation. Moving away from this will require much closer working between primary and secondary care, with a joint assessment of the local population needs and the level of activity that will be required. This will require support and flexibility on both sides as joint objectives and operating models are developed.

Secondly, how will outcomes be measured? The current system is simple: payment is made once a procedure takes place. Shifting to a system that is focussed on outcomes will be more difficult. This will require better monitoring and management of the patient population. Alongside this a new system for measuring success will have to be implemented. This could help support an NHS actually based on outcomes, with providers rewarded for delivering a healthy population. Measures such as disease and surgical survival rates, levels of disease prevalence, even softer quality of life measurements could all play a part. This will require new payment mechanisms, new ways to track and measure outcomes, all of which will prove challenging.

The key question around all of this is whether or not there is the will to drive through change. Fundamental changes to the financial operation of the NHS will lead to uncertainty for both providers and commissioners. Overcoming this will only work if both sides are actively engaged in supporting STPs to make a difference, and are committed to joint working, joint decision making and shared risk.

Dan Jones, Deputy Managing Director