Friday 4 April 2014

Week 8: “It’s the economy, stupid”

NHS Clinical Commissioning Groups (CCGs) are the part of the NHS responsible for commissioning health services for a local population.  In simple terms, this means assessing need, purchasing services and ensuring NHS funded service providers achieve required quality & outcomes.  Some health services like primary care (GPs, Dentists, Pharmacists & Optometrists) and specialised services, such as renal (kidney) dialysis services as well as neonatal care, severe burns care and some mental health and children’s services are commissioned by NHS England while public health services are commissioned by local authorities and Public Health England.  One key function of CCGs and all commissioning organisations is to make the best use of the resources available to them, i.e. spend NHS (public) money wisely on behalf of the population they serve.

This week CCGs were one year-old on 1 April 2014 following the NHS reforms in England.  The Kings Fund and The Nuffield Trust marked the occasion by writing 'How engaged are CCG members one year on?’ and ‘Clinical commissioning groups – one year on’ respectively.  Where I work in Luton we have had productive year developing the CCG into an organisation more focussed on the needs of the people of Luton who we’re here to serve; building on the fantastic work done whilst in ‘shadow’ form the year before (that’s a lot less sinister in reality than it sounds!).

One challenge we started the year with that remains with us is the constraints of the financial resources we have available to us.  This second year for Luton CCG will be equally financially challenging. I know that’s an oft heard refrain in the NHS and the wider economy, but let me explain a bit more about why this is a specific challenge in Luton.  In Luton, the services paid for by the CCG, in the financial year that ended on 31 March 2014, have cost more money than we received from Government and therefore ended the year with a deficit.  The exact size of this deficit is yet to be determined, as we’re still ‘closing the accounts’, i.e. doing all the final sums to identify exactly how much more have we spent than we had coming in.  At our Public Board meeting in February 2014, the forecast deficit was predicted to be £5.3M.  This is not the first year this has happened in Luton and based on the current accepted formula Luton receives about 7% less money annually than it should compared to other areas of England (NB CCGs receive our funding from Government, i.e. publicly funded through taxation).

There will be a modest increase in funding for health services in Luton commissioned by the CCG over the next two years, but this will only partially close this funding gap.  By 31 March 2016 (two year’s time) we are expected have to not only ensure that what we spend matches what we receive, but we’re required to make a 1% surplus each year (end the year with having spent less than 99% of what we receive from Government) for investment into new services.  Unlike in previous times in the NHS, there will be no bail-out from the powers above us and whilst we have locally secured ‘brokerage’ (a short-term loan from other nearby commissioning organisations) we have to not only pay this back in the next year, but we also to reduce the amount we spend more than we’re allocated.  This doesn’t equate to cutting services, but to being more innovative and efficient about how we use the money we do have, including through an approach called QIPP (Quality, Innovation, Prevention & Productivity).

This is a significant challenge and there is a great deal more complexity in this than is summarised in this blog but we’re up for the challenge.  We fully intend on meeting the tough standards we’re required to achieve and those we’ve set for ourselves.  Our plans for the coming year, and beyond, will ensure we work with local people and clinicians to be more focussed on the needs of the rich diversity within Luton to improve their health and outcomes.


(PS this blog is not intended to be a master class in NHS finances – if you want to read more about NHS finances, the NHS Confederation has some helpful resources.)

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