Breaking the gridlock: overcoming financial barriers to NHS and council collaboration

The NHS and local authorities share a critical mission: to deliver effective, integrated health and social care services that improve lives. Despite the shared goal, financial misalignment often hampers collaboration, leading to inefficiencies, higher costs, and poorer outcomes.

Financial issues hindering collaboration

1. Misaligned funding streams
   • The NHS and local authorities operate under distinct financial mechanisms. While the NHS is centrally funded, local authorities rely on local taxes, grants, and specific allocations like adult social care funding. This structure often creates incentive mismatches, with the NHS prioritising acute care and local authorities focusing on long-term social care. The result? Costs of inefficiencies, such as delayed discharges, are not borne by one entity, perpetuating the problem.
2. Financial pressures
   • Both systems face chronic underfunding. The NHS, already managing increased demand and workforce shortages, anticipates a £2.2b deficit this financial year – but this is likely to be much higher. Similarly, local authorities face a projected £4b funding gap over the next two years, significantly straining their ability to fund social care services.
3. Siloed accountability
   • Accountability structures in the NHS and local authorities are fragmented. Short-term budget cycles discourage long-term investment in integrated care. Decisions made within one entity often lead to unintended cost increases in the other, for example, when delayed discharges result from inadequate community care funding.
4. Bureaucratic barriers
   • Legal and regulatory constraints, such as those surrounding the Better Care Fund, limit the potential for pooled budgets and shared resources. Additionally, the fund’s complex governance requirements hinder its broader adoption and efficacy.

The cost of inaction

Failing to address these barriers has severe financial implications. In 2022/23, delayed discharges alone cost the NHS an estimated £1.89b. While all these costs are not cash-releasing – since the beds would otherwise be occupied – this highlights inefficient resource use. Moreover, patients waiting for social care often deteriorate, leading to higher emergency costs and missed opportunities for preventative care, further driving up expenses.

Solution for cost-effective collaboration: leverage Integrated Care Systems

Integrated Care Systems (ICSs) offer a model for shared financial planning, enabling more flexible resource allocation, through initiatives like the Better Care Fund.

Graham Urwin’s “Working as one” session at the recent HFMA conference, touched on some of these challenges but more importantly the successes within the Cheshire and Merseyside system.

Having been at IMPOWER for three months, I have seen evidence of other systems where the NHS and local authorities have worked well together to transform care and improve the lives of citizens within their communities. In Manchester, better joint working lead to a 40% decrease in delayed discharges[1], and outlining a way to deliver £18.5m in savings for all partners.[2]

IMPOWER worked with Surrey and Sussex Healthcare NHS Trust and Surrey County Council to provide discharge and flow support in East Surrey and deliver better outcomes that cost less. This resulted in 58 beds saved through length-of-stay reductions, 70 fewer patients residing in hospital for 14+ days per week, and 39% fewer patients discharged to long-term placements.[3]

We did this using our Valuing Home approach and toolkit to achieve service transformation that delivers better outcomes for less. Our approach uses applied behavioural science techniques and is grounded in best practice in the relevant service area. We work with ICS system partners to implement behaviour change in daily practice that has lasting, life-changing impact on how staff work to deliver services.

Please get in touch if you want to learn more.

[1] https://impower.co.uk/case_studies/delivering-better-outcomes-better-lives-in-manchester/

[2] https://impower.co.uk/case_studies/integrating-health-and-social-care-in-manchester/

[3] https://impower.co.uk/case_studies/delivering-sustainable-discharge-flow-improvements-across-east-surrey/