Commissioning and the revolving door

Upon reading yesterday’s article in the HSJ, ‘ICBs to tackle inefficient block contracts’, I was struck that this isn’t just déjà vu – it’s actually happened before. For those of us who have been in commissioning for over 25 years, there is a definite feeling of being in a revolving door.

With NHS England asking commissioners to review how much they are paying for non-elective care to tackle varying rates, my focus has been diverted to reminiscing about the ‘good old days’ and the introduction of Drug Action Teams.

In 2001, I distinctly remember negotiating a ringfenced budget for drugs services with the local NHS trust, who were paid through a block contract. Still to this day, I remember how difficult it was to achieve. The budget within the trust was not ringfenced and NHS colleagues had never had to disaggregate costs in that way before. It really was a painful experience and, later in another commissioning role, trying to identify the ringfenced budget in 2012 for wheelchairs was also an eye opener for us all.

I remember the development of agreed tariffs based on the annual reference costs collection (now national costs collection) that determined the cost base of delivering care. It subsequently got eroded by the NHS annual planning guidance and the requirement to implement annual savings, which then resulted in tariffs not fully covering the cost of care – remember that?

Remember the move to hybrid approaches where commissioners and providers worked together to identify and agree local tariffs and then reverted to the NHS England tariffs when we couldn’t agree?

Remember when we implemented cap and collar (or floor and ceiling contracts) and the end of year jamboree where we came together to agree the total payment.

Remember when we implemented payments by results and eventually ways to maximise payments were identified and implemented across providers e.g. training staff to code properly (which should have been happening anyway) and then staff trained to maximise coding?

What have we learnt?

There is no silver bullet.

If we wait long enough, things begin to repeat themselves and, if that is the case, how can we retain knowledge so that we avoid repeating the same mistakes?

What can we learn from local authorities who have been commissioning for many years, successfully benchmarking costs, managing budget cuts and provider relationships across the nation? (I’m not saying it is perfect).

So, the ICB commissioners’ mission – if they choose to accept it – is:

• Review how much is being paid for non-elective care, to tackle the widely varying rates which have developed under block contracts.

• Review the fixed funding deals to make them “more reflective of activity levels and reasonable costs”.

• Not to seek to move to the new rates in 2025-26 – which would mean severe cuts for some trusts – but calculate the gap and seek to close it over time.

• Use the NHS England analysis provided to systems to have provider discussions about acute services.

• Review the current fixed payment for all providers with which they have an aligned payment and incentive contract (which combines fixed and variable payments).

• Ensure the review helps identify areas of potential efficiency savings, over time leading to payments which are more reflective of activity levels and reasonable costs.

Given the recent cuts in commissioning across integrated care boards, is this mission possible?

The mission is a tough one, but we have shown what is possible through our work with clients across our hands-on practical Commissioning offer. You can read more about this in our 2024 Annual Impact Report.

Please get in touch if you would like to have a conversation about how IMPOWER could support your organisation.