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Dec
22

What the impact of the Integrated Transformation Fund (ITF) will be is the question at the forefront of most CCG minds.  It is without question a huge challenge for all local health economies.

There are huge cuts to local government over the next few years.  As a result of this there will be significant cuts to social services, which in turn will impact on health.  Seemingly in response to this it has been agreed that the ITF (now apparently named the ‘Better Care Fund’, but let’s stick with ITF for now) will be established.

The ITF is a £3.8bn fund that seeks to pool existing budgets from April 2015 to enable greater integrated working and the transformation of local services.  According to NHS England and the Local Government Association (LGA) guidance a key criterion for its use is to ‘compensate for social care cuts’.

A critical fact here to keep front of mind is that this is not new money.  It works a bit like a visual trick: social care understand they are receiving an extra £3.8bn and health are under the impression that they still have the same money available.  The NHS, after all, has been ‘protected’ from any funding cuts.

So where then does the money come from?  The expectation set by NHS England is that it comes from the expenditure on acute trusts.    There are two routes identified for this.  One is an expectation that there will be further savings. David Nicholson has talked about the requirement for an ‘additional’ 2-3% productivity gains.  So in 2015/16 there will be a requirement for efficiency savings of 6-7% rather than 4%.  You can make your own judgements about how realistic this is.

The second route is through the benefits that integration realises.  The theory is essentially that if health and social care work together and create new models of care that keep people healthy in the community then admissions will go down and delayed transfers of care will be removed.  But this of course sidesteps the starting point for all of this which was cuts to social care.  The money will at best protect the total current expenditure in community health and social care.

So in reality there will be no new capacity to enable the huge savings required of acute trusts.  Instead the new ways of working through integration will be expected to deliver these benefits with no additional capacity.  Herein lies the key problem that the ITF is creating: it is generating expectations of investment in community services that are not real, and using these expectations to justify the requirement for reduced expenditure in acute hospitals.

So how can CCGs respond?  There are probably two tactics available.  The first is to do everything possible to protect health expenditure.  CCGS can use the absolute minimum possible to be part of the fund, insist wherever possible that the funds used come with clearly badged expenditure, and try to limit the damage that this is inevitably creating.  CCGs could make a judgement that based on the experience of other nationally imposed financial constructs (e.g. MRET) that the incentives will not generate the changes expected, and proceed on that basis.

The second is to recognise that the only actual change proposed within the ITF construct is the integration of health and social care, and so to develop a plan that will maximise the impact of integration.  This then take CCGs into questions of scale, on the basis that the more that is integrated, the bigger the potential benefits (whilst at the same time recognising the bigger the potential risks).  The questions then for CCGs are whether they are prepared to commission all of community health and adult social care with local authorities on a whole system basis?  Are they prepared to create a single commissioning function for this that would incorporate planning, quality and contracting?  Or if not how far are they prepared to go?

Difficult choices ahead.  These choices are compounded by the timescale: the draft ITF plan is due to be submitted on the 14th February.  And we are already well into the contracting round for next year.  Acute trusts are quite rightly going to want to know what the plan is for the ITF ahead of any agreement, particularly any two year agreement.  Unfortunately there are not any straightforward solutions.

Merry Christmas to all, and a big thank you for all of your support and encouragement for this blog throughout the year!

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2 Responses to “The Challenge of the Integrated Transformation Fund”

  1. Graeme
    December 23rd, 2013 at 14:25 | #1

    A Merry Christmas to you too, and thank you for all the illuminating and thought provoking blogs this year.

    Your suggested scenario of commissioning with local Authority colleagues as a singular function does perhaps raise questions as to the future role of Commissioning Support Units, and whether there are signs a direction of travel will be for the Local Authorities to take on more of the functions that currently have been the preserve of CSUs.

  2. Ben Gowland
    December 27th, 2013 at 14:40 | #2

    Thanks Graeme. I guess you are right that should that happen it will put more pressure on CSUs, but of course the opportunity would be for CSUS to compete to provide services to the newly merged service. Local Authorities in many areas already seem further down the track in outsourcing support where they can.

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