Written evidence submitted by The Nuffield Trust (ICS0054)

The Nuffield Trust is an independent health think tank. We aim to improve the quality of health care in the UK by providing evidence-based research and policy analysis and informing and generating debate. This submission presents key findings from our research across UK, and on the current situation in health and care, to answer the Committee’s important questions about ensuring ICSs can deliver their aims, and the role that centralisation, autonomy and flexibility should play. We do not consider individual examples of best practice: membership and representative bodies will be well placed to provide these.

Overall, we conclude that Integrated Care Systems (ICSs) face great considerable difficulties given the poor state of finances and performance in health and social care. A clearer model of who is responsible for what is needed both to help deal with the complicated joint structures where many people hold multiple jobs, and to give ICSs meaningful and appropriate tasks in an NHS that defaults to central power.  The new structures require a lot of input from senior leaders across the system and ensuring that this does not detract from their individual responsibilities will be important.  This may require some time as it will to some extent depend on the level of trust in different areas.

KEY POINTS

• The evidence from integrated care initiatives across the UK is that structural change alone is unlikely to lead to a dramatic shift towards more preventive care that improves outcomes.
• The complexity of integrated structures, where many people are responsible for governing both an individual organisation and the integrated system, risks leaders not prioritising collective aims. This has been an issue in other UK countries and has been associated with slow progress, and money not shifting out of the hospital sector.
• The financial picture for ICSs is extremely difficult. They are inheriting a large funding gap built up over years in NHS trusts, which grew even larger during covid-19. They will be expected to deliver unprecedented and probably impossible levels of savings, over £5.5 billion this year. This risks crowding out other aims and goals, in a context in which behavioural and cultural commitment to integration is likely to be vital. 
• Adult social care is in very poor shape and many people who need help are going without. This will be a serious impediment to forming a system where people are helped to live independently for longer.
• It is important to have a clear model of what ICSs are responsible for, which passes power down from NHS England’s central and regional offices so that they can achieve autonomous goals rather than simply sitting as an extra layer of bureaucracy.
• Ministers and NHS central bodies must control the impulse to demand ever more reporting, monitoring, and specific aims.

1           Can ICSs achieve their aims? Lessons from around the UK

To understand the barriers to ICSs achieving their goals around prevention and the quality of care, we can draw on a long history of efforts to achieve similar goals through integration – in England, Scotland, Wales and Northern Ireland.

1.1          Broad lessons from previous initiatives around the UK

A common thread that unites reform in each UK country has been a reliance on structural and organisational changes to deliver integrated health and social care at the level of patients and users. While those structures have looked different in each context, each country has seen integration challenged by systemic factors, including: 

• a lack of resources, infrastructure and staff to meaningfully integrate services and move more care out of hospital;
• competing accountabilities and inadequate incentives to reduce fragmentation, divergent cultures and priorities across health and social care;
• the broader economic and political contexts, which have affected the extent to which and the way in which integration has been implemented;
• insufficient regulatory and outcomes frameworks to understand whether success is being achieved.

None of these can be easily resolved through organisational changes alone, and this is one key reason why integrated reform is still found wanting in each country of the UK. A review we published last year found[1] limited evidence that integrated care policies in any of these countries had made a difference to patients, or to how well services are actually integrated. As this submission describes, there is a clear risk of most of these factors slowing the progress of ICSs in England as well.

1.2          The limits of legislative integration

England has been an outlier in that integrated care systems have previously not been legal entities: the introduction of ICSs will now change that. The Scottish, Welsh and Northern Irish experience make clear, however, that having a legal duty to collaborate does not in of itself lead to effective collaboration. Without cultural changes and the right allocation of responsibilities and accountability, the creation of ICSs as structures may have little effect on improving prevention or experiences for patients.

In Wales, Regional Partnership Boards have a legal basis, but still lack the ability to employ staff, plan and hold budgets. A government review suggests that this has undermined their ability to jointly commission and plan services: proposals are in place to extend their functions.[2] Northern Ireland has had structural integration since 1973 but this has often been described as statutory rather than delivered in practice, with health continuing to dominate over other integrated services, including social care.[3],[4]

In Scotland, integration authorities have been statutory since 2014, and hold responsibility for a shared budget. They share a similar goal to ICSs, and may be similar in budgetary and administrative form to the still emerging “place” level intended to sit beneath ICSs and connect health and social care.[5] But various reviews have found limited progress towards integration objectives, revealing challenges around collaborative working and strategic planning.

1.3          Accountability and structures

The focus on structural reform to deliver integration in each UK country has also contributed to complex webs of partnership structures and joint commissioning arrangements, adding additional layers to health and social care structures. This can obscure which decisions need to be made where, confuse lines of accountability, and add to bureaucracy and inefficiency if the same individuals are required to sit on- and sometimes chair - multiple boards with overlapping scope.

In Wales, a review of existing partnership arrangements found that there can be unclear operational relationships differ between different joint boards and committees, adding to complexity and duplication.[6] In Scotland, integrated board chairs and vice chairs simultaneously hold senior positions on the Health Boards or as elected Councillors (one of each), which could also pose a problem for capacity and quality of decision making.

Establishing integrated care bodies as statutory organisations has also not made up for the fact that partner organisations continue to operate as autonomous agencies with competing interests, pressures and obligations. For example, local authorities in Scotland are democratically accountable to the local electorate, whereas health bodies are directly accountable to Scottish Ministers. Organisations tend to default to distinct accountabilities rather than system working.

Scottish legislation introduced in June 2022[7] partly seeks to address this situation through a National Care Service. It establishes local Care Boards with members appointed by Scottish Ministers and directly accountable to Scottish Government for the oversight and delivery of social care. The proposals were criticised at consultation stage, among other things for excluding local authorities and the local knowledge they hold, and for a lack of costing and staffing detail. The ambitious drive for change, though, illustrates that a structure with important similarities to that developing in England is now felt by the Scottish Government to need replacement by straighter chains of command.

These experiences suggest that clarity of accountability is important. NHS England’s upcoming Operating Model; the future frameworks and proposals to be developed under the February integration white paper; and guidance and planning in general must be highly alert to the risks of both wasting time and confusing priorities through the multiple roles that many people in the new system now play.

1.4          Falling short on funding

The limits of structural and legislative solutions have meant that health and social care partnerships have not encouraged more money to flow to social care and prevention as intended. In fact real terms funding to social care fell over the decade in all countries, except Northern Ireland.[8]

Collaborative commissioning and financing of services have been insufficient to make up for underlying challenges – such as social care being more financially overstretched than health relative to the level of need, cultural differences between locally accountable social care services and centralised health services, and variability in leadership capacity. Historically, even when resources have been pooled within place-based partnerships, resources have tended to keep their ‘identity’ between the two sectors.

2           The financial context

2.1          Steep financial demands in the NHS

Integrated Care Systems have been born with an enormous, likely impossible financial task ahead of them in their first years of operation. Responding to this is likely to divert time and resources from improving coordination and population health.

The underlying financial problem exists in NHS trusts. They had a large structural deficit in their income and expenditure of around £5bn each year from 2015 to 2020. While significant savings were delivered, cuts to the “tariff” rate paid for each treatment meant efficiency savings generally only kept up with inflation rather than reducing the ongoing gap between income and costs.  

During the pandemic the financial relationship between NHS commissioners and providers changed, and commissioners found themselves having to fully fund provider costs. While this meant a radical reduction in the income and expenditure deficits recorded by NHS trusts, it merely relocated the overspend problem to the commissioning sector, where it is experienced as excess spending pressures above what has been budgeted for in the 2019 Long Term Plan.

In addition to this, Covid-19 measures made it hard for NHS providers to continue absorbing inflation through efficiencies. This financial year, the underlying gap between the Long Term Plan’s expectations on spending on “core” or non-Covid-19 activity and actual levels of spending in the provider sector appear to be close to £8bn.[9] The recent pay deal will have increased costs by well over £1 billion. 

These problems are transferred to ICSs through a requirement to break even at system level, which NHS England will impose using provisions in the Health and Care Act. NHS England’s latest board meetings say that the new bodies are “targeting savings of over £5.5bn (around 5% of total system allocations)”[10]. It notes that five ICSs were not able to produce plans for a balanced budget at all. Transfer of specialised commissioning budgets to ICSs will shift more deficits onto their balance sheet: these budgets have repeatedly struggled to stay within limits.

These required savings are well above the 4% level the NHS serially failed to achieve up to 2016[11]. This year is likely to be a particularly difficult time because more than a decade of efficiency drives have already taken place; covid-19 continues to occupy thousands of beds requiring infection control measures; the health service is being asked to rapidly expand planned care; and inflation is very high and unpredictable across the economy.

This context will make investing and planning to improve prevention or public health very difficult. Savings on this scale can likely only be achieved by removing staff, closing services, and reducing the offer to patients. Reducing funding in hospitals even more to redeploy funding towards public health will be a very difficult case to make. While it may be hoped that in the longer term allocative and perhaps technical efficiencies can be delivered through integration and better population health, the one-year time frame of the savings required will make it very difficult to achieve these.

At a human level, there is a risk that the time and attention of leaders and staff in ICSs will be sucked into this forbidding task rather than their already long list of strategic and systemic goals.

2.2          Social care and councils

Over a decade of austerity has left social care in a fragile state, worsened as a result of covid-19. The lack of sustained and certain funding for social care has undermined aspirations set out from the Care Act (2014) to enable choice and control among people who draw on care and to encourage innovative models of care. It threatens now to frustrate the success of ICSs, whose aspirations rely on a functioning social care system with sufficient capacity of the right type to work alongside health and other services.

Council budgets have been cut in half over the last decade, causing social care spending, despite some lessening of austerity in the year prior to covid-19, to be lower than 2011/12 levels in real terms.[12] This relentless squeeze has left the social care provider market in a fragile state, with frequent and sudden exits of providers who struggle to remain financially viable.[13] Low pay, poor conditions, low status and insecure contracts alongside competition from other industries have led to a crisis in staff recruitment and retention that has been exacerbated by covid pressures. A recent survey by ADASS[14] estimates that there are half a million people waiting for assessment, care package or review and councils have been warning that they are struggling to find sufficient capacity to meet needs[15]. Delayed discharges from hospital are one area where these pressures are all too visible.

ICSs can be part of better working with the social care sector. It is important that initiatives addressing social care pressures are developed in partnership with local authorities and other social care stakeholders in a locality, and that services work alongside other out of hospital provision such as intermediate care and reablement.

As a commissioner of care, the NHS has a responsibility to collaborate with councils to ensure that there is agreement over fees, standards and workforce pay. Common approaches and strategies to commissioning and workforce planning could help to strengthen and grow provision and to assist in recruitment and retention within the social care sector. But the underlying weaknesses in social care need to be addressed for any genuine shift to prevention and to helping more people live independently.

3           Centralisation and autonomy

3.1          The role of the centre

The Committee is right to highlight the risk that ICSs will become an arbitrary layer of bureaucracy stripped of the capacity for useful action. Without a clear model that creates space for local initiative, the default direction in the NHS is constant monitoring and unhelpful micro-management. Ministers have legitimate interest in local delivery but too often this can translate into overweening oversight driven by political concerns.  This often adds little value but is time consuming throughout the system.

For the new architecture to be successful there must be a fundamental change in behaviour and practice. In our work supporting local systems and researching them, there is scepticism this will be allowed.  The emerging style and approach promulgated by national NHSE leadership, and the recent announcements on downsizing of NHSE[16], suggest change will come. But there is a troubling lack of clarity. The test will come when there are significant or high-profile issues within systems – will this be managed locally by ICSs or will the long arm of NHSE intervention reach in as an instinctive response?

The intermediate tier within the NHS, while regularly tweaked and renamed, has remained remarkably resilient throughout the long history of reorganisations, partly because the size of the NHS means that there are too many local organisations for a central body to manage effectively.  But a productive role for ICSs may be difficult unless functions, personnel and decisions are devolved from this level to them.

The NHSE operating model needs to be structured in a way that streamlines communication, requests and performance management arrangements. As much as possible responsibilities need to be discharged by ICSs. These might include managing the performance of providers, managing performance in working across the organisations on their patch, and allocating capital. Truly devolving these functions would mean NHS England no longer directly approaching Trusts on operational or immediate issues which would suck up bandwidth and add little value.  Aside from reducing replicated activity this shift will also be important in establishing the ICSs as credible centres of authority, not unhelpful middlemen.

Regulatory functions also need to change how they work to reflect new operating models.  Oversight and assessment must not simply be added onto the already heavy burden – for example, monitoring new provider collaborative and place-based partnership arrangements on top of all the existing demands on the bodies they are made up of.

At the same time, it is important that there is not a slavish assumption of delegation to individual ICSs.  Proper consideration needs to be given to the appropriate level of aggregation based on economies of skill and scale. Not all activities should only be discharged at one level in the system. A good example might be population health analytics: core dataset production and analyses could be performed at large scale, with devolved capacity and infrastructure in place to use data for local purposes.

Some functions are established as difficult cases, with a cyclical pattern of decentralisation and devolution as there is not a clear optimal level.  Specialised commissioning is a particular example of this where over enthusiastic delegation was followed by recentralisation, which in its turn also went too far and is now being reversed. 

Finally, if the planned shifts of responsibility from NHSE to ICSs are to deliver effectively this will require a concomitant redistribution of personnel and expertise.  A number of significant functions, most particularly commissioning responsibility for Pharmacy, Opticians and Dentists and specialised services, will move over time to ICSs. If this is not matched with appropriate resources, for example if NHS England retains people who monitor performance in detail, the local arrangements will be weak and ineffectual at a time when ambitious progress is needed, especially in dentistry.

A centralised and controlling approach to performance management of these functions would be wasteful and counter-productive.  NHSE needs to avoid performance managing local organisations to deliver early improvement in areas of activity where it has itself proven unable to drive positive change over a number of years.

In short, a systematic, detailed and sophisticated model is required which gives ICSs the responsibilities and resources they need without burdening them with tasks that should be done at a bigger scale, or that bog them down in bureaucracy and reporting upwards.  We are aware of discussions around systematic work being undertaken to ensure that tasks are discharged once, at the right level, and not inappropriately replicated. But this has yet to emerge.

3.2          Lessons on incentivising and enabling integration

There are important lessons from England’s own history and from other countries in the UK in how to incentivise integration and measure success. All countries of the UK collect and publish activity and performance measures; however, the extent to which breaches of performance targets are acted upon has varied. England has placed the most reliance on performance targets to drive improvements, although the approach in Scotland has strengthened over time.

A key limitation has been a lack of well-defined measures for integration, and their tendency to have low priority against other measures – like pressures to achieve financial balance. Performance frameworks, where they have been influential levers for implementing policy, have tended to focus on organisational targets.

The absence of robust measures of integration partly reflects practical challenges, including a relative lack of data about community health and social care services, or measures of coordination and care from a patient or service user perspective. In recent work in Scotland we heard of high local variability and lack of systemic collection in patient-reported indicators. There is also a significant gap in social care data, as local authorities currently do not have the same reporting duties as health boards. The situation in England is also very challenging.

There are also questions about whether performance measures should be set nationally or locally given the contextual differences from which each ICS is starting. A more localised approach would better account for local variables that are likely to impact performance, and perhaps better resist the temptation to expect that all ICS improve at the same rate.

In Scotland, multiple outcome and indicator frameworks exist, and integration authorities choose to report against the outcomes that are important to their local context. While this might help better account for local difference, it has led to concern that there is no clear relationship between spending and outcomes, and makes comparisons and the identification of good practice across integration authorities are difficult. As a result, it is not always clear on what basis ministers hold integration authorities and NHS boards to account.

Aug 2022