Enhanced tariff option is a step in the right direction, but we must find a way to avoid future face offs between trusts and commissioners

Everyone involved in the NHS knows how tough things are at the moment. A lack of certainty on the finances could make the tough job of delivering care in 2015-16 impossible.

The NHS has now been sent proposals from Monitor and NHS England for an “enhanced tariff option”, which allows providers to put themselves on a different tariff to the one originally proposed for 2015-16.

In a bold demonstration of genuine leadership, NHS Clinical Commissioners has supported the approach alongside NHS England, putting patients first.

‘In a bold demonstration of genuine leadership, NHS Clinical Commissioners has supported the approach’

This heralds a new national and local partnership that needs to become the way we always do things around here.

The adoption of the new tariff would mean a set of prices agreed ready in time for April. Everyone else will remain on the 2014-15 tariff rolled over until an agreement, or legally applied resolution, can be reached.

When the proposed 2015-16 national tariff was first announced in November, I wrote in HSJ about my concern that it could make it harder for providers and commissioners to work together because of an overreliance on technical efficiencies and the transfer of more risk from national budgets to local systems.

Unfortunately, this barrier became apparent when a sufficient weight of providers rejected the tariff in the statutory consultation.

The result was a delay in agreeing prices that continues to have an unacceptable impact on local planning. Time taken to agree the strategy nationally shouldn’t come at the expense of time needed to plan services locally, which is by far the most important factor in transforming care.

Mismatched priorities

It is natural for tensions to emerge between national strategies and local planning because priorities at the front line will not always match those pursued in aggregation at the level of government.

Finding a reasonable balance is one of the main challenges for any public service and it has been encouraging to see strong support for the NHS Five Year Forward View among NHS leaders and staff, building on the consensus in our own NHS Confederation “2015 Challenge”.

Support for this long term, locally driven vision cannot be undermined by short term, nationally driven pricing decisions.

When the tariff was rejected by providers, my plea to national bodies was to choose the course of action most likely to bring local partners together, not push them further apart.

I know how difficult this can be. As the head of a membership body for both commissioners and providers, I am regularly reminded of their distinct perspectives on matters.

Their ambitions are not different, though. They both want better care for their patients, financial stability for their local health economy and investment in prevention and innovation to protect the future of the NHS.

‘Political choices have been made not to increase funding to easily match growth in demand’

Providers are absolutely right to make clear their dismay at another year of punishing price cuts.

And they have been concerned that new mechanisms, such as a marginal rate for specialised services, could destabilise their finances even further.

Similarly, many clinical commissioning groups are spot on in being frustrated at not having the right levers and incentives to transform care.

The enhanced option offered seems to be an attempt to meet some of these concerns in the middle and a lot of thought will now go into whether it makes the situation more tenable for local systems.

No panacea

But it might not satisfy everyone, though. Movement on the marginal rates for emergency admissions and specialised services benefits acute providers who have been looking worryingly at financial forecasts for 2015-16.

Most other providers, in particular in community and mental health, will be less reassured and remain concerned about the funding left to invest in care outside of hospitals.

‘It’s tempting to simply see it as a battle between commissioners and providers’

CCGs are determined to make these investments and hopefully they now have more clarity about the pricing arrangements for 2015-16.

We will continue to work with the national bodies over the coming weeks to ensure the NHS has the information it needs on the enhanced option to support local planning.

No winners, no losers

When an agreement on tariff breaks down, it is tempting to simply see it as a battle between commissioners and providers. The financial challenge for the NHS means that this year’s tariff was always going to be difficult.

There is simply not enough money in the system to share risk from the outset in a way that balances the budgets of providers and gives CCGs the flexibility to manage their local health economy effectively and invest in new models of care.

Continuous price cuts have pared providers down to a point where there are few efficiencies left, but this has benefited the Exchequer, not CCGs.

Political choices have been made not to increase funding to easily match growth in demand, and the consequence is costs need to be cut to the tune of around £19bn in four years. Half of this has been driven by price cuts.

‘We will need to learn lessons about the best way to have a national discussion’

So, I recognise the challenge NHS England and Monitor have had in setting the tariff for 2015-16. Regardless of what is eventually agreed, we will need to learn lessons about the best way to have a national discussion that is constructive and helps to set the NHS up to have the conversations that matter locally.

This includes strengthening the interface between national frameworks and local leadership, acknowledging both the political context and the need for more rapid change in models of care.

The NHS Confederation is determined to facilitate these discussions and help enable the kind of system leadership the NHS is looking for on pricing.

Our role is to be the authentic voice of NHS leadership and we will continue to work to ensure the whole system is heard.

Rob Webster is chief executive of the NHS Confederation

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