Largest deficit CCG breaks even for first time ahead of merger

Northern, Eastern and Western Devon CCG’s achievement comes as it merges with South Devon and Torbay CCG today, creating a single NHS commissioner in Devon.

NEW Devon has a cumulative deficit of around £177m – the equivalent of 14.7 per cent of its budget and the largest such deficit in the country – and has recorded deficits every year since its inception.

The CCG ended 2017-18 with a £50m deficit.

However, the CCG has only been able to reach a break-even position in 2018-19 by unlocking £20m of commissioner sustainability funding after delivering its financial plan, which involved ending with a £20m deficit.

Success regime was ’the low point’

John Dowell, chief finance officer for the CCG, told HSJ the organisation is now “in the best place to get to a sustainable position”.

He said the imposition of the “success regime” on the CCG’s patch in 2015 marked “the low point”, but it had allowed for a “reset of transactional relationships” with the providers, and subsequent savings in Continuing Healthcare, primary care prescribing, and operating costs have had a big impact on the balance sheet.

Since the introduction of the success regime, the CCG switched from payment by results to block contracts with its Devon providers.

“This gave financial certainty from all parts of the system and has enabled us to concentrate our efforts on how we best deal with demand and deliver lower cost solutions,” Mr Dowell said.

“Importantly for me that got the focus in at the beginning of the year with everyone having a common understanding of what the level of activity that we anticipate is and how we manage it.

“It was a big mindset shift.”

Where have savings been made?

The CCG made savings worth £30.2m in continuing healthcare and £29.4m in primary care prescribing in the last three years, which Mr Dowell attributed to a “redoubling of our efforts and a refocus on it within the success regime”.

Mr Dowell said professional pharmacy advisers worked with GPs to “optimise prescribing”, and added both prescribing and continuing healthcare costs had stayed “flat” throughout the period.

The CCG has been working on a trajectory of reducing the number of people accessing continuing healthcare from 1,004 at the end of 2017-18 to 900 at the end of 2018-19. By the end of the third quarter in 2018-19 893 people were receiving continuing healthcare. 

During 2018-19, the number of people applying for continuing healthcare has dropped from 636 (first quarter) to 545 (third quarter). 

The CCG has also saved £4m in operating costs, for example, by not filling vacancies as staff left the organisation and running mutually assured resignation schemes.

At the start of 2016-17, the CCG’s headcount was 512 whole time equivalents. It now stands at 464.

Mr Dowell said: “The move away from PbR has definitely allowed us not only to focus people on stuff around delivering best value while servicing demand, but also allowed us to reduce headcount in finance and contracting and business intelligence that are more aligned to just operating PbR.

“Because you have broken the direct link between activity and payment, there’s less bureaucracy on the CCG end of that.”

He added: “Bringing the CCGs together has erased duplications.”

Delivering the merger

However, the road to merging the two CCGs was not smooth. South Devon and Torbay GPs initially voted against a merger (14-12 with two abstentions) in September last year.

Their concerns were primarily about losing influence by becoming part of a bigger CCG and the organisation’s financial problems.

Mr Dowell acknowledged the CCG “didn’t do enough engagement early on” with the South Devon GPs about the merger, but added it was approved by “quite a clear majority” after governing body members visited the GPs with concerns.

Asked what advice Mr Dowell would give to other CCGs with large deficits, he said: “The thing that’s made the real difference here is getting everyone focused on what the real service changes are that’s required to deliver a financial improvement in your wider system.

“I’m saying this coming from a place where we have looked at integrated care; looked at what that should look like, and getting everyone in the local health system focused on what is required to make the service change so that your financial and operational equation is doable.

“It’s absolutely not about moving financial problems from one part of the system to another.” 

Three of Devon’s four acute providers have also seen an improvement in their finances since 2015-16, when comparing their surplus or deficit in that year with their forecast for 2018-19. 

Mr Dowell added: “If we were going to keep putting as much money into funding acute services growth as we had done previously then that was making the financial problem bigger not better.”

However, the acute providers are struggling to keep up with demand for services, with its four hospital trusts responsible for 461 (22.5 per cent) of England’s 2,045 year-plus patients waiting for elective treatment, according to the latest available NHS England data. 

The new CCG, which will have a budget of around £1.8bn, has been given a control total of break-even (excluding commissioner sustainability funding) for 2019-20. Mr Dowell said he hoped the CCG could start paying off its cumulative deficit through future surpluses.

Devon’s sustainability and transformation partnership is forecasting a £61m deficit. Asked when he thought the STP would break-even or deliver a surplus, Mr Dowell said it was a “forward-looking question which I can’t answer”.