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Health and social care integration report: Pooled budgets, conclusions

Published On: 5 December 2014

Pooled budgets, conclusions

The idea of pooled budgets, which can help drive integration by bringing a broader strategic view and centralised management structures, is becoming more popular. Such a system can also deliver economies of scale and efficiencies as a result of cutting out duplication of back office functions such as finance and HR. But putting in place these structures can be challenging.

The Better Care Fund (BCF) was seen by some as a way of encouraging integration. However, concerns have been raised about the practicalities, and the potential for harmful redundancy costs as a result of streamlining services.

Commentators have been keen to see protections put in place for instances where there are disputes about how pooled cash is shared, what happens to overspends or underspends, or where there are other governance issues. It is around these issues that many interviewees called for more and better Government guidance.

But Judith Barnes, DAC Beachcroft Partner, pointed out local authorities “are rightly being told – ‘just do it’. They do not rely upon the endless guidance”. She said that it could be argued that health should try to proceed rather than asking for and waiting for guidance, which in any case may not be as robust as is hoped for.

Ian Smith, Chairman of Four Seasons Health Care, argued for an integrated health and social care model that offers a comprehensive service based on the needs of the individual rather than the existing provider structures.

“This would support lifetime care pathways, rather than individual episodes of care.”

Mabli Jones, Director of Operations and Organisational Development at the Hurley Group, said it is sensible to have a pooled budget in primary care to provide HR and financial services across an area.

“Scaling up in that way makes a huge amount of difference as we did in Tower Hamlets. But pooling budgets across local authorities can end up with an overengineered process because people are very protective. There needs to be some mechanism built into integration that pools the risk across different sectors.”

Jim Mackey, Chief Executive of Northumbria Healthcare NHS Foundation Trust, said that having an arrangement where access to resources is flexible between health and social care and not tightly ring-fenced can be helpful.

“Look at care of the frail elderly: patients move in and out of hospital, social care and housing services many times. Therefore, it is important to have a flexible approach. In Northumberland the social care budget is managed through a partnership agreement with the local county council and we have a shared management arrangement that makes an awful lot of things much easier: one director; one management team; one set of decision-making.”

However, there are concerns that governance arrangements around pooled budgets become the central focus rather than providing better care. Julian Emms, Chief Executive of Berkshire Healthcare NHS Foundation Trust, pointed to this as a symptom of general anxiety:

“It’s not just local authorities who are anxious; it’s everybody. ‘Will I get my fair share of the service if I put less money in? Will I be heard if I put less in? What if the pool works for two years but not in the way I want? How do I extricate myself?’”

With no central guidance on how these questions are resolved, ‘who gets what’ disputes are being sorted out locally.

“But this is incredibly complex as local authorities have their own set of ideas and different political landscapes at different times, and views on risk differ from local authority to local authority,” said Thirza Sawtell, Director of Strategy & Transformation, NHS North West London Collaboration of CCGs.

“We are working with some local authorities where we have low risk involvement and working with others where there is potentially higher risk but potentially higher gains.”

Brighton and Hove Integrated Care Service runs a mental health wellbeing service, which has a pooled budget for all partners where there are clear principles covering risk and benefit sharing. “We create incentives for the whole service to do well and so avoid any ‘land grabs’,” said Executive Director Zoe Nicholson.

“Where we do get an overspend situation or where a budget has not been set properly, we have to sit down and discus how we are going to prioritise spending.”

When working with secondary care organisations it’s important to make sure that the service being integrated with has a budget large enough to mitigate risk, she added.

“We have learnt that a contract needs need to be in quite high numbers – certainly over and above £2–3 million – to make sure it works safely. Where you work with smaller organisations you need to make sure that finances are ring-fenced.”

The legislative framework to enable health and social care funds to be pooled, and for health and social care commissioners to delegate certain of their commissioning functions to each other, has been around for a while, said Anne Crofts.

“Many health and social care commissioners already operate ‘lead’ or ‘integrated’ commissioner arrangements within this framework, or commission in an aligned way but operate separate funds and accounts. The difference with the BCF is that it requires budgets to be pooled and that forces minds to pay attention to how the risks of overspends and underspends will be managed. The governance arrangements that must be in place to operate the fund and ensure the outcomes are met within budget are also a focus.”

The legislative framework is quite specific about the requirement for commissioners to put in place an agreement (known as an s75 agreement), Anne Crofts added, detailing how the fund will be managed and how the  organisations will work together and share resource.

“Of course there are risks and each organisation needs to be absolutely sure what it is signing up to, what exactly it may be delegating to the other and what decisions will be reserved to the individual organisation. The role of the Health and Wellbeing Boards (HWBs) in monitoring and scrutinising the BCF is somewhat problematic.

"Some have called for HWBs or sub-committees of HWBs to be the forum to manage BCF funds. But there are clear legal issues around the ability for both local authorities and CCGs to delegate health/commissioning functions to HWBs, which adds yet another dimension to the governance challenge.”

Whilst the thrust of the Health and Wellbeing Board is to prepare a strategic response to the Joint Strategic Needs Assessment, promote the integration of health and social care and focus on promoting and improving wellbeing, it lacks the legal powers to implement those decisions (except in Committee system authorities) and so local authorities and other commissioners need to find ways of ensuring that decision-making processes do not become cumbersome and overly bureaucratic, said Judith Barnes. 

“Decision-making can be streamlined through executive delegation to members and officers within a local authority and directly to individual representatives of other commissioners, but it is important to ensure that the chain of delegation is not broken and that the organisations’ constitutions reflect the desired decision making arrangements – that may need higher levels of financial authorisation, for example.”