5-Year Financial Plan Update September 2013 Croydon CCG
Financial Strategy Background (1) This 5-Year Plan builds on the full financial strategy document incorporated in the 3-Year Financial Improvement Plan (May 2013). This includes local context (population, pubic health, service strategies), financial context/history, governance and project management arrangements and detailed QIPP analysis. This information is not replicated in this document. Croydon CCG has inherited a significant, and disproportionate share of, Croydon PCT s financial deficit, in the context of high & rising local need. The inherited deficit position was minimised through the delivery of significant QIPP savings ( 38m net) in 2011/12 & 2012/13 in the Croydon local health economy. Croydon CCG was authorised with 7 conditions (4 finance) and 2 directions (2 finance). The directions require NHSE to oversee (i) development of strategic and financial plans and (ii) development of project management capacity to deliver QIPP savings. The Independent Review (by PwC) of Croydon CCG in March 2013 confirmed (i) the underlying financial deficit plan for 2013/14 ( 20m- 25m) and (ii) the benchmarked net QIPP opportunity range of 25m to 37m, to commission at top quintile. It should be noted that for prescribing, the CCG is one of the lowest prescribers in London and nationally. The modelling underpinning the 3-Year Financial Plan identified that the recurrent financial challenge by Year 3 (2015/16) is 45m. The 3-Year Financial Improvement Plan (May 2013), recognised that this did not meet statutory breakeven duty or business rules. This plan was clinically led, focussing on unexplained variation in clinical practice and utilisation. The QIPP programme fundamentally redesigns services in Croydon to deliver (net) 30m QIPP (including long term conditions/emergency care, cardiology, urology, gastroenterology, COPD, diabetes, dementia) over 3 years. 2
Financial Strategy Background (2) Strategic collaboration with SL CCGs (BSBV / QIPP) Financial Risk Sharing (CCGs/ providers / LA) Strong Governance Arrangements Communicatio ns Strategy on Finance Improve financial skills of staff and GP members (CCG/JCU) Integrated Single Financial Environment (NHS SBS) Key Enablers Robust Financial Systems and Processes (SL CSU) Business Intelligence for GP Networks (SL CSU) Procurement/ Market Development Robust costing and pricing of MH and Programme communiity Management services Office approach to delivery (CCG/JCU) The key enablers identified in the October 2012 Financial Strategy document remain critical to support the clinically and quality led service redesign that will reduce unwarranted variation in outcomes and utilisation. 3
Financial Strategy Background (3) In August 2013, NHSE published Indicative Target Allocations for CCGs. The allocations are subject to feedback from CCGs and NHSE Regions. They will also be updated to reflect final agreement on specialised commissioning transfers due in September 2013. Whilst this Indicative Target Allocation analysis bears out the local analysis on population trends and benchmarked productivity, there is still a significant political debate to be had on pace of change from current allocations to target allocations. Historically movement has been very slow, but the new climate of transparency on deficits and recent census data along with the existing head room reserves means this is the best/only opportunity that will exist to agree and manage a significant movement. In August 2013, the Department of Health announced the Health and Social Care Integration Fund ( 3.8bn nationally), with full impact in 2015/16. The impact on allocations for Croydon CCG is a 3.7% transfer in 2015/16 of 15m ( 3m in baseline and 12m additional) to Croydon Council to be overseen by the Croydon Health and Well-Being Board. The CCG is continuing to analyse existing commitments, for example on reablement and carers, that would transfer with the funding. The guidance is clear that an element of the transfer will be to fund/avoid what would otherwise be reductions in social care expenditure. As a shadow CCG, exploration of innovative approaches to commissioning commenced on the following four programme areas: outcomes based commissioning, mental health service redesign, integration with local authority of commissioning function, and reducing variation in primary care provision. The product of this work, in particular outcomes based commissioning, is at a stage where potential benefits beyond benchmarked opportunity can be anticipated. 4
Financial Strategy Background (4) The 2013/14 indicative target allocation has been mapped against current allocations and expenditure plans. Croydon CCG expenditure plans are still within the indicative target allocations and would meet business rules if the target were adopted. 5
5-Year Financial Plan Baseline and Scenario Assumptions The Governing Body remains committed to achieving financial targets based on clinical and quality led service improvement programmes. This ethos underpinned the 3-Year Financial Improvement Plan, and continues to underpin the 5-Year Financial Improvement Plan The expenditure and QIPP assumptions under both scenarios are identical. Appendix 5 summarises the underlying base expenditure assumptions across the 5 years. The target is to achieve recurrent run-rate balance in the first instance, and the test for delivery of business rules (2% surplus and 2% headroom) The 5-Year Financial Plan contains two scenarios (the difference being allocation assumptions) Scenario 1: extrapolates the 3-Year Financial Improvement Plan assumptions to Years 4 and 5 i.e. current allocation + 2.3% pa uplift Scenario 2: Scenario 1 adjusted for the transfer to the Health and Social Care Integration Fund From this information we can determine the baseline financial challenge under each scenario as an extension of the 3-Year Financial Improvement Plan (see next slide) 6
5-Year Financial Challenge to achieve Recurrent Balance Scenarios 1 and 2 100.0m 80.0m 8.2m 8.2m 4.9m 60.0m 8.2m 4.9m 4.9m 15.0m 15.0m 15.0m 40.0m 20.0m 44.8m 52.5m 60.5m 0.0m 15/16(Total 72.9m) 16/17(Total 80.6m) 17/18(Total 88.6m) Scenario 1 Recurrent Run-Rate Deficit Scenario 2 + Social Care Transfer Balance of 2% Headroom 2% Surlpus 7
5-Year Financial Plan Extended QIPP Savings Plans The expenditure and QIPP assumptions under both scenarios are identical. Appendix 5a summarises the underlying base expenditure assumptions across the 5 years. The 30m benchmarked QIPP savings in the 3-Year Financial Improvement Plan remain the foundation of this plan, and have been extended to 65.9m over 5 years as follows: Increase QIPP to reflect the stretch opportunity on the original 30m Extend annual savings into Years 4 and 5 (e.g. prescribing) Adopt 4 new programme areas to deliver savings (refer to appendices for scheme outlines) 1. COBIC Capitation Outcomes based Incentivised Commissioning for Older People Health & Social Care Services 2. Mental Health Strategies 3. Integrated Commissioning (ICU) CCG & Local Authority 4. Reducing variation in General Practice Provision The outcomes base commissioning opportunity is explored in further detail in the separate paper entitled Case for Change Outcomes Based Commissioning for Older People in Croydon RISK: It should be noted that these initiatives are on the cutting-edge of commissioning and whilst clinically led, therefore carry a significant amount of risk on delivery of the financial savings (as indicated by the risk bar on slide 9). It is proposed that his is consistent with the risk appetite of the Governing Body. 8
5-Year Financial Plan Summary of Stretched QIPP Savings ( 65.9m) Description Total 13/14 14/15 15/16 16/17 17/18 Saving Year 1 Year 2 Year 3 Year 4 Year 5 m m m m m m QIPP Savings Programme Benchmarked Financial Improvement Plan (3Yr) 30.0 14.0 10.0 6.0 Stretch on Financial Improvement Plan 7.2 2.0 3.2 2.0 Extension of FIP to Year 4/5 (Prescribing/Cont Care) 4.0 2.0 2.0 Extension of FIP to Year 4/5 (Mitigate acute growth by 1%) 6.0 3.0 3.0 COBIC Mid Range 11.8 6.6 3.2 2.0 Mental Health Strategies Opportunity 3.0 1.0 1.0 1.0 Integrated Commissioning 2.0 0.5 0.5 0.5 0.5 Reduction in GP Variation 1.9 0.5 0.5 0.9 0.0 QIPP Total 65.9 14.0 13.0 17.8 12.6 8.5 QIPP Cumulative 14.0 27.0 44.8 57.4 65.9 RRL% 16% 3.5% 3.3% 4.5% 3.2% 2.1% 9
5-Year Financial Plan Stretched QIPP on top of benchmarked opportunity 70.0m 60.0m 50.0m Note: 11/12 and 12/13 QIPP = 38m net 9.8m 11.8m Reduce GP Variation Integrated Commissioning Mental Health Strategies 40.0m 30.0m 6.6m 5.2m 12.2m 17.2m COBIC Mid Range FIP Stretch / Extension 2.0m 0.0m 3 Yr FIP 20.0m 10.0m 0.0m 14.0m 24.0m 30.0m 30.0m 30.0m 0.0m 13/14 ( 14.0m) 14/15 ( 27.0m) 15/16 ( 44.8m) 16/17 ( 57.4m) 17/18 ( 65.9m) Risk rating 10
5 Year Financial Plan Estimated Impact on Local Providers The impact of the stretched QIPP programme has been mapped to local providers to provide an indication of the scale of shift in service provision and cost base required. Description FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 000 % split 000 000 000 000 Acute CHS 8,689 72.69% 12,213 20,078 10,395 5,088 St George s 1,179 9.86% 1,657 2,724 1,410 690 King s 740 6.19% 1,039 1,709 885 433 Epsom 535 4.48% 753 1,237 641 314 Others 810 6.78% 1,139 1,873 970 475 Out of Hospital NHS continuing/nursing care 910 570 581 500 500 Other out of hospital care 151 2,058 1,981 500 500 Prescribing 1,097 1,425 0 1,500 1,500 Primary Care/ Intermediate services (2,522) (8,613) (-14,111) (5,200) (2,000) Mental Health SLaM 573 2,000 2,000 2,000 Other MH 656 760 (274) (1,000) (1,000) Learning disabilities 402 0 0 0 0 Reserves Non-acute reserve 780 0 0 0 0 Net QIPP savings 14,000 13,000 17,800 12,600 8,500 Note: Reinvestment assumed at 50% of saving, including COBIC and MH 11
5-Year Financial Plan Net Impact of Stretched QIPP Programme The following graphs illustrate, on an in-year basis, and repayment basis, modelled performance against the target of recurrent run-rate balance The following are mapped on each graph: Original outputs of 3-Year Financial Improvement Plan 5-Year Plan: Scenario 1 5-Year Plan: Scenario 2 12
5 Year Financial Plan Financial Position (In-Year) after 65.9m QIPP The stretch QIPP savings achieve and maintain recurrent run-rate balance under stable allocations (Scenario 1). Scenario 2 highlights the challenge of a downside scenario on allocations (no pace of change, social care transfer, no impact of specialised) 13
5 Year Financial Plan Financial Position (Cumulative) after 65.9m QIPP The stretch QIPP savings achieve and maintain recurrent run-rate balance under stable allocations (Scenario 1). Scenario 2 highlights the challenge of a downside scenario on allocations (no pace of change, social care transfer, no impact of specialised) 14
Risk Profile In adopting the stretched QIPP programme of 65.9m, the risk profile is increased as follows: Risk on original benchmarked opportunities is increased as the upside case on delivery has been adopted, albeit in years 4 and 5. Outcomes based commissioning (COBIC) is a significant plank in the stretched programme, but is untested in the UK (refer Case for Change) Mental Health service redesign is essential with benchmarking supporting changes. The specific proposals are being developed as part of the Mental Health Strategy proposals. Many of these initiatives required joint working with partners across the health and social care system to achieve the quality and financial benefits. Allocations changes remain a significant risk, including specialised commissioning, social care transfer, pace of change, annual uplift. It should be noted that in light of the financial challenge, the Governing Body has agreed to adopt a high appetite for financial risk in order to address the inherited clinical and financial challenges. 15
Conclusion The 5-Year Plan maintains the ethos that financial recovery is clinically and quality lead following the principles of QIPP (Quality, Innovation, Productivity, Prevention). The QIPP programme is stretched from 30m over 3 years to 65.9m over 5 years. The plan provides a pathway for service redesign and innovative contracting to deliver run-rate balance under Scenario 1. The significant risks to achievement of recurrent run-rate balance need to be noted. Given that the CCG does not have a 2% headroom fund, financial support will be required to pump prime developments e.g. COBIC, Primary Care Development 16
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Appendix 1: Programme 1 Outcomes Based Commissioning Please refer to separate Governing Body paper outlining the case for change for Capitated Outcomes Based Incentivised Commissioning (COBIC) 18
Appendix 2: Programme 2 Mental Health Strategies Mental Health Strategies Review - QIPP Focus 1. Maintain contracted levels of activity 2. Redefine role of voluntary sector interventions to reduce pressures on statutory services 3. Reduce inpatient beds alongside: Increase shared care in Primary & Community settings Expansion of local crisis resolution services to prevent social care admissions Expansion of community team capacity to prevent crisis admissions Expansion of IAPT services to provide lower level intervention Repatriation of activity to local services. Mental Health Strategies Review - Key Findings For last 5 years Croydon expenditure on Mental health per capita was lower or equal to average spend of other London PCTs suburbs cluster Croydon Council spend on Mental health adults and older people has fallen by 30% Low level of primary care prescribing may be indicative of relatively high level of continuing secondary care management of mental health problems in Croydon Potentially a high number of admissions may be primarily for social care reasons People stay on secondary care caseloads for too long Sharp increases in psychosis in South London in 20 35 age group Croydon has an unusually small IAPT service Current acute pathway under significant pressure with activity well ahead of contract 20% of acute inpatient care happening in non local services Balance between primary and secondary care is leading to difficulties and potential inefficiencies 19
Appendix 3: Programme 3 Integrated Commissioning with LA Integrated Commissioning Unit (ICU) CCG & LA 1. Co-location of CCG & Local Authority from early September in Bernard Weatherall House Croydon 2. Integrated Commissioning Unit for Health & Social Care live from October 2013 to facilitate delivery of greater positive outcomes and more efficient and productive health and social care services. Integrated Commissioning Activities (outside of Transforming Community Adult Services and COBIC) - QIPP Focus 1. Children s Speech & Language Therapies 2. Children s Occupational Therapies 3. Children s Hospital at Home 4. Continuing Care Mental Health, Learning Disabilities & Children 5. Social Prescribing Adult - Community Nursing, Therapies, Rehabilitation, Continuing Care is the focus of the Cobic > 65) 20
Appendix 4: Programme 4 Reducing Variation in Primary Care Reducing Variation in Primary Care outside of Out of Hospital - QIPP Focus 1. Diagnosis reducing delays and errors, focus on assessing and improving the use and quality of diagnosis 2. Referral improving timeliness, quality of referral letters, appropriate right setting, decision making with the Patient (overlaps with Financial Improvement - CRES) 3. Prescribing reducing medication errors, improving adherence, standardising prescribing practices (overlaps with Financial Improvement Prescribing) 4. Acute Illness Appropriate & effective diagnosis, management of acute illness 5. Long term conditions proactive preventative activities and management strategies (overlaps with Financial Improvement LTC) 6. Health Promotion target child hood immunisations, proactive smoking cessation, weight management 7. Accessibility to Services opening hours, availability of clinicians, consistent access to reduce urgent care activity 8. Continuity of Care enabling patients to see the same doctor and other clinical staff 9. Engagement & Involvement of Patients - involvement in decisions about care and treatment 10.Comprehensive services able to meet the majority of patients physical and mental health care needs 11.Patient Centred - interactions concerned about the whole person 12.Co-ordination of care for patients with long term conditions and mental illness, those at the end of their life (overlaps with Financial Improvement EOLC) Strong primary care is associated with: lower health inequalities, better value for money, reduced urgent care activity and lower hospital admissions, improved patient satisfaction. 21
Appendix 5a: Scenario 1/2 Expenditure and Income Assumptions 22
Appendix 5b: 3 Year QIPP Plan (Agreed May 2013) 23
Appendix 5c: 3 Year Financial Improvement Plan Summary of Key initiatives Additional Opportunity Area of key Interventions Potential scope of savings (gross) base Potential scope of savings (gross) best Potential scope of savings (gross)* - 3 years Commencement of implementation Elective 10.9m 12.8m 11.9m 7.1m Non-Elective 14.5m 17.7m 16.1m 8.1m Other 5.6m 7.2m 6.4m 5.2m To be explored 1.4m 3.3m 2.3m 1.2m Total 32.4m 41.0m 36.7m 21.6m * The potential QIPP opportunities outlined above are additional to the existing FY13/14 risk adjusted QIPP. The cost to deliver has been assumed at: - 40% elective - 50% non-elective/ other acute - 50% mental health - 0% prescribing - 0% continuing care 24
No Key Intervention Stage of planning Level of priority Initial scoping / Detailed planning / Implementation High / Medium / Low Potential scope of savings (gross)* - 3 Years EL 1 Referral facilitation system Detailed planning High 2.6m X EL 2 Whole system redesign for key specialties Initial scoping/ Detailed planning Commencement of implementation - Year 1 Year 2 Year 3 High 5.3m X EL 3 C2C referrals Detailed planning High 0.9m - 1.1m X EL 4 EL 5 Appendix 5d: 3-Year Financial Improvement Plan Overview of key initiatives - Elective Dermatology redesign and Teledermatology Revision of MSK services and comprehensive pain management services Initial scoping Medium 0.2m X Initial scoping High 0.7m - 1.1m X EL 6 IP threshold and shared decision making Initial scoping High 0.5m - 1.0m X EL 7 Scaling up of anti-coagulation project Detailed planning Low 0m - 0.1m X EL 8 EL 9 Redesign of sickle cell and haemophilia pathways and service provision Review of Gynecology and ENT intermediate services Grand Total Initial scoping Medium 0.3m - 0.4m X Initial scoping Medium 0.3m - 0.8m X 10.9m - 12.8m * Savings in italic text are specific; non-italic text shows savings which are generic subject to scoping. 25
Appendix 5e: 3 Year Financial Improvement Plan Overview of key initiatives Non elective (Transformation) No Key Intervention Stage of planning Level of priority Potential scope of savings (gross)* - 3 years Commencement of implementation Initial scoping / Detailed planning / Implementation High / Medium / Low - Year 1 Year 2 Year 3 NEL1 Rapid response, community bed provision review + Rapid assessment and triage in acute Detailed planning High 2.4m X NEL2 ESD (transformation and quality premium) Initial scoping High 1.2m X NEL3 Integrated case management and care coordination (scaling up from risk stratification and MDT) Detailed planning High 2.5m - 3.5m X NEL4 Comprehensive geriatric service Initial scoping Medium NA (captured under NEL 1-3) X X NEL5 Care homes initiative Detailed planning High 0.5m - 1.0m X NEL6 Falls whole system redesign Detailed planning High 1.5m 2.0m X Subtotal 8.0m - 10.1m * Savings in italic text are specific; non-italic text shows savings which are generic subject to scoping. 26
Appendix 5f: 3 Year Financial Improvement Plan Overview of key initiatives Other non elective No Key Intervention Stage of planning Level of priority Potential scope of savings (gross)* - 3 years Commencement of implementation Initial scoping / Detailed planning / Implementation High / Medium / Low - Year 1 Year 2 Year 3 NEL7 Stroke ESD and AF Initial scoping Medium 0.3m - 0.5m X NEL8 Diabetes whole system redesign Detailed planning High 1.9m X NEL9 COPD whole system redesign Detailed planning High 0.5m - 1.0m X NEL10 EOLC Initial scoping High 0.5m - 1.0m X NEL11 Urgent care redesign Detailed planning High 1.3m X NEL12 Dementia whole system review and select interventions Subtotal Grand total Detailed planning Medium 2.0m X X 6.5m - 7.7m 14.5m - 17.7m * Savings in italic text are specific; non-italic text shows savings which are generic subject to scoping. 27
Appendix 5g: 3 Year Financial Improvement Plan Overview of key initiatives - Other No Key Intervention Stage of planning Level of priority Potential scope of savings (gross)* - 3 years Commencement of implementation Initial scoping / Detailed planning / Implementation High / Medium / Low - Year 1 Year 2 Year 3 Other1 Mental health: Review of current services Detailed planning High 1.2m-1.8m X Other2 Continuing care Initial scoping High 1.5m X Other3 Other4 Public health: Targeted smoking cessation (maternity, pre-op and early CHD) Public health: Adult weight management programmes Initial scoping High 0.1m - 0.5m X Initial scoping Medium NA X Other5 Maternity Initial scoping High TBC X Other6 Integrated child health Initial scoping Medium 0.3m - 0.8m X Other7 CAMHS Initial scoping Medium 0-0.1m X Other8 Medicines management: Adverse drug reactions Initial scoping Medium 1.0m X X Other9 Medicines mgnt (stretch) Detailed planning High 1.5m X Grand total 5.6m 7.2m * Savings in italic text are specific; non-italic text shows savings which are generic subject to scoping. 28
Appendix 5h: 3 Year Financial Improvement Plan Overview of key initiatives Areas to be explored No Key Intervention Stage of planning Level of priority Potential scope of savings (gross)* - 3 years Commencement of implementation Initial scoping / Detailed planning / Implementation High / Medium / Low - Year 1 Year 2 Year 3 Explore1 Alcohol Initial scoping 0.5m - 1.0m X Explore2 Explore3 Mental health liaison in acute Acute productivity measures Initial scoping/ Detailed planning 0.5m - 1.0m Initial scoping 0.1m - 0.5m X X Explore4 Critical care Initial scoping 0.3m - 0.8m X Explore5 Social isolation Initial scoping TBC X+ Total 1.4m - 3.3m * Savings in italic text are specific; non-italic text shows savings which are generic subject to scoping. 29