The Better Care Fund: no easy way out

Mark Dayan examines the issues with the Better Care Fund's performance pot.

Blog post

Published: 16/07/2014

Nokia CEO Stephen Elop found a place in the vocabulary of austerity-beset civil servants everywhere when he told his struggling company’s staff they stood on a “burning platform”. The phrase suggests that, like a man jumping from a blazing oil rig, managers and organisations can expand the range of what they see as possible if times get tough enough.

The Better Care Fund was designed to be the quintessential “burning platform” policy. Into this pot of funding, in 2015/16, will go £1.9 billion top-sliced from the budget of NHS commissioners, £1.1 billion of transferred money for local authority social care, two chunks of money the NHS is supposed to put aside for carers and recovering patients (£400 million), and £400 million straight from Government’s capital budget.

This money will then be re-allocated, through local plans. The system has managed these so that their net effect is to take just over £1 billion out of the health service’s budget – intended to come mostly from hospital trusts.

To make this large transfer towards council social care, without a crippling impact on the hospital sector, the plans must set out how they will use investment in social and community care to reduce dependence on hospitals, racking up major NHS savings. The idea was to make local leaders speak to one another, and to take the most radical solutions seriously, by facing them with a daunting common task.

You can see why this seems like a clever way out: but there are some big drawbacks

The problem is that with the platform smouldering, it started to look as if there was no way off. Rumours started to echo round the NHS that BCF plan projections didn’t tally up with the plans of hospital trusts or commissioners. The same money had been earmarked for spending multiple times. The deeper problem is that there is little actual evidence that shifting responsibility for care out of hospitals can be a quick money-saver.

Fear in the Government over the possible impact on hospital finances in an election year started to spread. The Cabinet Office was called into action to lead an urgent review of the plans submitted in April, and at a well-chosen hour of Friday night, the Government quietly announced a radical change of direction – a path back through the flames.

The idea is to create a self-correcting mechanism, so that in areas where the BCF works it is allowed to work, and in areas where it fails, it will effectively not have happened at all. £1 billion from the Fund will be set aside as a “performance pot”, given to council boards as originally planned if BCF schemes meet a target of cutting unplanned admissions by 3.5 per cent. Otherwise, it will be handed back to the NHS.

You can see why this seems like a clever way out: but there are some big drawbacks.

For a start, a 3.5 per cent reduction in admissions is not enough for the NHS to break even if it loses £1 billion of funding. If BCF plans work perfectly, deliver reduced admissions in every area, and get their money, the health service would still be left facing a gap of hundreds of millions. Given that 2015-16 will almost certainly see the NHS in a state of financial crisis, this still looks like a serious problem.

On the other hand, missing the £1 billion would leave local authorities without the money to make many BCF schemes actually happen. That would be a shame, because they include many promising ideas for monitoring and rehabilitating vulnerable people – and because social care, more than the NHS, has already been cut to the bone.

And the path for local plans to succeed has become a narrow one. The success of the BCF is in theory meant to be judged against five other metrics alongside emergency admissions, including reductions to delayed transfers of care, and to permanent admissions for care homes.

Now only reductions in emergency admissions will bring in the money for which councils are so desperate. There are two problems with this.

Firstly, this is one of the least plausible areas for progress in a single year. Reducing delayed transfers has been achieved before and the mechanisms to bring it about are fairly simple: it often just needs someone on the phone at the council, with enough money and power to secure a place for those leaving hospital. Reducing emergency admissions means simultaneously tackling a series of social, behavioural, and clinical issues which do not exist within the system but outside it, in the lives and bodies of potential patients.

Secondly, several other BCF goals, especially reduced admissions to care homes, were designed with the potential to generate savings for local authorities – not the NHS. But the large transfers from the health service which will now effectively follow success in reducing emergency admissions pull councils away from using the BCF to look for these sustainable long-term savings within their own services.

The unpredictability and risk associated with the performance pot is also a concern – as we’ve pointed out.

It’s hard to criticise the Government for looking for an escape route, and the “performance pot” is a solution which might salvage some of the genuinely good ideas and intentions contained in BCF plans. But as the platform blazes, there may be no way to avoid somebody getting caught by the flames.

Revision: 31 July 2014

This blog was written before the release of the Revised Planning Guidance on the Better Care Fund by NHS England and the Local Government Association (LGA). This set of documents officially rewrites the Better Care Fund policy. It lays out in full how the “revised pay for performance” pot of £1 billion will be divided up, and how targets and rewards for reducing emergency admissions will be calculated.

Although the entire pot is potentially available for Health and Wellbeing Boards to win under high enough targets, NHS England estimates that the minimum emergency admissions target of 3.5 per cent would in fact deliver only £300 million to actually be spent outside the NHS. The remaining £700 million will technically remain part of the Better Care Fund, but will be spent directly by the NHS, on community health services.

Although still potentially leaving financial pressure on the hospital sector, this marks an even deeper shift away from making substantial transfers out of the health service, underlining that 2015-16 will be an even more difficult year for local authorities.

Suggested citation

Dayan M (2014) ‘The Better Care Fund: no easy way out’. Nuffield Trust comment, 16 July 2014.