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The capped expenditure process (CEP)

Fourteen health economies have been placed into the CEP (capped expenditure process), a regulatory intervention designed to cut spending in geographical areas with the largest budget deficits.

The areas in the CEP are under intense pressure to reduce their spending and have been told to 'think the unthinkable' with regards to cuts.

The CEP has not been announced publicly and only limited details have been made available, typically by individual trusts and CCGs (clinical commissioning groups), or through leaks to the press. However, this briefing provides an explanation of what we know about the process and its potential implications for doctors, patients and the NHS.

 

The CEP

It launched by NHSE (NHS England) and NHS Improvement (NHSI) in April 2017, with the aim of ensuring rapid improvement in the financial performance of those health economies with the largest overspend against their collective control total. This is in line with the position NHSE established in the Next Steps on the NHS Five Year Forward View, that some health economies were effectively 'living off bailouts' and had historically overspent their share of NHS funding.

The process has so far been imposed on health economies that are operating a significant overspend against their overall financial control total for the area, and have been unable to produce deliverable plans for services that fit within that allocation. These control totals are an aggregate of CCG and NHS trust budgets, as well as STF (sustainability and transformation fund) funding. 

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By introducing a cap on overall spending and promoting a wide range of suggested cost-cutting measures, the CEP is intended to support each health economy to deliver workable plans within their funding allocation. NHS bodies within the selected health economies are required to collaborate in the development of a new area-wide plan that will ensure they meet their allocated control total for 2017/18. While deadlines for these plans appear to vary across the 14 areas, most are expected to have been developed by the end of June 2017.

Health economies have been instructed to think beyond typical savings measures and there is a strong possibility that severe action will be taken to make the mandated savings, including significant reorganisation of services and redundancies. In some cases, outside consultancies have also been engaged by NHSE and NHSI to carry out rapid reviews of the finances in an area, with the aim of identifying additional opportunities for spending reductions.

NHSE and NHSI have stated that the process will allow trusts to limit their spending, while achieving the best possible care for patients. However, the primary focus of the CEP is the short-term financial position of each health economy.

 

Who is involved?

The 14 health economies selected for the CEP are:

  • Bristol, South Gloucestershire and North Somerset
  • Cambridgeshire and Peterborough
  • Cheshire (Eastern, Vale Royal and South)
  • Cornwall
  • Devon
  • Morecambe Bay
  • Northumberland
  • North Central London
  • North Lincolnshire
  • North West London
  • South East London
  • Staffordshire
  • Surrey and Sussex
  • Vale of York and Scarborough and Ryedale.

Details are limited regarding exactly which bodies are subject to the CEP within each area, although NHS trusts and CCGs are the principal actors affected. Some of the health economies selected by NHSE and NHSI align with existing STPs (sustainability and transformation plans) footprints, although others do cover smaller areas. In both cases it is unclear how the CEP will interact with the relevant STPs.

Several of these health economies also include trusts and CCGs that are already subject to regulatory intervention, including financial special measure. In these cases, the CEP is intended to align with the measures already being taken.

Regional staff from NHSE and NHSI, specifically the local director of commissioning operations and director of improvement and delivery, will also be involved in the process in each health economy. Their role is to provide oversight and support to those bodies developing savings plans, as well as additional details of the CEP as it develops.

 

What does this mean?

  • Potential implications

    Although the finalised plans for the 14 health economies are not yet publically available, it is clear from the measures that have been suggested so far that their implications for doctors, patients and the NHS are likely to be significant.

    Various NHS trusts and CCGs, as well as the HSJ, have reported some of the possible measures being considered as part of the process, including:

    • The closure or downgrading of hospitals, wards and services - including maternity and emergency departments
    • Redundancies and cuts to staff numbers - while also attempting to maintain sufficient capacity in emergency care to cope with winter pressures
    • Further reductions in agency spending
    • Limiting or blocking outsourcing and patient choice - with the aim of retaining resources within the NHS
    • Rationing services and systematically extending waiting times for planned care
    • Abandoning planned funding increases - including to mental health services
    • Reductions in referrals to hospital

    Restricting or removing NHS funding for certain treatments, including:

    • Tighter limits on IVF treatments
    • Designating additional treatments as 'low value'
    • Delaying funding for certain treatments newly approved by NICE
    • Cuts to endoscopies - a reduction of 25% has been suggested in Cheshire
    • The sale of estates and property assets
    • Restrictions on prescribing
    • Reduced contributions to the Better Care Fund - a programme designed to support the integration of health and social care, and thereby reduce unnecessary admissions and DTOCs (delayed transfers of care)
    • Cuts to continuing healthcare funding, which funds ongoing care for patients with serious permanent or long-term conditions or disabilities.

    NHS Providers has strongly criticised the plans that have been highlighted so far, and has called for full and proper debate on the CEP. The Royal College of Surgeons has also shared its concerns regarding the potential cuts, which it argues will cost the NHS more in the long term.

    The details of these proposals have not been published and neither have the final plans for each area, and so there is a possibility that they may not be carried forward. However, those steps suggested thus far show a clear drive towards radical and severe cuts, which could have drastic implications for patients, staff, and the NHS.

    The suggestion of redundancies and service closures presents a potential risk to the NHS workforce, with the possibility of roles being cut to reduce costs. Further cuts to agency spending have also been suggested, which may have an additional impact on locum doctors.

    In respect to quality of care, the CEP could have a negative impact on the standard of care that patients receive, as well as the speed in which they receive it. Documents leaked to The Guardian also show that the North Central London health economy plans include explicit reference to its cost-cutting measures having a negative impact on quality of care. Possible service reconfiguration could also see the downgrading or closure of hospitals, maternity units, emergency departments and wards. This would present an enormous challenge for those working in services under threat, and also risks the loss of valued local services.

    There has been a severe lack of transparency in the introduction of the CEP and the development of plans for each health economy. Therefore, clinicians and the public have not had the opportunity to respond to and scrutinise the process in their area.

    Cuts to preventive-care measures, such as continuing healthcare and the Better Care Fund, may reduce spending in the short term, but could potentially increase future costs by failing to adequately address continuing issues with social care, DTOCs and their impact on winter pressures.

    It is also highly likely that any cuts facing individual providers or commissioners will alter the development of STPs in the selected areas - a point that has not been addressed by NHSE or NHSI so far. This could lead to further changes in long-term planning within each health economy.

  • BMA policy and key questions

    Key questions to be answered

    There a number of questions the BMA believes need to be answered. These include:

    • What impact will the proposed cuts have on long-term quality of care?
    • Have impact assessments been carried out to assess how the CEP might affect patients in each area?
    • How many patients will be affected by the CEP in each area, and in total?
    • What assessments have been made by NHSE, NHSI and the individual health economies of the impact of the CEP on clinicians, their working patterns and jobs?
    • Will the plans produced by each health economy be subject to a full consultation process with staff and patients?
    • How will the process impact on the ongoing development of STPs in the affected areas?
    • What consideration has been made of the ability of health economies to sustain any reductions in spending they make in 2017/18 in future years?

     

    BMA policy

    The BMA is deeply concerned by the CEP, the secretive manner in which it has been introduced, the risk the proposed cuts could present to patients and NHS staff, and by the implication that deeper cuts will be made to already stretched services.

    NHS staff and their patients need a long-term and credible plan to overcome the crises facing the NHS, which requires proper investment. Short-term savings, achieved through rationing and cuts, will only deny patients treatment, exacerbate already unacceptable waits, and lead to poorer care.

    BMA policy strongly opposes rationing and the existence of a postcode lottery in access to treatment, which appear to be facilitated by the CEP. We also support the integration of health and social care and proper investment in preventative care, which may both be held back by the consequences of the CEP.

    The BMA's principles for service reconfiguration are also relevant here and state that there should be a thorough impact assessment of any proposals, including an examination of safety issues. The process should involve consultation with all sectors and patient groups. It should be led by clinicians and based on good clinical evidence that care will be improved or at least not compromised.

  • Download the briefing

    Our briefing contains more details on the population of areas involved and citations.

    Download the briefing