BOARD PAPER

PART I – NOVEMBER 2010

WHITE PAPER UPDATE & EMERGING TRANSITION PROGRAMME

MARK PRICE
PROGRAMME DIRECTOR – ORGANISATIONAL TRANSITION

Summary of the Paper:

The PCT submitted responses to the White Paper ‘Equity and Excellence: Liberating
the NHS’ published on Monday 12th July 2010 and 4 supporting consultation
documents earlier in October. The responses are available on our website at
http://www.iow.nhs.uk/index.asp?record=1412. The DH have also published two
further consultation documents , one on Information and the other on Choice , for
which the consultation deadline is January . Responses will also be submitted to
those documents.

The new arrangements require the separation of provider services from

commissioning by April 2011. Currently there is internal business separation rather
than organisational separation and the latter is particularly difficult for NHS Isle of
Wight to achieve.

Our concerns were escalated to the SHA and DH and, following a meeting with
representatives from both organisations on 4th October 2010, a letter was received
from DH on 13 October outlining a way forward:
1. NHS IoW and the SHA would encourage the GP consortia to consider moving
forward at a pace such that they could be viewed as a pathfinder – regionally, if
not nationally, demonstrating that commissioning on the island is strong and
separate from provision.

2. The SHA would lead an option appraisal for the ultimate provider form. This
option appraisal would be completed by the end of the financial year and would
describe all key milestones, and address, for example, the specific issues the
financial challenges the island faces.

3. It is accepted that provider services will remain within NHS IoW until 2013.
However, in the meantime, the SHA would assure itself that NHS IoW has
achieved business separation of provision and commissioning reflecting existing
national and SHA guidance. It was agreed this would include separation of
ledgers.
The attached presentation pack has been delivered to a number of forums and
discussed with a range of stakeholders. It sets out the direction of travel. A short
paper providing an update on the issues and the transition programme will be tabled
at the Board Meeting.

Decisions Required:

The Board is recommended to note this paper and endorse the proposed direction.
 BOARD PAPER

PART I – NOVEMBER 2010

TRANSITION PLAN

MARK PRICE
PROGRAMME DIRECTOR – ORGANISATIONAL TRANSITION

Aims / Objectives supported by this paper:

Principal Objective 5

Care Quality Commission Regulation this relates to:

Principal risk(s) related to this paper (select from assurance framework if

appropriate):

Principal Objective 5

Any legal issues related to this paper that the Board should be aware of, or that
require Board approval:

Implementation of the Government White Paper will require primary legislation which
is scheduled to be considered in Parliament.

Extent of Public Involvement taken or planned:

Our White Paper responses and Transition plans have been discussed with the
Health Overview and Scrutiny Committee, LINks and Patients Council.

Author(s) of this paper:

Mark Price, Programme Director – Organisational Transition

Lead Directors responsible for this area of work:

Mark Price, Programme Director – Organisational Transition

Kevin Flynn, Chief Executive

Date of paper:

22 October 2010

Enc
Purpose
• Feedback the recent meetings with the DH & SHA about 
transition between now & April 2013
• Understand how I shape with you the programme of work 
that is emerging following this
• Talk through how I engage you in the development of the 
overall cost reduction programme & determining the future 
form of the provider in the new post white paper era 

1
Overview of Health System
Local context Organisational context

• The Island has a population c140,000 (this is less than  • NHS IoW exists to maintain this balance for a place 
half that needed to support a DGH).  more vulnerable and close to the threshold of critical 
• There is no fixed link so there are extended travel times  mass than is average for England. 
to the mainland & local people are reluctant to travel  • For this reason NHS IoW is unique for England ‐ a 
(especially the elderly) due to cost and logistics. Commissioner and Provider of the Islands: Mental,  
• Extreme weather and emergency planning show the  Acute & Prison Health; Ambulance, Primary & 
island has to cope on its own with minimal mainland  Community Services, etc. with Provider and 
support during difficult times. Commissioner business separated internally.
• The island is seasonal with the population doubling for  • The white paper requires organisational separation of 
periods in the summer when there are large events. This  Commissioner from Provider which brings challenges 
varies health need & demand. and opportunities for the Island.
• The average life expectancy is above that for the SE. • There is no other health organisation on the Island to 
• There is a growing number of people over 65 (25% by  facilitate separation so the proposal is to retain the 
2012 making demographics more typical of those of  existing organisation through the transitional period so 
England in 2048) and there is a very large prison  it can become a Provider FT whilst divesting: 
population (1.25%).  Commissioning to a GP Consortium and the NHS 
• The island is economically poor for the SE with 7.7% on  Commissioning Board, and overall system resilience 
disability benefits compared to SE average of 4.6% & this  oversight to a new Health & Wellbeing Board.
is growing. • The Island Strategic Partnership (ISP) wish to explore 
• This means the Island’s health system has to maintain a  using the opportunity presented by the White Paper to 
sensitive balance between clinical and financial  drive change and get closer working across the island 
sustainability and resilience whilst underpinning the  public and third sectors.
islands economic wellbeing.

2
Overview of Health System
Financial overview To achieve the White paper:

As a single organisation: • Work with partners (locally within the NHS, 

• In 2010/11, as at the end of August 2010, we are  commercial & third sectors and with national public 
‘on track’ to save £7.4m and deliver the planned  sector organisations delivering services on the Island) 
surplus. In future years this gap increases to c£10m to create a new health & social care system managing 
pa (depending upon assumptions) which can be  the transition of:
achieved by delivering QIPP in the short term.  • Commissioning ‐ to a new local GP Commissioning 
• The NHS on the IoW is therefore ‘In balance’ with  Consortium and the new national NHS Commissioning 
commissioning & provision in the same organisation  Board
during the proposed transitional period .
When separated: • Public Health ‐ to the Local Authority and a new 
National Organisation
• The Commissioner is immediately in surplus, the 
Provider in deficit, & the gap widens year on year  • The existing organisation ‐ to a Provider Foundation 
exacerbated by QIPP.  Trust ‐ FT (&/or Social Enterprise ‐ SE) that will be a 
• A local provider is only financially sustainable with a  vehicle for change across public services
payment system that includes subsidy because of  Keeping the existing organisation for the transitional 
critical mass. period after which the PCT is abolished & responsibility 
• Key to achieving separation is having a future  for overall system resilience rests with a new Health & 
payment regime that does this and by achieving  Wellbeing Board
better integration of all public services delivered on 
the Island to share overhead and help improve  To deliver QIPP & transformational change of the 
critical mass. whole health & social care system.

3
Overview of Strategy
Island Provider ‐ Proposal

• To use the changes offered in the white paper to: 
– transition the existing organisation into a Provider Foundation Trust (FT).
– bring together in this FT as many corporate support services as possible from across the IoW 
including commercial, third sector and national public sector organisations delivering services on 
the Island.
– extend the FT to provision beyond health to social care and possibly later other related services.
• This improves ‘critical mass’ and reduces overheads not only of health but also the other public sector 
organisations that take part and support the delivery of a ‘place based’ approach.
• The FTs role will include the ‘spin off’ of future Social Enterprises (SEs) where staff wish to do so, business cases 
are sound and maintain resilience. To provide some level of security and incentive to individuals it will also 
support their transition and provide shared services if required.
• An FT is preferred because it is a defined process but it remains to be confirmed it can accommodate the 
proposed range of services. If it can’t the alternative is a large Social Enterprise (SE) very similar to an FT but 
with a defined benefit beyond health (something like Welsh Water which is a SE set up for the greater benefit 
of the people of Wales).
• An options paper on the legal form of the New Provider is in draft and suggests an FT can work if contracted 
using ‘Section 75s’ for non‐health activity.
• From a health perspective an FT is only possible with payment subsidy and this also influences arrangements 
during transition as the new payment regime has to be in place before full separation can take place.
• Dialogue is underway with the SHA & DH to understand the nature of organisation that is possible from their 
perspective, the emerging payment arrangements, and nature of Options Appraisal they will need to see

4
Overview of Strategy
GP Commissioning ‐ Proposal

• GPs have established a group, and PCT Commissioning staff are engaged with them, 
designing a single GP Commissioning Consortium.
• The intention is for GPs to have started Commissioning by April 2011 and to be fully 
commissioning by April 2012.
• The GP are making an application to become a regional pathfinder project for GPC
• GP Commissioning arrangements can be established quickly during the transitional period 
when the PCT acts as the receiver of overall funding and distributes as shown in later slides. 
This overcomes the island premium / subsidy issues pending confirmation of new national 
payment arrangements.
• When the PCT is abolished there will need to be a new payment regime in place to replace 
the transitional subsidy arrangements and this remains on the critical path until these new 
arrangements are confirmed. Urgent dialogue / guidance is being sought. 
• GP Commissioning budgets are not yet known and the governments management cost 
reductions mean, for the transitional period (and possibly beyond), it has to be assumed 
some form of shared commissioning services with other PCTs, GP Consortia, the National 
Commissioning Board, and IWC may be necessary ‐ so are being explored.

5
Overview of Strategy
National Commissioning Board ‐ Proposal

• Currently government proposals reduce the resources and funding under local control 
so the ISP seek to explore an IoW based element of the NHS Commissioning Board to 
oversee critical local services. Currently the National Board is proposed to commission 
things like primary care, maternity, paediatrics and locally delivered specialist services 
(which include IC & NICU). What would sit locally will need to be confirmed.
• A letter outlining the Island’s desire to achieve more local control over government 
funded services has been sent by the Leader of the IWC to the Prime Minister and 
further dialogue is proposed, including the Cabinet Office, regarding more ‘place 
based’ budgets.
• The desire is to establish a local NHS Commissioning Board function during the 
transitional period (see slides that follow). Some of this could combine 
(organisationally or through partnership working) with IWC Commissioning, the GP 
Commissioning Consortium and Public Health – but detail will need to be developed. 
• There is also economic benefit in sharing corporate services of these new local 
commissioning arrangements (inc. Public Health) with the New FT Provider to help 
reduce overheads and improve critical mass.
• This approach is being explored with the SHA & DH and detail needs to be developed 
with national and local stakeholders.

6
Overview of Strategy
Health & Wellbeing Board ‐ Proposal

• Key for the island in its post white paper environment is a highly effective 
and functional Health & Wellbeing Board because it will be the only entity 
that can take a complete overview of the commissioning, provision and 
outcomes of the island’s health and social care system.
• Transition will need to be overseen by a System Transition Board of local 
& other stakeholders.
• It is proposed that this System Transition Board be considered as a 
precursor to the Health & Wellbeing Board.
• This could facilitate learning about the sensitivities of the islands system 
resilience and ‘critical mass’ so that a full strategic capability can be 
developed to support the Health and Wellbeing Board in its future role of 
overseeing system resilience. 
• This could be used to create the ability to identify & target early 
intervention preferably before system resilience or outcomes are 
threatened. 

7
Overview of Strategy
Delivering the White Paper ‐ Summary

PCT Partners
Public / third sector &
commercial Partners
Local GP Commissioning Surplus / deficit
imbalance
Become a Provider FT
National PC & Spec. &/or SE with local shared
Commissioning (inc. services
maternity & prison) Will need to
include
some
Will need to
include
some
Commissioner Corp Services
Public health Provider
NHS IoW

LA based PH Overall system

resilience
National PH agency Health & WB Board

• Separating Commissioning from Provision is only viable with a payment regime that addresses the 
local need for subsidy.
• Sustaining ‘critical mass’ has to be done by working across all public organisations.
• Overall system resilience needs to become the responsibility of the Health & Wellbeing Board. 
8
Overview of Strategy
NHS IoW Transitional Arrangements – April 2011
Funding

PCT Board

Subsidy Commissioning
Board

Provider
GP
Commissioners
Public Health

IWC Local ‘National

Existing IWC Section 75s
Commissioning
Board’ Function

System Transition Board

9
Overview of Strategy
NHS IoW Transitional Arrangements – April 2012
Funding

PCT Board

Subsidy Commissioning
Board
* * Merging of
membership and
functions to be
confirmed.
Provider
Full GP
Commissioning
*
IWC
Commissioning
Increased use of Section 75s & Public Health
Local ‘National
Commissioning
Board’ Function
Shared services

System Transition Board

10
Overview of Strategy
NHS IoW Transitional Arrangements – April 2013
The desired ‘end state’ is achieved with
• Commissioning separated from provision but with partnership working with IWC & National Board .
• A larger provider who is now an FT doing Health, Social Care & Shared Services.
• The local health & social care system being overseen by a Health & Wellbeing Board.
• The new FT supports the ‘spin‐off’ of Social Enterprises where there are willing staff and resilient business 
cases.

Market 
Health &
Mechanism 
Wellbeing Subsidy [tbc]
Partnership Health & Wellbeing Commissioners (a) or (b) or both
FT (a) Subsidy arrangement
Full GP
Commissioning
IWC
Commissioning
Higher use of Section 75s & Public Health
Local ‘National
Commissioning
Board’ Function National
SE’s Commissioning
Board
(b) Subsidy arrangement

Island Health & Wellbeing Board

11
Overview of Strategy
Becoming an FT….

• QIPP is making explicit a law of diminishing returns with provider savings.
• This is beyond productivity as the provider in more areas starts to hit the threshold of critical mass below which 
services can’t go. As a result for every £ the Commissioner believes can be saved the Provider can only realise 
about 60p.
• Some of this can be overcome by getting better at Counting & Coding but this is likely to be by no more than 
£1m or £2m – but key is closer working and integration of public services to create new delivery models.

• For example MH, DN, SS, CS and others all undertake home visits. With a more multi‐skilled health & social care 
workforce there must be potential to reduce the total number of visits and improve the experience of patients, 
carers & staff 
• An emerging issue is Estates and infrastructure where a draft study is starting to confirm that there are 
unavoidable fixed and semi‐variable costs beyond that covered by average national tariff of around £5m.
• Another area is Corporate overheads where work is needed to establish the contribution this makes to fixed 
and semi variable costs beyond that covered by the Av. National tariff. 
• Island Premium services such as A&E and Maternity have traditionally attracted subsidy of c£5m but more 
areas are expected to be approaching their critical mass threshold as the total cost base reduces so this figure 
can be expected to rise.
• An example is Ambulance Services where the introduction of triage can reduce ambulance call outs by 25% but 
the total staffing and number of ambulances can’t be reduced because it would take the service below the 
minimum safe level. At the reduced volumes the national tariff won’t cover the costs of the service so it will 
need subsidy.
Work will be needed during the FT application process to make this more explicit

12
Overview of Strategy
What is the New Provider?

An Options Appraisal will be undertaken between now and April 2011 as 
part of the FT process. The Option ‘menu’ will include:

Social Care  ‐ c£60m
Acute Care  ‐ c£100m  The SDS will be developed
with GPs and other
Maternity Care  ‐ c£4m stakeholders within the formal
Community Care  ‐ c£10m  FT process and will be used
to determine the
Prison Health  ‐ c£4m organisations form and
Mental Health  ‐ c£20m content .
Ambulance Services ‐ c£7m

The Options are expected to cover min & max scales of activity and range 
of services to identify the optimum cost / subsidy range.   It is proposed 
this process be overseen by a revamped Clinical Design Group with sub‐
groups for the various areas (TBD)
13
Overview of Strategy
Option appraisal

The Options need to be developed but will need to include:
– Option 1 ‐ the minimal island health solution based on a clinical view of 
what could be transported to the mainland
– Option 2 ‐ if the above excludes A&E then this option will be minimal with 
A&E, Maternity, etc.
– Option 3 ‐ the maximum organisation for health with everything in it
– Option 4 ‐ as 3 but with social care provision added
Whilst the above options need to be developed this does not mean that we are 
advocating an Island without A&E, maternity, etc..
There will be opportunities for stakeholders, patient, staff and public 
involvement in the development of the options.
The minimal options will need to include the cost of robust transport and logistic 
arrangements to demonstrate the relationship between this and the costs of 
local provision.  
There will need to be a financial model that facilitates adding and subtracting 
services to help ‘goal seek’ the optimum solution. 
It is seen key to identify high cost services that generate the need for subsidy so 
it is absolutely transparent where these are needed and to support discussions 
regarding future payment mechanisms.

14
Outcomes from DH Meeting

• We will evidence business separation by:

• Planning for the GPC to become a Regional pathfinder (consistent
with maintaining the current PCT during the transitional period)
• Demonstrating a phased approach to GPC transition (as slides)
• Refreshing our audit and closing any remaining significant gaps
• Proposing a timetable for separating of ledgers
• We will confirm our intention to enter FT pipeline (Nov) and produce
option appraisal by end of March 2011 with a view to becoming a FT by
April 2013.
• Submit the above to our Board & the SHA Board (by end November) for
DH submission (early December) for an “Approval in Principle” (AIP) to
maintain the integrated organisation for the period through until April
2013 and enter the FT pipeline.

15