Battle of the backlog - how can the NHS maximise use of the independent sector to bring down waiting lists?

The 1^st April 2022 marked one year since the end of the national covid hospitals contract, and the move within the NHS to the ‘recovery’ phase of the pandemic response. The latest round of Referral to Treatment Time (RTT) data published by the NHS which is for April 2022 gives us a clear insight into the state of the recovery one year on, and whether the NHS’ aim of maximising the usage of independent sector capacity is being realised.

Headline figures from the data remain as stark as ever. In April 2022, the official waiting list stood at 6.5million people – the largest on record – and up 2.2million compared to three years previously. Some 2.5million people have been waiting more than 18 weeks, the maximum waiting time set out in the NHS constitution, and 323,000 of them have been waiting more than a year.

But are inroads being made into this unprecedented backlog? Early indications are that the number of people waiting more than 104 weeks – two years – for treatment are starting to come down. This cohort is the NHS’ first priority under the backlog delivery plan, though it is not yet certain whether the target of eliminating these waits by the July target date will be achieved.

On overall activity, however, there is a very different story. Admitted pathways completed in April were down 17% compared with the same month pre-pandemic (2019) and non-admitted pathways completed were down 10%. Not only is activity still significantly below pre-pandemic levels (despite an overall aim of reaching 104% of 2019-20 activity levels in 2022-23), the number of people being referred still outstrips completed pathways, leading to an ever-increasing waiting list.

So where does the independent sector fit into this?

Since last April, the independent sector has committed to making as much capacity available to the NHS as possible – with an offer that the sector could potentially deliver as much as 130% of pre-pandemic activity levels in short order, even taking into account the upswing in the private pay market. NHS England, in turn, have committed in their plan to the independent sector being an integral part of the recovery plan.

In practice, however, it simply hasn’t happened. Now there is some nuance here. In April 2022, overall total NHS pathways delivered in the independent sector were in fact up 7.4% compared with April 2019. But that headline number somewhat masks the true picture. Ophthalmology activity carried out by the independent sector has more than doubled, increasing by an incredible 149% compared with pre-pandemic levels, demonstrating the flexibility of independent sector capacity to meet demand. But it isn’t reflected across other specialties.

Trauma and orthopaedics was, pre-pandemic, the specialty with the highest activity levels in the independent sector by volume – with some 1500 or so procedures carried out per day (in 2019 almost three times the volume of ophthalmology activity). In April 2022 though, trauma and orthopaedics activity was down 9.1% on 2019 (which was, in fact, comparatively the best month since July 2021). Likewise, gynaecology was down 15%, and gastroenterology was down an incredible 38%.

Why then, when waiting lists are up, overall activity levels are down, and the independent sector are ready and willing to deliver, is so much potential capacity in key specialties going unused?

Unsurprisingly there are several interlocking issues at play, that make resolving the problem far from straight forward.

At a most basic level, patients simply aren’t making their way from the NHS to the independent sector at the same volume as three years ago. Patients make this journey by one of two main routes – selecting an independent provider themselves, through the eRS (electronic referral) system that lies at the heart of patient choice, or by being transferred from an NHS provider under sub-contracting arrangements made directly with independent sector providers. And this is where the problem starts. Firstly, eRS referrals to IS providers have fallen off a cliff. Overall referrals are down by 20% compared with 2019 – and even that number is softened by a doubling of ophthalmology referrals.

Getting a handle on the reasons for this are not straightforward, but three key issues come up again and again in discussions – firstly, legacy issues with reactivating the eRS system in some areas after it had been temporarily disabled during the pandemic. Secondly, lack of information for patients, combined with a lack of policy direction to general practice on the importance of choice. And lastly, the use of referral management centres and similar arrangements.

This last one, in particular, is a difficult issue to navigate. Having a single referral point is attractive to systems, in that can reduce administrative burden across the system and can create a single waiting list for the entire system to work through in order. The downside of such a set up, however, is that it can serve as a major bottleneck, with less flexibility to move easier cases through the system quickly – not to mention acting wholly contrary to the principle of patient choice. In reality, many referral management centres deliver lower volumes of patients to the independent sector than would be the case if they weren’t in place, especially where they are owned and operated by NHS Trusts.

It’s harder to get a handle on transfer volumes. Anecdotally, numbers are up – but fundamentally transfer is a far less inefficient method of driving volume to the independent sector. This is for a number of reasons, the main one of which is that identifying suitable patients to transfer is not a straightforward process. This means it’s difficult to sustain a predictable flow of patients, which in turn often leads to last minute requests that are impossible to make work in the needed timeframe.

The issue of transfers also brings in the second key hurdle to better utilisation – money.

Now it’s important here to be clear – using the independent sector for NHS activity has no cost to patients, and costs the NHS no more than if the activity is delivered by an NHS provider. The actual issue in question is the flow of funding – from centre, to system, to provider.

The complexities of the problem would take up too much space to be covered here in full, but at a basic level, the past decade has seen a gradual shift away from a pure tariff system of payment – where all providers (NHS and independent alike) were paid by activity according to the same rules – to something of a mish-mash, where tariff exists only for independent providers and NHS providers are instead paid by a form of block contracting known as the aligned payment and incentive approach.

This approach sees providers given a fixed amount based on achieving a certain level of activity (for 2022-23, this target averages out to 104% of 2019-20 levels) across the country). If they exceed that target, they receive additional funding, but if they fall short, then they have funding removed. The principle of only being paid for activity delivered remains, but the model makes it harder for systems to plan on the inclusion of the independent sector within their activity plans – primarily because independent sector activity is paid at 100% of contracted value whether the system meets its overall targets or not.

Unfortunately this means that many systems are reluctant to contract with the sector, on the basis that they don’t think they can meet their overall activity targets (even with a potentially significant independent sector contribution). This, combined with the significant proportions of trusts who are predicted to run deficits in 2022/23, means that many would rather protect the funding that they have received and keep it ‘in-house’ – even if that comes at the cost of delivering additional activity through independent sector partners.

Clearly this is a significant problem – and has been a major obstacle in this year’s planning round. Nor is there an easy solution in the current financial model – the clearest answer is a redesign of the payment system from the ground up with the independent sector’s relationship with NHS systems properly reflected. In the short term, more blunt measures may be required to encourage systems to use the independent sector in the manner that NHS England intends – this could include ring-fencing funding, building in greater incentives for systems to use independent sector capacity, or even exploring ways of funding the sector’s activity directly from the centre.

Fundamentally, just a few significant actions, if taken, would significantly improve utilisation of the independent sector. Firstly, we need to focus on the flow of new patients rather than trying to rely on Trust transfers – this means ensuring that eRS works as designed across every system. Secondly, we need a serious conversation on designing simpler, more effective funding flows. Finally, we need to overcome the cultural barriers that see money kept ‘in house’ while waiting lists continue to rise. These three things, if done properly, could give individual systems need a real push to get activity flowing and to allow the independent sector to realise its potential role in the overall elective recovery programme.

John Hopgood, Head of Acute Care Policy, IHPN