Analysis: Operating Framework

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The Operating Framework sets out the Department of Health's vision for the NHS, bringing together last year's priorities with the proposals on quality set out by Lord Darzi – though not fully integrating the two. This year the service will have to implement a new quality payment and cope with a host of financing changes. The case for redoubling efforts to improve efficiency is clear, but the Framework is weak on how this should be realised.

The Operating Framework documents have become the place where the Department of Health sets out its priorities for the delivery of health services in the coming financial year, explaining the purpose of reforms and describing how different parts of the reform programme are intended to work together.

National priorities: some constants, some changes but no clear rationale

The Department of Health is aiming to allow local providers and commissioners greater discretion to choose and implement their own priorities while maintaining some national priorities. In line with this general approach, no new central priorities are introduced though last year’s priorities are rolled over to this year. In addition, the Department is taking the first steps towards implementing the proposals set out in Lord Darzi's report – in particular, its emphasis on the need to raise the quality of care.

The priorities are again split into three tiers. The themes for Tier 1, the five national 'must dos', have remained the same as 2007/8 on the grounds that they continue to represent what matters most to patients, public and staff. However, there have been some changes to the actions under these areas. There are also changes to the Tier 2 'national priorities for local delivery'. Last year’s prescribed focus on services for disabled children has gone and instead there is a new focus on access to services for military personnel, their dependents and veterans; support for people 'living in vulnerable circumstances'; ensuring equity in access to and experience of mental health services across ethnic groups; and improving health services for people with severe mental health problems.

All these changes have been made on the grounds that they are areas in which there have been ‘important developments’ in the past year. There is no doubt that improvements are required in all these areas, but what is not clear is on what basis these areas were selected over others.

A new quality framework, but how does it fit with the national priorities?

The content relating to Darzi principally restates policies that are still in development. The Darzi review included a commitment to make a proportion of providers' income conditional on quality and innovation, through the Commissioning for Quality and Innovation (CQUIN) payment framework. Details of this new framework are published alongside the Operating Framework; in 2009/10, the CQUIN payment framework will cover 0.5 per cent of contract income, to be funded from a special allocation. This will be one of the most significant developments for NHS organisations next year. It is not yet clear whether this incentive will drive improvement or simply remunerate changes that would have happened anyway. Nor is there a clear vision for how these two broad policy programmes – the national priorities and the Darzi reform – will fit together.

The chapter setting out Darzi's quality framework and the tools for improving quality (choice, commissioning, leadership, strengthening providers and informatics) makes virtually no reference to the national priorities and the means of achieving the national priorities are principally national strategies and targets, not the new quality framework. The two programmes sit side by side, but are not integrated in any real sense. Moreover, whether PCTs will have the energy and resources to pursue the Tier 3 locally selected priorities in addition to these two programmes and the 21 existing national commitments from previously set targets is not clear.

New financial arrangements

Local areas will also be contending with a suite of new financial arrangements in 2009/10: a lower tariff uplift than the previous year (1.7 per cent compared to 2.3 cent);  a new way of grouping procedures for reimbursement under Payment by Results – HRG4; a new pricing framework for community services; the introduction of CQUIN; a new accounting regime (adopting the International Financial Reporting Standards), which will require moving all LIFT and PFI schemes onto their balance sheets. In addition, all local health economies will be adjusting to the longer term prospect of a new target allocation for the funding they receive in light of a new resources allocation formula, published alongside the Operating Framework.

Ready for a colder economic climate?

The Framework's prescriptions for improving efficiency given reduced levels of growth (which may reduce further as a consequence of public expenditure reductions from 2011) are weak. The ongoing Operational Efficiency Programme and Public Value Programme refers to merging back-office functions, reducing outpatient non-attenders and securing better value for money from workforce training arrangements. However, more radical changes will be required in which efficiency gains are sought through changes to everyday clinical practice and improvements in safety and quality. This is the aspiration set out by David Nicholson in his foreword to the Framework, but, perhaps because it is recognised that this is a matter to be tackled by local management and clinicians, the document itself is thin on detail of how this will be realised in practice.

Assuming that the £1 billion of the £1.8 billion surplus – which the Operating Framework omits to mention – is not clawed back by the Treasury and is added to the Department of Health’s allocation in the next spending round, there may be a small reserve for the NHS to draw on. Nevertheless, the NHS is facing a bleaker financial future than it has for many years, and the onus to boost productivity and increase value for money will shape the health debate for the foreseeable future.