Overdrawn: What exactly is CEP and can pharma help?

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We are all aware of the severe financial straits the health and care system currently finds itself in. According to figures from NHS Improvement the provider deficit for 2016/17 was £791m, and this is set to be repeated this year with the King’s Fund recently forecasting a near £500m provider overspend.

With no substantial new money on the horizon from Government, and all political attention focussed on Brexit, and the passing of the ‘Great Repeal Bill’, the NHS will continue to feel an ever-tightening squeeze on its resources. One such mechanism that has become more high profile over the last month is the new Capped Expenditure Process, or CEP.

CEP is another double-act intervention by NHS England and NHS Improvement. These are the bodies in England with responsibility for overseeing the commissioner and provider sectors and, importantly, the bodies which negotiate provider reimbursement via the tariff. It is the latest in a series of measures introduced by NHS central agencies to bring down spend in line with its budgetary allocations.

Simply put, CEP is a spending cap targeted at specific areas of the country deemed to be financially out of control. It is designed to contain high levels of spending, while bringing under its scope whole health economies, including both commissioners and providers in the region.

Earlier this year, CEP areas were asked to review their current financial plans and come back with bold proposals that would bring spending back in line with budget allocations. They were asked by NHS England and NHS Improvement to consider controversial interventions and ‘think the unthinkable’ over the nature of the care they deliver to reduce local spend.

It is reported that the original instruction to CEP areas stipulated that revised plans and proposals for cost-saving measures should not compromise patient safety and CEP plans should be consistent with the rights set out in the NHS Constitution, and protect patient choice.

The revised financial plans submitted in May 2017, through the CEP, were due to be reviewed by National Directors of NHS England and NHS Improvement. Details of the revised plans, however, are still not in the public domain, but it is likely that many of the areas have produced revised plans that come far closer to closing the financial gaps they face.


Backlash from the NHS

Trusts under the CEP programme have openly criticised the plans. NHS Providers, the body that represents the NHS provider sector, has stated that: “Trusts are concerned that these targets can only be realised in full by cutting or reconfiguring services in ways that are neither realistic nor reasonable.” It also added that, “Some of the proposals could challenge fundamental expectations shared by NHS staff and the public about what the health service is there to provide.”

As a result, according to the Health Service Journal, NHS Improvement has since agreed to nearly halve the savings targets sought through CEP from an initial target of £470m, down to required savings of £250m, although there remain significant concerns about the risks involved in delivering these.

The Guardian reported that Shadow Health Secretary Jonathan Ashworth MP has openly criticised CEP, by saying: “The capped expenditure process is in total chaos. The government are refusing to answer questions about it and Jeremy Hunt is trying to shirk responsibility for this scheme, which will see hundreds of millions of pounds cut from health budgets.”


Pharma to help meet the cap?

To date, dialogue between central NHS bodies and those areas under CEP measures have taken place largely behind closed doors. It is undoubtedly a missed opportunity that industry has not been approached to explore how it might contribute towards meeting these ambitious savings targets.

Industry already provides financial support to the cash-strapped NHS through a unique agreement in the PPRS whereby it underwrites growth in the country’s medicines bill over and above agreed limits. Many companies, however, are seeking to do more with the NHS and have offers specifically designed to help deliver returns.

There is a chance for pharma companies to help generate savings, whether in the cost of treatments or through system efficiencies, to support the achievement of financial targets in hard-hit areas, without compromising patient care.

NHS England’s new Commercial Unit is still being formed, but has started to move into second gear. It now needs to look outward and engage in new types of discussions with industry. There is a clear opportunity for the NHS to benefit from pharma’s ideas and partnerships.

Such collaborations would help generate headroom in specific health economies, so that some of the ‘unthinkable’ measures can remain ‘unthought’ and patients living in certain parts of the country will not receive a lower quality of care compared with others.   


Response time

Suggested measures include:


•          Reducing spend on non-urgent work

•          Reducing levels of planned elective care currently outsourced to non-NHS providers

•          Restricting access to services, with IVF specifically called out

•          Stopping funding for some low value treatments, and seeking to delay or avoid funding some treatments newly approved by NICE

•          Closing wards and operating theatres to reduce staff and operational costs, where it will not impact on emergency care services

•          Closing hospital sites

•          Selling property and surplus land.



Being watched

So far 14 areas have been listed where future financial plans are deemed unaffordable.


1. Bristol, South Gloucestershire & North Somerset

2. Cambridgeshire & Peterborough

3. Cheshire: Eastern, Vale Royal & South

4. Cornwall

5. Devon

6. Morecambe Bay

7. Northumberland

8. North Central London

9. North Lincolnshire

10. North West London

11. South East London

12. Staffordshire

13. Surrey & Sussex

14. Vale of York & Scarborough & Ryedale



Alex Ledger is Deputy Managing Director at Decideum – the views expressed here are entirely his own. Go to decideum.com