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System level finance in health and care – new policy brief

A new policy brief from Public Policy Projects (PPP) highlights the significant progress around financial decision-making that has been made within integrated care systems in the face of ongoing national and systemic challenges.
system level finance in health and care
  • Progress has been made in creating integrated care systems that are collaborative, effectively resourced and responsive to local-level needs. 
  • Increases in inflation, staff shortages and low bed capacity have hampered the adoption of wide-scale reforms. 
  • Even while significant financial deficits loom for ICSs, more time is needed to garner a better understanding of how reforms are being adopted before more system-wide reforms are undertaken. 

A new policy brief from Public Policy Projects (PPP) highlights the significant progress around financial decision-making that has been made within integrated care systems in the face of ongoing national and systemic challenges. This progress includes a move towards approaches that foster collaboration, both among healthcare providers, and between integrated care systems (ICSs) and local governments.  



Additionally, movement away from a results-based to an outcomes-based payment model has enabled some ICSs to become more efficient in how they resource and deliver care in their areas. Importantly, the brief showcases how the creation of system-level financing plans enables ICSs to better support their local areas. 

This progress has been made despite challenges from a growing elective procedure backlog, increased inflation, staff shortages. PPP’s brief importantly highlights that the spending power of the NHS and ICSs are drastically reduced due to the widespread inflation crisis gripping the UK. This, combined with the already drastic challenges presented by the Covid-19 pandemic, means that ICSs have been hampered in their adoption and integration of overarching reforms. 

However, as the PPP brief states, there are clear advantages with the introduction of ICSs, despite the inability to meet financial targets, such as the ability to respond to challenges as they arise at local levels. Other such challenges include the lack of truly effective assessment and measurement metrics that would enable a more prescriptive approach in identifying changes that should – or could – be made to reach targets. 

The brief makes clear that more time is needed to understand how ICSs are coping with these increased challenges, but also how these reforms are taking effect in general. For example, the looming and significant deficits that ICSs will have to manage in the upcoming financial year cannot be viewed independently of the intractable and long-term challenges that exist beyond the control of both the NHS and the ICSs.  

The brief concludes that attempting to implement further reforms in response to the financial deficits is too hasty a measure. Doing so would fail to acknowledge that many reforms arising from the Health and Care Act 2022 have yet to be fully implemented. Despite this, however, benefits of those reforms that have been implemented are evident, from increased collaboration, to financing, to delivering more personalised, impactful and joined-up care. 

Tim Wakeford, Vice President of Product Strategy for Workday said: “It’s clear that the ICS model has the potential to transform how healthcare is delivered in the UK. Indeed, the research undertaken for this report shows there’s widespread support among finance leaders with many feeling that progress has been made over recent years. 

“Workday has helped many organisations in both the public and private sectors undergoing significant transformation. While change is never easy, it’s clear that true transformation is only possible with the right foundations in place. 

“To truly embrace the opportunity the ICS model presents, a system-level approach to financial decision making is required. This is only possible if CFOs join up back-office decision-making, enable system-wide collaboration and elevate their role to that of value creator.” 

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Recommendation One: ICSs must be given time to implement whole-system financial approaches before being subject to further wholesale reform – much of the current capacity pressures facing health and care were unexpected, forcing many systems into a focus on immediate pressures, and into deficit. 

Recommendation Two: DHSC and NHS England should resist reverting to competition-based healthcare models; many health leaders favour a collaborative approach to commissioning and competition runs contrary to the ethos of integrated care.  

Recommendation Three: Activity-based payment models such as PbR should be eschewed in favour of long-term fixed payment models, which are more conducive to population health management approaches to care delivery. 

Recommendation Four: ICSs should be empowered with increased levels of financial autonomy. Not only would this enable ICSs to deliver care and resources more effectively, but it would enable a culture of trust between ICSs and local government that is vital for enhanced collaboration. 

Recommendation Five: Funding allocations should be determined, as much as possible, at local levels. Doing so enables a more targeted approach to care delivery that is respondent to local level needs, thus, further creating a more effective financing and resourcing model. 

Recommendation Six: ICSs must maintain oversight of constituent providers within their region, however they must be wary of becoming overly centralised organisations within their localities. 

Recommendation Seven: ICSs must be empowered and given the right tools to develop and implement system-level views to financial management. These include digital operational tools that enable ‘back-office integration’. 

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