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The State of Integrated Care Systems: Finances
The State of Integrated Care Systems: Finances

ICBs: What does the ‘less is more’ mantra mean in reality?

Words by:
Senior Director
April 3, 2025

Even before the announcement that NHS England is to be abolished, the direction of travel for integrated care boards (ICBs) was clear – less is more.  

The cost management and reduction scheme which forces a 30% real terms reduction in staffing by 2025/26 had taken centre stage, making the delivery of Joint Forward Plans and the delegation of specialised commissioning far more difficult.  

As such, conversations on reducing the total number of ICBs via mergers have been rife behind closed doors, seen as a strategic decision to make the most out of resources and expertise available.  

However, following the announcement that ICBs must cut their already diminished workforce by a further 50% (although note this will not be universally applied due to ICBs being at different baselines following the previous 30% cut), the consolidation process is now a necessity rather than a nice to have and will be accelerated and at a greater scale than previously thought.  

This is much to the joy of NHS England’s Interim CEO, Sir Jim Mackey, who although falling short of mandating mergers, is keen that ICBs cover larger average populations. With this will come a shift in responsibilities to providers, and the potential for less delegation of specialised services than previously outlined.  

1. So, what does consolidation actually look like? 

ICBs covering small populations merging 

The ICBs that will struggle to survive, and have to merge, are those that cover smaller populations. Many of these ICBs were too small to begin with and are an outcome of the nebulous nature by which ICBs were formed. 

These ICBs are those that cover under one million people (10 ICBs), but potentially those serving under 1.2 million (a further 9 ICBs). Many of these smaller ICBs are in the West Midlands, East of England and the South West, so this is where we are likely to see the most consolidation.  

While no ideal size has been mandated for ICBs, a target population size of 1.5million – 2.5 million is likely to align with ICS design guidance and create ICBs that are at a scale conducive of implementing their new responsibilities while providing financial sustainability. 

In this likely scenario the Midlands would go from having 11 ICBs to 4, East of England from 6 to 4 and the South West from 7 to 4.  

Will larger ICBs split? 

While the focus is on small ICBs which will be unable to continue due to cuts, larger ICBs, more likely to be able to shoulder a reduction in staffing, will not automatically fit the future model envisioned by the DHSC and NHS England transition team.  

But don’t expect these to split into more manageable population sizes. If anything, mergers of large ICBs are just as likely as those covering small ICBs. For example, discussions are ongoing in London on whether to consolidate 5 ICBs to 3, or potentially even 1 ICB covering the whole 10million+ population in the city. 

The potential of aligning to pathology networks 

One train of thought is that the necessary consolidation of ICBs provides an opportunity to align their footprints against the 27 pathology networks outlined in NHS Improvement’s ‘Pathology Networking: State of the Nation’. While the report is now six years old and created by the defunct NHS Improvement, it still holds that these networks are optimal geographic groupings of providers into hub-and-spoke configurations.  

By adhering to these configurations, ICBs would ensure they cover a patient who under current ICB boundaries live outside of their catchment area, but use a tertiary centre within their area, reducing the number of ICBs that share major hospitals, aligning better to patient flows. 

 The pathology networks could provide a template for ICBs to merge along these geographic boundaries, while also bearing in mind considerations on mayoral combined authority boundaries, as outlined by Sir Jim this week.  

2. What will consolidation mean for budgets and spend? 

Winners and losers on budget allocations 

ICB budgets are not distributed evenly, with some ICBs receiving higher or lower funding across key areas including their core allocation, high cost drugs and to cover specialised commissioning. This means that when allocations are broken down per capita there can be variance of over 20% between the amount of money an ICB receives per a patient in their catchment area. 

Often ICBs with large universities in their catchment area, or a higher proportion of people with high indices of deprivation, will benefit from a higher per capita budget allocation. Inevitably some of these ICBs will merge with others that are receiving a lower amount of funding per capita – meaning the freedom to which some ICBs can operate will be stymied.  

While this may benefit some, and hinder others, ultimately one of the key drivers of ICBs covering larger populations is a greater mix of demographics within each catchment area and therefore a reduction in budget variation.   

Misalignment on spending priorities 

Similarly, how money is spent, and where, can differ wildly between ICBs. This does not always correlate to geography, so an ICB which spends a large amount of money on a priority could easily merge with one that spends little money in the same area. 

For example an ICB spending nearly £200 on GP prescribing per person, merging with an ICB spending £120 per person may not appear problematic, but when you extrapolate that £80 per person difference across the potential 2 million people in the catchment area of the new ICB the difference in allocation of resources is stark – in the hundreds of millions. 

How new ICBs wrangle with budget allocations, and how they use them, with a reduced workforce, will be challenging to navigate, and must be taken into account during the consolidation process.  

3. When will this all happen?  

Discussions on consolidation have significantly accelerated over the last couple of weeks, with some ICBs unable to viably continue given the funding it takes to run a statutory body (£2-3m a year) falling below the amount needed for some smaller ICBs. 

As with the abolishment of NHS England, the DHSC and NHS England’s new leadership don’t have the time to wait for legislation to come first. However, as ICBs are statutory bodies, without new, or amended legislation, they cannot formally merge. This means that we can expect de-facto mergers where all 42 ICBs are still legally separate, but not in practice.  

This means while a new health bill is prepared, there is nothing in the way of ICBs and we can expect the first news on mergers to come over the coming months.   

These mergers can’t come soon enough for Wes Streeting, Sir Jim Mackey, and Dr Penny Dash who need to show the widescale changes they are demanding from the system don’t disrupt the implementation of the forthcoming 10 year plan which is now only two months from publication.  

 

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