NHS long term plan should herald new approach to deliver further efficiency

David Williams profile picture

09 October 2018

David Williams
Policy Advisor - Finances


Ask any trust leader whether they can see waste in the NHS, and the chances are they will say yes. But ask the same person how confident they are that their organisation can hit its efficiency targets, and they will probably say, “not very”.

Why? Because trusts say the current approach to saving money does not address the main causes of inefficiency and cannot be sustained at its current rate.

The current approach to saving money does not address the main causes of inefficiency and cannot be sustained at its current rate.

David Williams    Policy Advisor - Finances

To help inform debate ahead of the forthcoming long term plan for the NHS we surveyed and interviewed provider leaders to find out where they believed efficiencies could be made, what the barriers are, what support they need and how confident they are about delivery.

 

Barriers to efficiency

In Making the Most of the Money: Efficiency and the Long Term Plan, we reveal that more than half of trust leaders did not think they could increase the rate of efficiency delivered in their organisation, and 84% believe they will start next year in a worse position than they did this year. But it would be wrong to say providers believe it is impossible to become more efficient: rather, that we must focus on system level efficiencies and adopt a radically different approach if progress is to be made.

More than half of trust leaders did not think they could increase the rate of efficiency delivered in their organisation, and 84% believe they will start next year in a worse position than they did this year.

David Williams    Policy Advisor - Finances

When we asked trust leaders what the biggest barriers were to becoming more efficient, the top answer was short-termism encouraged by the current financial rules – the control totals, provider sustainability funding and cost improvement programme regimes. Those mechanisms grip the performance of individual trusts, with a narrow focus on the current year.

This has not succeeded in balancing provider finances, given the £4.3bn underlying deficit. What it has done, trust leaders told us, is push them towards quick fixes and in some cases desperate one-off savings. They also said it drains attention away from transformational work, which could deliver efficiencies at scale for a system rather than an individual organisation, and over a longer time. Our survey found that trusts believe efficiencies derived from redesigning services across a system present the best opportunity to make better use of the resource available.

Trust leaders are not defeatist. They are positive about much of the work NHS Improvement is doing on efficiency – efforts to benchmark trusts and identify variation are seen as helpful, and will become increasingly useful as data quality improves. Providers generally feel the Getting It Right First Time programme has the potential to change clinical cultures in a way few centrally-sponsored initiatives have managed in the past. Those that have embraced lean working methods also have promising stories to tell about how resources and staff time can be put to more effective use, improving quality of care and efficiency.

Our survey found that trusts believe efficiencies derived from redesigning services across a system present the best opportunity to make better use of the resource available.

David Williams    Policy Advisor - Finances

However trusts would like an acknowledgement that, while the 7% spend on administration recommended by Lord Carter is just about enough to run existing services, it doesn’t provide headroom for redesign and transformation. And, it is not enough just to identify variation: pointing at waste does not guarantee it will be eliminated. Trusts need more practical support: the popular Global Digital Exemplars programme, with its bottom-up, peer to peer approach to spreading best practice, may offer a template.

 

Lessons to learn

As national system leaders finalise their new long term plan, lessons need to be learned from history. The Five Year Forward View won widespread support for its overall vision, but the improvement in efficiency needed to deliver it was always unrealistic, and came without a rigorous delivery plan.

For too long, there has been an assumption that if you use national payment mechanisms to cut the amount paid to providers in real terms, year on year, this will automatically cause an acceleration in the annual rate of efficiency savings. The endemic provider deficits of recent years demonstrate that hypothesis has been tested to destruction.

The Five Year Forward View won widespread support for its overall vision, but the improvement in efficiency needed to deliver it was always unrealistic, and came without a rigorous delivery plan.

David Williams    Policy Advisor - Finances

The long term plan and new money offer the opportunity to restore the NHS to good financial health – and this will require a stretching, but realistic efficiency ask. If it is to succeed, it will not be brought about via a top-down deflation in the amount paid to providers.

Instead, it should based on partnership working between national leaders, trusts and local systems. Efficiency requirements must be based on reasonable timeframes and take into account trusts’ starting positions, capability, and the capacity available. They need to factor in the support that local systems will need to realise genuine savings. And there has to be a shift in emphasis towards long-term savings that benefit the entire system, not just single organisations.

There has to be a shift in emphasis towards long-term savings that benefit the entire system, not just single organisations.

David Williams    Policy Advisor - Finances

With these conditions in place, an ambitious efficiency target could be achieved. But if not, we could end up looking back on this moment as a missed opportunity to break the cycle of financial distress which providers are currently locked into. And, that allowed unjustified waste to remain in the system.

 

This article was first published by the HSJ on 9 October 2018. 

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David Williams profile picture

David Williams
Policy Advisor - Finances
@DavidProviders

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