This site is intended for health professionals only

Balancing the books

Balancing the books
24 September 2012

Service redesign, referral management and diagnostics are some of the ways savings can be made and from reports we’ve received it would seem that these are areas of focus for CCGs.

But can this level of work really make a dent in the £20bn efficiency savings required? And where are the potential pitfalls when it comes to keeping in the black?

Service redesign, referral management and diagnostics are some of the ways savings can be made and from reports we’ve received it would seem that these are areas of focus for CCGs.

But can this level of work really make a dent in the £20bn efficiency savings required? And where are the potential pitfalls when it comes to keeping in the black?

Leading figures in CCG development gathered at the King’s Fund thinktank in London on 14 June to discuss these and other questions to piece together how, ultimately, we’re going to balance the books.

Victoria Vaughan: Howard, can you get us started by giving us an overview of where CCGs can save and what they need to watch out for?

Howard Stoate: We [Bexley] are in a health economy with resources that are being uplifted by less than inflation, demand that is going up by more than inflation, and a Trust that is finding it difficult to get itself into any kind of financial balance to be sustainable in the future.

So what do we do about it?

We decided that Bexley on its own wasn’t going to be able to solve the problem, so we are working increasingly closely with our neighbours in Bromley and Greenwich. What we are trying to do is do wide-scale redesign of services, largely across the three, particularly around things like cardiology, MSK and diabetes. We are looking at demand management, unscheduled care, lengths of stay in hospital – all those things we believe, because we all have a single large provider, we can do at scale more effectively than we can do on our own.

Obviously, we are doing the usual stuff on QIPP, stuff on medicines management – all that is in the mix as well. But the bottom line is going to be for us that if we are going be sustainable as a health economy there is really
only one way to go.

Reducing referrals won’t effectively reduce costs if hospitals remain full. What we need to do is ease pressure on hospitals by treating more patients in the community and that requires a cultural shift on the part of both patients and GPs. We need to find more community based solutions.

We have to decommission quite large scale services away from the acute trust to physically take capacity out, physically close wards, physically remove consultants, physically reduce the nursing bays, physically reduce the admin base and slim down.

Joe McGilligan: Everyone thinks their budget is wrong and everyone thinks they haven’t got enough spend. The issue is the way the whole system has been set up.

If you have got a hospital that to get FT status has to have a 9% recurring surplus each year, all the drivers and incentives are to make as much money as they can.

Monitor has done a fantastic job in ensuring all FTs are financially stable, but the only way they can be financially stable is by increasing the amount of work that they do without losing people. The perverse incentives are that if you try and stop it one place, it fills in another place. Consultant referrals go up once you start reducing referrals. There is a vested interest in the hospitals maintaining their position.

Candace Imison: Just to reinforce Howard’s point that even if you hold down GP referrals, consultant referrals will grow, that is exactly what we found in the GP referral management research that we did.

So even in areas that had managed to curtail GP referrals, overall referrals had not changed significantly. I think these are really hard messages because losing consultants is not something the NHS has traditionally done, so actually taking real capacity out of hospitals is a hard thing to do – it is easier to close wards but actually I am not aware of any reconfiguration of services that has genuinely resulted in consultants losing jobs.

The reality of the £20bn gap is that does mean we will not be employing as many people potentially, or people’s salaries will go down.

Dr Atul Arora: As Howard pointed out, we have a very financially-challenged Trust on our doorstep and there is clearly an issue for us there. Where there has been some success in commissioning has only been in terms of peer pressure on GPs to reduce referrals. Unless we make major changes in service redesign in hospitals and reduce dependence on consultants, things will not improve. Since the NHS started, GPs have traditionally played the gatekeeper role, which has worked very well up to this point, but things have changed now.

Jon Ford: How do you get the resources out of the acute sector into your integrated setting? How do you design it? You have massive fixed costs in the acute setting, which are going to be there, and you are incurring running costs in the integrated setting. So, the transfer of those resources is the real issue, and I do not know how you can do that locally. Ultimately, it has to be something that is done strategically, because you have to shut vast swathes of your capacity, and you do not drive that as a CCG. You only used to drive it at the strategic level and I do not see how you are going to get round that problem.

The other point – and I think Candace again hit the nail on the head here – is that 60% of your costs, in some cases more than that, are staff costs. So, if you want to save £20 billion, it has to be staff, and you do not have that much capacity to alter staff because quite a lot of them are contracted out; they are part of PFIs, they are part of long-term contracts. You only have nurses and doctors and some therapists, at the end of the day.

The bottom line is that it has to be doctors who are made redundant, and we recently, in the last decade, hiked up medical school intake, to generate more.

Ken Aswani: If we were to put all the successful areas together, that in itself will make a significant change. For example, with dermatology, we have virtually 90% of our dermatology out in the community; it is a better service than it was before, and it is definitely much more cost-effective. If every CCG did that, that would be millions of pounds saved.

We can demonstrate that in a number of areas, and it is sustainable; we are actually continuing that.

What we found is that we went from GP-led clinics in the community to consultant-governed, where each clinic is governed by a consultant, and together they work out the best solutions. The ones that get it really do make a difference; they provide a better service at a reduced cost.

For example, for ENT, all the referrals are screened; the ones that can be managed by a GP are referred back to the GP to try six weeks of PPI or straightforward advice, and then refer. Again, that has hugely reduced the number of referrals, but the acute trust have accepted it because they were struggling to put on so many extra clinics.

Howard Stoate: I entirely agree with Ken that we can do redesign. We have done dermatology redesign and taken a lot of staff out. We have done cardiology re-design and taken staff out: fine. However, I do not think that we have the luxury of that because the problem is, I have looked at the figures for the next three to four years: South London Hospital Trust’s recovery plan is based entirely on increased income. I entirely agree with Joe; your trust does the same thing. Their entire future is based on getting more income. When you say, ‘Where from?’ they say, ‘Oh, repatriation from Guys and Kings. We are going to do this; we are going to do that.’ Their entire plan is based on Guys and Kings. That is their survival plan.

So we do not make these big changes, and the reason is we are blocked by politics. It is how we get beyond that and say, ‘If the GPs really are going to take control of the health service, does the government actually mean it?’ Does the government actually say to GPs, ‘GPs, do it’, or do they say, ‘GPs, we do not really want you to do it, what we want you to do is to go up there and try to explain to the public why you cannot have what you want, and if you fail, it is your fault’? That is the problem that we have. If we are not careful, yes, it is a risk, because we will not be allowed to do it.

Jon Ford: The problem is that many of these redesigns are local. The CCGs are supposed to be providing local health services. Politicians require national equity. If you were a CCG trying to do something that puts you in a position where somebody somewhere else in the country cannot get that service; that causes problems. It causes repeatable problems, because the law actually allowed your head to do exactly what you want locally, because there has to be a national prescription, some services have to be available nationally, and the politicians cannot keep their noses out of local decision-making because of the equity issue.

Unless you allow the CCGs’ heads to redesign services for local people according to local circumstance – that may mean some things not being delivered in some areas that are delivered elsewhere –  I think politicians are always going to interfere and prevent precisely what you are trying to achieve locally.

Candace Imison: There is an interesting situation, though, in that the reforms technically keep the Secretary of State further from that local decision-making. I know that the reality, as I understand it, is very different, but technically it is the case. Also, I do think Health and Wellbeing Boards represent new opportunities to engage local politicians in understanding the situation in a way that is much better.

Joe McGilligan: If you are saying to somebody, ‘Save £20 billion’, they say, ‘I do not know where to start’. I broke it down in our practice. Our QIPP challenge this year was two patients per practice per year not being admitted. That was our QIPP challenge last year. If you break it down to that, practices say, ‘Yes, I can do that’. If you say, ‘I want you to save £20 billion or £500,000’, whatever, they cannot do it. Yet if you say, ‘One admission per week, per doctor, if you do something slightly differently, that will do it. Overnight.’ That is how you have to break it down for people to actually understand that.

Kosta Manis: Can I just go back for one minute or two, Victoria, to your title, which has appealed to me immensely: ‘Balancing the books’? It brings back to me my own partner and myself sitting over the ledger: the ins, the outs, losses and gains, and so on and so forth. Facts and figures; what have we got to balance the books? Why do we call it balance? The only thing we have is Nicholson Challenge: 20 billion boys and girls saving in the next four years.

Let us start from the beginning. It does not take into account the technology, the demographic changes, or anything else. To me, it will be more than £20 billion. Also, as Howard would probably agree, after the next election, there are going to be much steeper demands on savings from the NHS. So my guess is, it is not going to be £20 billion, it is going to be £30 billion, but for the sake of argument, let us stick to £20 billion. So far, the Nicholson Challenge has done extremely well. What I have an issue with is the method. How did they do it? They did it by redundancies and by pay freeze. Okay, they trimmed the tariffs, but these are their main weapons for succeeding recurrent surplus, they will actually put the surplus on their targets. What we are left with are two weapons, which are QIPP and CIP (Cost Improvement Programmes). To me, the performance of those two methods so far has not been successful.

What I am getting at is that the £20 billion savings over the next four years, to me, is a utopia. The reason it is not going to succeed is because, as Howard said earlier on, there are too many district hospitals in certain areas; not everywhere. Unless there is a drastic cut on those hospitals that are currently obliged to use any means available to bring in revenue, I do not think it is any help whatsoever to the success of the reforms. As for the CCGs, the reason they are there is to take the blame, when that happens.

GP Business hosts regular roundtables to tackle the issues affecting
GPs with invited guests including practicing GPs, academics and GP leaders. For more information contact: [email protected]

Want news like this straight to your inbox?

Related articles