Changes in Patient Care Delivery Vital for Meeting NHS Cost – Grant Thornton
Redesigning patient pathways will play a major part in nearly all trusts’ Cost Improvement Programmes (CIPs) over the coming years, according to a survey of NHS provider finance directors.
A new report, based on a joint survey undertaken by the Healthcare Financial Management Association (HFMA, the representative body for healthcare finance staff) and leading business and financial adviser Grant Thornton UK LLP, examines NHS finance directors’ experience of achieving CIPs to date and their expectations for the next three years.
Nearly nine out 10 finance directors taking part identified service redesign as needing to make a major contribution to CIPs over the long term. More directors highlighted the importance of this than any other approach to savings. The study highlights the recognition within NHS trust management that squeezing greater efficiency out of existing ways of working can only produce limited savings.
Reducing headcount and pay costs will still be an important part of most organisations CIPs, reflecting the fact that 70% of a provider’s costs are typically related to pay. This is also to be expected given the national policy to shift services out of hospital settings and deliver them closer to patients in the community.
In recognition of this, a reduction in workforce numbers and average pay were cited as important factors in meeting spending targets. Eighty-two per cent of the participating NHS trust finance directors said that reducing staff numbers would make a major contribution to cost savings, and 58% thought the same about reducing average pay – suggesting trusts will be looking at changes in skill mix where appropriate.
Confidence was high in terms of meeting financial targets in 2012/13 despite significant cost pressures. However, this confidence reduces in later years, reflecting greater uncertainty about tariff levels, efficiency requirements and business rules beyond the current year. Sixty-three per cent of the respondents said it was only ‘possible’ they would meet their targets in 2014/15 for example, rather than ‘likely’ (25%) or ‘very likely’ (6%).
The report also highlighted the difficulties that NHS finance directors are facing with internal perception of the cuts and initiatives currently being implemented. Rather than being seen as an opportunity to improve services, only 20% of the trust directors surveyed felt that their clinical staff thought that services could improve alongside cost improvements.
Although more than half the participants claimed clinical staff saw the main goal of CIPs as ‘reducing costs without reducing quality’, one in four said the view of CIPs was purely as an exercise in cost reduction.
Bill Upton, Head of Healthcare, Grant Thornton UK LLP, said: “With £20bn of savings to be found, the ability of NHS trusts to deliver financial savings remains as important as ever. While most trusts identify service redesign as key to delivering their CIP, our survey discussions and work with trusts indicate a lack of worked up plans. We believe trusts must make project management resources available to ensure service redesign ideas are converted into robust, deliverable plans.. Those trusts that have a major focus on continual improvements in quality appear significantly more successful at delivering on-going financial savings.”
Keith Wood, Chairman of the HFMA Financial Management and Research Committee, said: “What is clear is that NHS trusts face an unprecedented financial challenge in the coming years. While some organisations have delivered more than five per cent efficiencies in the 2011/2012 period, estimates suggest that the whole service will need to match this performance. For some areas the challenge will be even greater. Success will depend upon finance professionals working alongside clinical colleagues and other support services. Cost improvements are getting progressively harder, and the simple improvements have often already been made. Given the current difficult financial environment is likely to be with us for some time, non-recurrent measures such as vacancy freezes are not only unsustainable, but add to the cost improvements needed in future years.”
Highlights from Grant Thornton’s report:
• two thirds of NHS finance directors who took part in the survey say that their trusts have no plans to use mergers and consolidation of whole trusts to deliver cost savings
• trusts delivered, on average, around 90% of their 2011/12 CIPs target and are planning CIPs for 2012/13, 2013/14 and 2014/15 of 5.1%, 4.9% and 4.7% of income respectively
• finance directors believe that the achievement of future CIPs will depend on the redesign of services/pathways and increased partnership working to deliver savings
• CIPs provide an opportunity to review pathways, can lead to quality improvements and increase engagement between finance and clinicians. There were 34 responses to the survey from finance directors and senior finance staff, representing 14% of provider organisations in the NHS.