We can't just 'do the same again' to make £22bn of NHS efficiencies

Yesterday’s apparent Conservative commitment to fund the extra £8bn the NHS Five Year Forward View requested from politicians is welcome.

The forward view suggested a £30bn NHS funding gap by 2020, with £8bn of extra NHS funding set alongside £22bn of NHS efficiencies.

The document is a vital template but the 2015 spending review will need to revisit its assumptions as some have already changed.

NHS providers, for example, have been required by National Institute for Health and Care Excellence guidelines to add further staff over the last year, with more to come and the full year costs of this growth not reflected in the 2014-15 outturn.

The new commitments being made by politicians will also need to be factored in: for example, Labour’s commitment to 36,000 extra NHS staff and the Conservative commitment to all hospitals delivering seven day services by 2020.

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24/7

NHS providers support the need to run effective, well staffed 24/7 services but this costs.

‘The required investments must be factored into future NHS financial needs’

And the NHS needs investment in community, ambulance and mental health services, as well as in the hospital sector to ensure that patients not only get the best hospital care but can then flow seamlessly back to the community and their own homes - 24/7 hospital care needs 24/7 community care.

This means investment in social care as well. We have a health and social care service, a hospital and community service and a physical and mental health service.

Each needs to be supported in parallel and this must be factored into future NHS financial needs.

Integration benefits

In looking where the NHS can realise £22bn of efficiencies, there are clearly longer term opportunities.

These include benefiting from the demand reductions that “getting serious about prevention” can bring and realising the financial benefits that new integrated models of care might bring.

But, as the forward view itself sets out, these will take time to realise and will, themselves, require investment.

Investing to transform and double run existing services whilst new service models are being developed is nothing unusual.

As the early King’s Fund and Health Foundation work on an NHS transformation fund is showing, large scale change programmes routinely fund double running.

‘Public finances will be tightest in the early part of the Parliament’

Labour’s Oldham commission, for example, costed this transformation at an extra £2bn a year for each year of the next Parliament.

This investment needs to include funding for appropriate extra management and leadership capacity so that we support and set a realistic task for the small cohort of clinical and other managers who are already stretched keeping today’s show on the road.

However, one key issue for the NHS is that, as this month’s budget showed, public finances will be tightest in the early part of the Parliament so the service will have to realise significant savings over the next three years.

Delivering these efficiencies at this speed brings a further financial pressure.

It’s difficult to see how they can be delivered without significant pump priming from some form of “spend to save” programme – investing up front in better procurement; embedding improvement methodology; or merging back office functions across organisations.

There has been no reference to such investment anywhere but it seems essential if the NHS is to realise significant savings between 2015 and 2017.

Time to change tack

Much is rightly made of the NHS’s delivery of the “Nicholson challenge” to save £20bn over the last Parliament, including very high levels of productivity improvement between 2010 and 2012.

But it would be a mistake to believe that “we just need to do the same again”.

‘It would be a mistake to believe that “we just need to do the same again”’

Much of the Nicholson challenge has been delivered by holding down pay. And all the provider sector evidence – a rapidly growing deficit; slowing cost improvement programme savings; increasingly missed CIP targets – suggest that we have largely exhausted the supply of savings within the existing approaches and structures.

If the NHS is to realise a further £22bn of efficiencies, the service has to approach the task very differently from what’s been done over the last five years.

NHS providers are ready to play their part in this stretching challenge but they tell us they need three things:

• Honesty and realism about what really is deliverable rather than plans that, as if by magic, add up to the amount required but are actually undeliverable, passing risk to the NHS frontline and patients;
• A recognition that many efficiencies can only be delivered at local level and that delivering £22bn in a completely new way requires full co-design between national and local, right from the start;
• Acceptance that local delivery of such a stretching task will require unprecedented levels of support from NHS leaders and realism about how this task is then balanced against the other requirements of providing outstanding patient care that meets performance targets and moving to new models of care.

Chris Hopson is chief executive of NHS Providers