Achieving transformational change – the key ingredients needed to become a high performing NHS

Chris HamChief Executive, The King’s Fund5 December 2013

The challenge

NHS will receive flat real terms increases at best for the foreseeable futureHoles in the NHS ‘ring fence’ mean that some of this increase will be transferred to local authorities, especially from 2015/16NHS has more or less delivered on Nicholson challenge through pay restraint and tariff cutsMuch more needs to be done to navigate to 2020 without performance and patient care suffering

NHS England: Call to Action: £30bn gap by 2020/1 (could be smaller…. But still a gap)

“The broad consensus is that for the next decade, the NHS can expect its budget to remain flat in real terms, or to increase with overall GDP growth at best.” Call to Action

Assumes GDP def=1.7% pa

Assumes ‘Need’ growth of 5.4% pa

Uses actual GDP def. + guess for 2018 on (+1%

2018 on)

Assumes ‘Need’ growth of 4% pa

£13bn

£30bngap

The NHS productivity challenge: Making £1 in 2011 buy £1.60’s worth of care in 2020

High quality care does not always require extra expenditure

Every health care system suffers from waste and inefficiencyIn the US, states with high levels of spend have outcomes no better than states with low levels of spend, and outcomes are often worseWaste and inefficiency often occur in care transitions, e.g. delayed transfers of care, which have wider repercussionsDistinguishing between warranted and unwarranted variations is not easy

Tackling variations in care

Effective care: the challenge of under useSupply sensitive care: the challenge of over usePreference sensitive care: the silent misdiagnosis

Russian roulette for NHS leaders

Francis and other reports emphasise importance of front line staffing in delivering safe careThe move to 7 day working is not cost freeStaffing levels in some providers may need to increase to avoid future failures of careWith such a high proportion of spend going on pay, where will the money come from?

Staffing and pay

Delivering future QIPP plans cannot ignore staffing levels and payIncremental pay progression, extra pension costs, and proposed pay increases add to the pressures on the NHSBut the costs of agency/locum staff and high rates of sickness absence need to be tackledAnd opportunities also exist to cut back office costs and improve procurement practices

The wider economy

As the economy grows again, this will be reflected in pay increases in the private sectorThe gap between the wider economy and the public sector will widenThe BMA, RCN, Unite and others will not accept pay restraint willingly Debate over the pay review body illustrates the difficulties that lie ahead

The view from our leaders

David Nicholson: politicians need to be honest about what can be delivered with available NHS fundingMalcolm Grant’s three options: impose user charges, ration care, root out waste and inefficiency (and don’t do the first two until the third has been achieved)

Where should NHS leaders focus their efforts?

Delivering improved performance in a large and complex organisation requires action at all levelsIf the Nicholson challenge has been delivered mainly through crude national controls to date, a different approach is needed in futureEach and every NHS organisation must redouble its efforts to reduce waste and inefficiencyOrganisations must work together in local systems of care

Good quality care often costs less

Systems of care

The NHS needs to adopt a local systems approachHow can organisations and clinicians work together to deliver improvements?Local authorities and the voluntary sector should be involvedIntegration is now supported by Ministers, but policy settings do not always support

Long term conditions and integration

Much NHS spend is in acute hospitals and arises from unplanned admissionsMany unplanned admissions involve people with multiple and complex long term conditions: a small proportion of patients account for a high proportion of spendThe NHS needs to give real priority to long term conditions and admission avoidanceIntegration can play a key part in this, both within the NHS and between NHS and social care

Where next?

Providers will face increasing performance pressuresAn increasing minority are already struggling to meet targets and balance booksSmaller hospitals appear to face particular challengesExtra funding is being provided to areas and services under pressure e.g. South London and winter pressures moneyService reconfiguration costs before it possibly pays e.g. South London and Mid Staffs

Will this be enough?

The King’s Fund’s view

Now is the time to review fundamentally the health and social care divideThe Barker Commission will report its findings and recommendations in 2014Assuming (heroically) the next two winters can be navigated, the next government will face some very difficult choices e.g. between building surpluses or increasing public spending Leading the NHS today is not for faint hearted