Went to the Confederation conference in Liverpool where I chaired a session about Commissioning when there is less money to commission health with. Matthew Swindells from Tribal and Malcolm Scott Chief Exec of Westminster PCT spoke.
The whole conference took place against the backdrop of what will be a radical change in the resource available to the NHS. I will discuss some of the content but first its interesting to chart the different groups of responses to the issue of what to do about the money .
The ‘realist‘ depressives These managers and clinicians think they form the backbone of the NHS and whilst they may be a growing delusion, they do form the backbone of its culture. They have seen it all before and will therefore know what to do when the money dries up again. In some ways what they see as a return to the past is an enormous relief for them. All this business of competition and choice would always end in tears, so after a few years of trying to learn these new ways, they return to cuts with some relish. They are depressives because they feel that ‘politics’ – that strange game which gives them all the resources has now reverted to its normal hostility to their lives. For most of the period up until 2001 politics never had the ‘courage’ to give them enough money. Then for a few years for unknowable reasons someone called Tony Blair broke these rules and found lots of money. for them. Now for similar unfair and unknowable reasons, the money has been turned off again. Again its business as usual.
Their answer to the demand/ resource ratio going wrong again is to do what they did before. If we have to cut £15 billion by 2013 and most of our money goes on salary, then that means we have to sack 12% of our staff. It may not quite be the mathematics of Roman decimation, but the numbers are scarily similar.
And also history shows that given the inevitable rise of demand for health services, there will have to be a rise again in waiting times. Rising demand static income must lead to increased waiting times and the size of lists.
They admit to this not being easy and a bit depressing, but the skills that they always are in control again.
The business process technicians One of the great things that has been happening in quite a few hospitals in the last three years or so is results from their becoming more and more responsible for their finances. (For FTs if they make money they keep it, and if they lose it they have to find it. So its probably worth making and keeping the stuff). So, counter-intuitively at a time of great increase in resources, some hospitals – and a few other providers, have been looking closely and regularly at their costs and how to improve them. This has led to a considerable increase in technical skills and an ability to run through processes and demonstrate where costs can be saved. This has mainly happened in hospitals because that is where the payment for service has been at its most profound.
In April next year the DH plans to introduce tariffs for mental health and community health services. The need for these technical skills will then be at a premium there. A helpful and neighbourly thing to do would be for those hospitals with expertise to set up low cost consultancy unitst o work with colleagues in other places.
Nothing I say should belittle this activity. As tariff is reduced more and more, waste, 10% a year I would expect, will be driven out of providers. But whilst this figure looks high it is nothing compared to,
The commissioner who recognises the importance of their Allocative Efficiency task. There was a sobering show of hands in the meeting on commissioning when Michael Scott asked all those commissioners in the room if anyone had succeeded in cutting their acute spend during the last year. The answer was no one. Yet I know that most PCTs in the room had intended over that year to do just that. This is crucial.
Allocative Efficiency is the role of the PCT. That is to ensure that the finances and the patients are allocated to the institution that is best able to provide the health care. Matthew Swindells from Tribal reckoned that at any one time 30-40% of the people who were in hospital should not be there. This is a lot of people and a lot of money. Some should have been discharged quicker and some should not have been in there at all.
We have known this. PCTs have know this for some time. Yet still every PCT in that room had increased their acute spend last year, They had almost certainly had plans to reduce it, but failed.
If this continues for 2009/10, 2010/11 and 2011/12 then the NHS will go bust. We all know that it’s got to be done, but the mechanics of making it happen seem to be mainly absent.
So for “Allocative Efficiency” read “stopping people from going into or staying in hospital unnecessarily” . This will be one of the main themes of my blog over the next few months.
The reforming visionaries One of the most oft quoted phrases in the conference was that “we should not waste a good crisis”. This phrase does of course have a certain relish to it. What we have not been able to change and confront when there has not been a crisis, the crisis will let us do. This has already started to happen. In recent years the DH, backed up by the Treasury has gone cold on tariffs.
Her Majesty’s Treasury exists in two modalities. When it thinks about the private sector it thinks strongly of laissez-faire in the 18th century. Pricing and competition needs to be introduced, maintained and developed. But when it thinks of public expenditure it reaches back into its library to the 18th century. Here it likes control from HMT through the Department concerned all the way down to the person writing the checque. So it was never really in favour of such tricky things as prices and consumer choice in the public sector as these represented cut off points in the HMTs total control of the chain of command over their money.
Therefore one of the best moments of the last decade of battles with HMT about public service reform was when in the Budget book they said that following the billions that had been saved by the creation of pricing in secondary care, this would now happen in community health and mental health. When a sinner comes to the Lord we should all accept them with open arms, HMT has now come to accept prices within the NHS as a vehicle for improving value.
HMT is now facing a crisis, and that is forcing it to trip through 250 years to think of new incentives to get Value for Money out of public expenditure. The crisis is not being wasted.
People are looking very hard at the whole way in which value is created. For too long the model has been one where the only way in which value is created is by bringing a sick person into contact with a health professional or their technology. It is this change that will form of the main part of my blog for the next few months.