Comment / All for one: no room for going it alone

With unprecedented financial challenges facing the whole health and social care system, working together is the only viable option, argues Cathy Kennedy.

Calling on organisations to work as whole health economies has become something of a cliché. But the truth is that, along with engagement with local authorities, this is the only way the NHS can meet the current financial challenges.

NHS deputy chief executive David Flory underlined the point last month (Healthcare Finance February, p16) when he called on finance directors to look beyond their organisational boundaries. They could ‘do the right thing by your organisation… at the same time as taking this broader role’.

He also suggested PCTs had had the luxury of being able to afford to see their demand management plans fail, thanks to significant levels of growth funding. But we are moving into different economic times and this luxury no longer exists.

Sometimes it can seem the easiest thing for PCTs to do is pass the buck by moving QIPP (quality, innovation, productivity and prevention) savings on to providers. There is a place for demand management, and for caps and marginal rates to provide sensible risk sharing as health economies work together to deliver new pathways and ensure patients are treated (or not treated) in the most appropriate setting. But they cannot be used by PCTs simply to limit their exposure and pass on an unreasonable saving pressure to providers.

If you push the bump in the carpet, it simply emerges somewhere else in the system and often comes back to hit you.

Secondary care providers already face significant efficiencies built into tariff and non-tariff services. PCTs – and GP consortia – will need to think long and hard about the long-term consequences of multiple short-term decisions. Too many people salami slicing current services could result in unexpected and unwanted consequences such as unviable services or the loss of a district general hospital.

That scale of change may sometimes be what is needed, but it must be planned and managed.

This is not to say providers don’t have a huge role in changing their portfolio of services and reducing their own costs, in all sectors. If PCTs have been able to hide the slow uptake of demand management behind growth funds, then acute hospitals have often delivered cost improvement programmes out of increased activity, rather than taking absolute costs out. This has to change.

But it will only happen if we collectively identify the problems and jointly buy in to the solutions.

The partnership has to be wider than just the NHS. Cuts in local government provide a major risk to the NHS – there could be changes to the thresholds for entitlement to social services or slower assessments and provision of services for patients awaiting hospital discharge, which could clog up hospitals. These hospitals will face higher costs, not all of which are guaranteed to be covered under current funding rules, and PCTs risk increases in excess bed day payments. No-one wins.

And if people don’t receive the social care they need at home, we will see emergency admissions rise. This clearly isn’t right for the patient, but it also makes no sense financially. While PCTs may be partially protected from the full costs of such admissions, through the marginal rate, hospitals will meet the full costs. Overall the health economy loses.

There is no easy solution. And everything is complicated by the transition to the new NHS structure and the need for PCTs to crack down on running and management costs. There are things we can do alone – hospitals streamlining procurement, sweating their assets and reducing agency costs and PCTs hitting areas such as back office costs and prescribing. But the fact remains that the solution will not be found through an island mentality. Cliché or not, the big wins will come from working together.