Comment / Back to basics

If anybody out there missed the fact that good old-fashioned cost efficiency is back on the agenda, they must surely have been put straight by the health secretary discussing the price of toilet rolls at the NHS Confederation conference.

This was reinforced by last month’s release of Lord Carter’s interim report on his Review of operational productivity in NHS providers. Although transformed models of care are important to the overall £22bn efficiency challenge, productivity and efficiency in the provider sector remain absolutely crucial.

The overall ask of 2% per annum (rising to 3%) over the next five years is more than has ever been achieved by the sector without some assistance from pay restraint, so providers need all the help they can get.

By all accounts, Lord Carter and his team do genuinely want to help. They are keen to stress that they want to support trusts to improve themselves and that their findings are not to be used as a stick to beat organisations.

Organisations supporting the programme that I have heard from all speak highly of the team and its work.

The team has sought to establish a base metric to measure the efficiency of organisations now, to provide information to boards on what is achievable in term of improvement and to provide them with pointers as to where they might look to find those improvements.

Their findings demonstrate a significant variation in performance across providers, but they conclude that there is no silver bullet to solve the efficiency challenge; the answer lies in a relentless focus on costs across a number of fronts.

The evidence is compelling: the lack of controls on sales reps (65 on site at any one time in one organisation), the huge number of product lines (500,000 across the NHS compared with global best practice of 6,000-9,000) and price variations of up to 35%.

It provides a signal to NHS finance and procurement staff to get back to basics and make sure our houses are in order before we say no more can be done on the efficiency agenda.

The report calls for sensible standardisation of clinical practice and increased transparency in clinicians’ relationships with suppliers, something that’s difficult to argue with.

The scope for efficiency gains in pay costs is of course much higher than non-pay, with an NHS provider pay budget of £45bn against a non-pay budget of £26bn.

Lord Carter is clear the drive for efficiency must encompass both. The interim report includes a granular review of nursing rosters against patient numbers, highlighting big disparities.

On paper, it can be all too easy to convert changes in length of stay into savings. But in finance we know it can be really hard to get the cash out, especially where hospital activity is reducing or extra activity is remunerated at less than full tariff.

But difficulty is no excuse. Our challenge is to find the management capacity to push the efficiency drive on multiple fronts.

We absolutely need to support the development of new models of care. We have to dig into the potential for quality and cost improvements from reducing clinical variation. And, yes, we have to push again on good old-fashioned efficiency – if what we are doing now is the right treatment with the right supplies, can we do it or procure it cheaper with no reduction in quality?

This probably means we need to invest in procurement systems (recognised by Lord Carter) – which in itself is difficult in the current climate.

By the way, the difference in the price of those toilet rolls? £30 to £66 per box.

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