Comment / Big gain hunting – for elephants in the room

The NHS can make the savings needed over the coming years, but it needs to start addressing some of its taboo subjects.

I know I am not the only one struggling with how I’m going to save 3.5% to 4.5% from my organisation for each of the next three, maybe five, maybe 10 years without some fixed assumptions being relaxed? 

I am of course taking steps unilaterally to deliver big reductions. But based on informal discussions with colleagues, plans seem filled with heroic assumptions. Yet there’s little discussion on the subject. There are many things we could do, but they seem to be taboo. There’s an elephant in the room. 

But I’m not planning to fail; I’m going on an armchair safari – and I can see a whole herd of elephants.

The obvious place to start is payroll.  The planning assumptions already indicate that pay rises will be limited to 1% for two years from 2011. As a finance director, I may be in a relatively luxurious position, but I’d rather have no pay rise and avoid having to lose 1% of my establishment. 

And what about incremental drift? Shouldn’t we suspend pay increments to save jobs and protect services?  Is there not a deal to be struck with staff-side representatives?  The private sector has incurred great pain – pay freezes, pay cuts, reduced hours – and in Greece the public sector is following the same drastic route.  So is it beyond us?

What about the NHS pension scheme, which was only tinkered with in the recent review? Could it be closed to new joiners or, more radically, frozen for all current members, with a new scheme operating for all staff from a certain date with ‘earned’ benefits protected. 

The pension benefits of a replacement scheme need to be good to benefit society in the long term. But one that costs the employer 14% is simply not affordable in the current and foreseeable climate.

Then there’s demand for services. The ambulance sector has seen demand growth of 3.5% a year for the past decade. Demography explains about 1% of that; expectation and accessibility presumably accounts for the rest. Demand management from my organisation’s perspective has failed the moment the phone’s 9 button is pressed for the third time.

Public perception must be changed and education enhanced to ensure patients access the most appropriate care. It’s not the public’s fault; the care network is too complex, too diverse. Single point of access may be the answer, but it needs to be different from NHS Direct, which just filled an unmet demand. 

And finally on my safari there’s the addition of unnecessary costs. Is now the right time to scrap car-parking charges? Other recent cost additions include quality accounts, CQC charges, carbon tax and the Freedom of Information Act. Of course openness and accountability are important, but let’s review what they add.  I spend a fortune feeding companies information that allows them to shower us with marketing material or produce dissertations or TV programmes. I wasn’t aware this was my core function, but I still have to provide the information.

Enough elephants, already? The herd is huge. If there’s an elephant in the room, you must recognise it rather than hope it goes away.

I honestly believe the NHS can make the sort of savings needed to deliver the reductions in public sector spend – getting things right first time and reducing variation will improve quality and save money. We can replace the gaps earlier referred to as ‘heroic assumptions’ in financial plans, but not until we stop acting like Dumbos and recognise the elephants before us.