News / News analysis: A difficult sell

Last month the Department of Health aimed to grab an easy headline. ‘Fewer NHS managers, more doctors and nurses,’ it screamed. The substance behind this message was a reduction of 2,770 managers and senior managers between September 2009 and September 2010 and a spookily similar 2,707 increase in the number of professionally qualified clinical staff, including consultants, GPs and nurses.

While clearly playing to the tabloid gallery, a number of observations jump to mind. First, the time period suggests the changes are as much to do with the former government’s policy as anything done as a result of last year’s health white paper (itself only published mid July 2010).

But perhaps more important, some managers are wondering how replacing one set of staff costs aligns with the quality, innovation, productivity and prevention (QIPP) agenda. More specifically how does it support the challenge of achieving £20bn in savings over the coming four years?

Far more realistic and ‘on message’ is David Flory, NHS deputy chief executive. Speaking to Healthcare Finance earlier this year (February 2011, page 16), he acknowledged that the service was behind on  some of the actions it needed to take to deliver the £20bn savings. ‘I look at the workforce numbers all the time, and I look at the capacity in the system,’ he said.

‘And now, as we head towards 2011/12 and the significantly reduced rates of increase, we have to play catch-up.’

He reiterated these views in a comment article in the Health Service Journal in March. ‘The headcount and hospital activity numbers suggest we are not running ahead of profile on QIPP as we might have wanted. This isn’t hurting right now, but soon will if 2012 plans don’t get to grips with the pay bill and shifting work from higher cost to lower cost/higher quality settings.’

More with less

The simple truth is that – whisper it quietly – finding savings of £20bn will involve doing more with less – and that almost certainly includes fewer staff.  It is fair to say the NHS does not have to actually release £20bn of cash. The £20bn equates to the increased cost of meeting higher demand from an ageing population and the costs of new technology and drugs. While all of this needs to be met from broadly flat allocations, some can be achieved by treating more patients – the higher demand – with the same number of staff, presuming lengths of stay can be addressed and pathways remodelled.  But the higher costs of new drugs or therapies and of additional consumables, will actually require real cash to be released from existing costs.

Even where pathway changes mean staff numbers in broad terms are maintained across health economies, they will not necessarily be in the right places. New community services may keep patients out of more expensive acute facilities, while improved community support (in health and social care) may allow earlier discharge or whole phases of secondary care to be reprovided in the community.

But this will still require acute organisations to shed staff in line with commissioners’ demand management plans. And those re-recruited in the community may well be different types of professionals with different skills.

Chris Calkin, former HFMA chair and association spokesman, is clear the NHS has had a generous financial settlement compared with other government departments. But it is not immune from the well rehearsed pressures of inflation, demography and advancing technology.

‘All of these pressures are focusing attention on productivity,’ he told Healthcare Finance. ‘With around  65% of costs in the workforce – higher in mental health and community sectors – it is inevitable there will be an impact on staff numbers.’

Mr Calkin added that earlier efficiency drives on soft facilities management and back office functions have left little opportunity for major savings in these areas.

‘With the level of outsourcing, whether to shared services or as part of private finance initiative deals, the opportunities to deliver further efficiencies in these areas are limited. Increasingly the focus is falling on frontline staff to deliver  increased productivity and efficiency combined with improved clinical quality and patient-centred care.’

Avoiding redundancies

This will not mean a headlong rush into redundancies. There is a well trodden pathway for NHS bodies – bearing down on agency staff costs and better rostering, freezing extra posts and not re-recruiting to all positions as staff leave – before redundancies are even considered. 

‘As frontline staff and beds are taken out of the system, the key message to the public is that this is not a reduction in the volume of healthcare available or a threat to the quality of services,’ said Mr Calkin. ‘That is not an easy sell but one we must deliver on if we are to maintain the public’s confidence and support.’

This is in line with wider calls for the service to monitor outcomes rather than inputs – meaning the focus should be on the quality of care delivered rather than using staff numbers as a proxy for quality.

Unions remain unconvinced. A spokeswoman for Unison said the quality of care was closely linked to staffing numbers and skill mix. And she referenced the former failings at Mid Staffordshire, where the organisation was too focused on financial targets and didn’t consider enough the impact of reduced staffing. She accepted ‘there may be circumstances’ where staff numbers could be reduced as long as there were ‘checks and balances’ to ensure care of the appropriate quality was still being provided.

For instance, the union acknowledges a scenario where a hospital might look to close beds as a result of, for example, reduced length of stay. But the spokeswoman said this could only happen if the right community support were in place to support the faster discharge.

Broader financial challenges, particularly within local government and social care, mean this support may not be available. The union suspected that in many cases the motivation for staff reductions is purely financial and that the £20bn was unlikely to be achieved without inflicting damage to patient service.

It has been compiling figures for planned NHS job losses – 54,000 at the latest count and growing by about 4,000 a month it claims.

Some trusts contacted by Healthcare Finance pointed out that these cuts were dependent on the success of PCT demand management plans. PCTs may have a patchy track record to date on managing demand, but  if their schemes are successful and trusts do not reduce pay costs, NHS productivity measures – already being criticised – will worsen.

John Appleby, chief economist at the King’s Fund, said it is already clear that staffing reductions are playing a part in hospital plans to deliver future activity plans within budget. The question is only about the scale at which this will need to happen.

He pointed out that hospitals face a double whammy of pressures. First, the tariff is passing on real and challenging unit price reductions. At the same time PCTs are looking to reduce activity in key areas. Put bluntly, it means hospitals will do less and get paid a lower unit price.

‘Pay is 50% of entire NHS spending and for hospitals it is between 65% and 75%, depending on the type of hospital,’ he said. ‘For hospitals, which are under the most direct pressure to generate more productivity, where are they going to look? You can’t avoid your biggest budget, which is pay.’

Clearly, the pay freeze helps – at least for the next two years, although a deal on increments would have provided further relief.

The reality is NHS bodies will have to take difficult decisions on staffing levels while facing growing union opposition and little political cover from the centre. Despite political rhetoric about an outcomes focus, the public is unlikely to move away from seeing staff cuts as anything but a reduction in service. As we stand, we appear no closer to a headline declaring ‘Fewer staff, better care.’

Efficiency webinars

The HFMA is running a series of interactive efficiency webinars. The first – ‘Delivering more with less’ – was held at the end of March and involved the NHS national director for improvement and efficiency Jim Easton. A recording of the session can be accessed at www.hfma.org.uk – follow links for events and then webinars. Further webinars in the series are to be held on 6 April and 12 May.