News / News review – reforms controversy; Q2 financial position; winter pressures

The NHS year is likely to be dominated by the government’s proposed reforms and health service efficiency programme. While health secretary Andrew Lansley looked forward to a year when his planned reforms redefine the NHS in England – he found an extra £162m from central budgets at Richmond House to support faster discharge in the current financial year – others were more circumspect about prospects for in 2011.

Reflecting this in his own new year message, British Medical Association chairman Hamish Meldrum (below) insisted the NHS would be tested to the limit as it tried to cope with ‘unprecedented’ financial pressures and ‘unnecessarily ambitious’ reforms. Days later the BMA warned proposals to overhaul the collection, control and use of patient information could be difficult to achieve within current financial constraints, while in its report, Remote control: the patient-practitioner relationship in a digital age, the NHS Confederation said investment in IT was crucial.

The future shape of the health service in England is clearer following publication of the health and social care bill in January and the legislative framework and next steps document a month earlier. The latter includes plans to cluster primary care trusts during the transition to GP commissioning consortia, a move designed to retain key staff and ensure organisational and financial stability during the transition period.

The move to clusters takes its cue from London, where one of the first contracts to provide support to pathfinder GP commissioners was awarded to a partnership led by KPMG. The KPMG Partnership for Commissioning, which also includes the National Association of Primary Care, Healthskills, Primary Care Commissioning, United Health UK and lawyer Morgan Cole, will provide finance support, including financial and contract management, governance and personal development support to the pathfinders.

While PCT and strategic health authority staff will be concerned over their futures, the acute sector is not immune from job cuts. Heart of England NHS Foundation Trust announced it would cut 1,600 back-office jobs over the next four years. The trust said it typically shed 3%-5% of its staff a year – losing 400 staff a year was the equivalent of 4% and it hoped the job losses would be achieved without redundancies.

The Next steps document and other recent publications have mentioned the Department’s wish to develop tariffs. Its new cancer strategy pledged to accelerate the development of chemotherapy and radiotherapy tariffs. The strategy aims to save an extra 5,000 lives a year by 2014/15. Funding will be provided to improve earlier diagnosis, by increasing GP access to diagnostic tests and supporting more testing and treatment in secondary care.

Away from the reform programme, NHS organisations continue to deliver healthy financial results. At quarter two, SHAs and PCTs were forecasting an aggregate surplus of £1.286bn, according to the Department. This was down from the £1.345bn forecast at the end of quarter one, though it remained in line with the revised operating framework for 2010/11. NHS trusts were forecasting a further operating surplus of £177m (£186m in Q1).

NHS foundation trusts delivered an actual surplus of £213m for the six months to September 2010, with EBITDA (earnings before interest, tax, depreciation and amortisation) of 6.9%, according to Monitor’s review of quarter two. Operating income was £181m (1.2%) above plan, primarily driven by greater than planned non-elective, outpatient and other NHS revenue. The aggregate cash balance at Q2 was £2.8bn (£199m above plan), mainly due to favourable movements in working capital and slippage against capital expenditure.

But there are signs of tension in the system. At £152m, foundation trust operating costs were 1.1% above plan with an overspend in the acute sector offset by an underspend in the mental health sector. ?Much of the extra cost was driven by the extra activity.

The Department reported four PCTs predicted an aggregate year-end deficit of £56m at Q2. No PCTs did so at Q1. Three NHS trusts were forecasting a gross operating deficit of £69m – there were two at Q1, forecasting an aggregate deficit of £55m. The NHS performance framework assessed seven trusts as challenged on finance – there were six at Q1.

In January, Barking, Havering and Redbridge University Hospitals NHS Trust’s appointed auditor issued a public interest report after the trust failed to meet its statutory duty to achieve cumulative break-even over the five-year period ending 31 March 2010. ?

Amid stories that some PCTs and providers were reducing services in order to make savings, NHS deputy chief executive David Flory (right) wrote to PCTs reminding them to ‘have regard’ for guidance on the purchase of IVF services. He acknowledged that the National Institute for Health and Clinical Excellence is reviewing its guidance, but in the meantime he insisted the current guideline stood – this offers up to three IVF cycles to eligible couples where the woman is aged between 23 and 39.

In another letter, Mr Flory said he expects primary care trusts to be ‘reasonable and fair’ with providers when elective activity falls well below contractual levels in exceptional circumstances. Winter pressures could lead to a drop in elective activity and place an undue burden on trusts’ financial positions. Adjustments to the overall emergency activity payments could be made through local agreements. ?

The NHS Confederation reported that one way of making the service more efficient is to make patients happier. But finance directors shouldn’t rush off to dress up like clowns – the confederation’s argument is that well-informed patients who feel they are listened to and are comfortable in their surroundings are less likely to develop complications or need readmission.

The month in quotes

`The public are just not aware of the sums they can earn. If the data were published, it would put pressure on them and reduce some of the figures we are seeing.’

York University’s Professor Alan Maynard says consultants’ overtime earnings should be published after it was reported that some consultants earn £100,000 a year from waiting list initiatives (source: BBC)

‘Call it the post-bureaucratic or the post-industrial age, the NHS, like any other sector of the economy, has to keep up with developments in technologies. In doing so, there is an opportunity to both improve care for patients and make sure resources are better focused when face-to-face care is the only way forward. ‘

NHS Confederation acting chief executive Nigel Edwards, who leaves the confederation later this year, on the importance in investing in IT

‘This is widely regarded as a well-run trust; there’s no slack to trim off, these cuts will strip the service to its bare bones. It adds up to one thing for patients – a collapse in the quality of care.’

Unison’s Karen Jennings warns of the consequences of cutting 1,600 posts at Heart of England NHS Foundation Trust

‘Some providers will perform better than others, but that does not mean people will receive worse care. In fact, the evidence is that where there is effective competition, all producers are driven to raise their game.’

Health secretary Andrew Lansley dismisses claims that greater competition will lead to poorer care