Feature / QIPP shape and Bristol fashion

The NHS faces a daunting challenge over the next spending period: needing efficiency savings of up to £20bn. The QIPP (quality, innovation, productivity and prevention) initiative is built on the belief that higher quality – treating patients right first time in the right setting – can also mean reduced costs. In the first of a series on health economies tackling QIPP, we visit North Bristol, where rising to the challenge comes on the back of years of financial recovery.

The NHS faces an unprecedented productivity challenge. It needs to find efficiencies worth an estimated £20bn by the end of 2013/14. No part of the NHS will be immune from this. But for North Bristol NHS Trust, the requirement comes after seven years of wide-ranging cost improvements needed to recover a major deficit. And with a new private finance initiative hospital due to come on stream in 2014, providing both opportunities and further financial pressures, there are no illusions about the challenges facing the local health economy.

North Bristol hit the headlines seven years ago when it ran up the largest deficit ever recorded in the NHS – £44m in 2002/03, which was more than 10% of its income at the time. 

While repaying that debt is still a live issue, the organisation has made significant progress with its financial performance. It has posted revenue surpluses in every year since. These were minimal in the early years, but more recent surpluses have been substantial – £9m in 2008/09 and £6m last year (before impairments).

This outturn has been matched by a steadily improving performance in the Audit Commission’s auditors’ local evaluation, which has improved from an overall 1 (inadequate performance) to a 3 (performing well) in the 2008/09 and 2009/10 assessments.

The trust had by April this year repaid more than half of the £52m loan, the hangover from the trust’s initial overspend. It is scheduled to make a further £8m repayment this year, leaving just £19m outstanding.

Repaying the debt

‘The financial picture is of surpluses in the 1% to 2% territory that have gone towards repaying this historic debt,’ says Steve Webster, who joined the trust as finance director just after its overspend hit the headlines and has been there ever since.  But the current challenge – to deliver higher quality services while reducing costs – has called for a step change in productivity improvement.

Mr Webster says the trust faces two specific drivers as it moves into the new future of flat national growth – managing its own cost pressures in the face of likely tariff reductions and the impact of financial pressures on what its primary care trusts can afford to commission.

‘Our strategic health authority’s advice is to plan for at least a 4% efficiency element in the tariff,’ he says. ‘But in addition we need to be generating a higher underlying surplus than we have been before our new hospital opens.’

The new PFI hospital on the trust’s Southmead site will have a net cost that will exceed recent surpluses, not all of which have been recurring or underlying.

On top of this is an expected reduction in non-patient income from undergraduate and junior doctor training levies. And this is before you consider the impact of reduced growth in PCT allocations, which is likely to put pressure on what commissioners can afford to buy.

‘My assessment is that we need to be in the 5%-5.5% range for cost reductions, assuming constant activity,’ says Mr Webster.

Activity issues

‘Constant activity’ is a luxury the NHS can probably not afford – at least not in the same settings. The new hospital’s reduced bed count compared with the two existing sites (Southmead and Frenchay) is evidence that a reduced bed requirement is being planned for in a significant way – whether through fewer admissions or shorter lengths of stay. But Bristol is in a better condition than many parts of England when it comes to demand.

While in some areas emergency admissions have risen by nearly 9% over the past two years, North Bristol has bucked this trend.

‘Our activity has been fairly flat,’ says Mr Webster. ‘Some of the national modelling assumes 4% growth per annum, but we’ve not seen that. Whatever we’ve done on redesign and control at the front end – the cause and effect isn’t completely clear – we’ve essentially kept emergency admissions broadly static.’

The picture is similar for elective admissions, with a local independent sector treatment centre, specialising in orthopaedics, having little impact on activity (largely replacing work that was previously sub-contracted).

While North Bristol is in an arguably better starting position than many – broadly flat rather than rising admissions – Mr Webster is clear that reduced activity remains central to commissioners’ spending plans.

He acknowledges a tension. ‘The picture you’ve got is of PCTs commissioning absolute reductions year on year, while the combined efforts of the system so far are to hold activity level,’ he says. Service level agreements with PCTs for 2010/11 included £17m of activity reductions, while the trust set its budget assuming that only £10m of this would be achieved.

One of its PCTs, South Gloucestershire, had been seeking to take £9m out of the contract. As part of a risk-sharing scheme, the trust has agreed to a more modest £3m coming out. A risk fund would then be accessed by the trust if reductions were closer to the £9m or by the PCT if the higher reduction did not materialise and the activity had to be paid for.

The actual position to date is one of slightly increased contract income as opposed to reductions.  ‘If we look forward into the QIPP plans for the future, the set of interventions planned around elective and non-elective admissions are very similar to those planned across the country,’ says Mr Webster. ‘The challenge is to operationalise these ideas and put the real meat on the bones. To a degree they are plans that need a greater level of detail. There is a greater need for them to be clinically embedded.’

He says this ‘embedding’ needs to be across the GP workforce and the trust’s frontline clinicians, adding that progress is being made.

GP referrals

One of the relative successes in North Bristol has been with GP referrals from South Gloucestershire (see box, previous page and right). Following rises in 2009/10, referrals are down in 2010/11.  Taken with the flat elective admissions, this suggests GPs are, correctly, not referring patients who would not require an admission. But the trick will be to take the next step and turn fewer referrals into fewer admissions. The trust is looking at standardised admission ratios on a healthcare resource group by healthcare resource group basis with the PCT’s GP lead for elective care, and agreeing areas for detailed review between GPs and hospital lead clinicians.

Reduced referrals means fewer first outpatient appointments and that means reducing the outpatient cost base, which is dominated by consultants’ time. Without increased inpatient activity to soak up this time, cutting costs first means reducing locum or agency costs and then reducing programmed activities.

‘We have to recognise that the reality is there is less work there and take out the costs,’ says Mr Webster. ‘But there are clear challenges in getting people on board.’

A contract limiter linked to the first to follow-up outpatient appointment ratio means no payment for activity above the set threshold. While both new and follow-up appointments are down, the ratio is not and is adding another financial pressure. Mr Webster accepts the need to get costs out, but says a joined-up approach is needed.

While the onus is clearly on the trust to ensure follow-ups are used only when necessary, the GPs need to be on board with the overall aim, ensuring referrals are appropriate in the first place and recognising that eliminating follow-up appointments may require alternative community arrangements – perhaps a further visit to the GP.  

North Bristol’s own internal QIPP plans build on its approach over the past two years. It has identified potential savings  by stream of activity – length of stay/beds; theatre productivity; outpatients; nursing; non-pay; and back office. Each directorate gets an overall target for savings, but broken down by these different streams. Wherever possible, targets are set differentially to recognise realistic opportunities for improvement in different service areas or specialties.

‘Where there are hard metrics – for instance, on length of stay or theatre utilisation – we’ve targeted upper quartile or median performance plus a further improvement,’ says Mr Webster.

In other areas where metrics or data by directorate don’t exist, such as costs of patient administration, a more uniform approach has been taken.

The trust is extending this with a transformational change programme known as ‘Building our future’.  This brings together the numerous imperatives for change – financial, new hospital and quality improvement – into a single plan. It aims to support individual directorates to deliver on the various savings streams while maintaining or improving quality. ‘We have a central team that is generating project plans around these cross cutting themes and these are now put into a more structured programme management process with a project leader, say, for outpatient improvement, who is generating opportunity savings directorate by directorate,’ explains Mr Webster. ‘It also acts as a banner for getting more engagement from all our staff, because this isn’t just about money.’

QIPP concerns

Mr Webster believes any process that targets quality and productivity is unarguably the right thing to do. Patients should be treated in the most appropriate and cost-effective way. But the pacing has to be right. In QIPP plans that aim to save money from redesign, he is concerned there is an assumption that full tariff will be released in all cases. He says this will rarely be possible.

 ‘What is important for us is not just QIPP but the net impact of demand growth less QIPP activity reductions. The South Gloucestershire and North Somerset elements of our catchment area are seeing relatively high increases in population, especially the elderly.  But if QIPP reductions exceed underlying population growth, net activity growth is negative.  In our plan we have historically assumed net growth of 0% to 1%, but that is slightly out of sync with PCT plans and is being looked at again.’ Getting a consensus over what is realistic for reducing hospital usage and what the wider impact of changes will be is key. 

North Bristol is not alone in having reduced capacity before, only to find that activity did not reduce in parallel, which resulted in capacity having to be replaced by expensive premium staffing.

‘There is that tension all the time,’ says Mr Webster. ‘One of the conundrums of QIPP is how we build that mutual confidence to take more capacity out.’