Comment / Raising the game on productivity

The requirement for greater efficiency is nothing new in the NHS. But the productivity challenge is about to get even more demanding, argues Bill Moyes

We’re all aware that the productivity challenge facing the NHS is a daunting one, with increased pressure to drive up quality while pushing costs down. Foundation trusts have performed well financially in a relatively benign climate but the world has changed. And it’s about to change even more.

Current growth in health expenditure is 4% per annum. The Pre-Budget Report outlines that the government expects growth in public expenditure including benefit payments to fall to 1.3% in 2011/12 and 1.1% in 2013/14. This is likely to require a big increase in productivity, which could demand 1% more efficiency per annum.

Simultaneously, the pressure to drive up quality will intensify – improved metrics, quality reporting, and an increased focus on patient experience will all turn up the heat.

Past responses to financial squeeze – longer waits, reduced maintenance, no new kit – are no longer an option. Cutting corners entails additional costs (revision surgery, costs incurred through healthcare associated infections) and is strategically risky in an environment of patient choice.

A step change in productivity is needed – and finance directors should be leading this. The task of improving quality under tight finances demands specific responses:

• Execute the basics well – cost management, capital planning and budgeting. And in addition to managing cash and budget, it’s important to get clinical coding right  to support revenue and feed into clinical quality reporting
• Focus on reporting. Your organisation will need effective reporting systems to manage costs and quality. The finance director has the best combination of rigour and analytical ability to ensure the right performance informatics are available and to lead the analysis. Clinicians will be interested in developing quality reporting systems, but may need help to make them robust.
• Support the commercial team. There is an increasing requirement for good commercial skills in trusts: to negotiate contracts with commissioners; to develop bids for work put out to tender; to agree and manage major capital projects. Either the finance director will be leading on this or will be providing critical challenge and analytical support to the commercial team. It will be up to you to ensure a suitably rigorous attitude to commercial proposals.
• Service line management. Increasingly, trusts are organising into business units. For devolvement to clinicians to be successful, the finance director must ensure service lines have the analysis to make good decisions. There are also likely to be cross-trust programmes of work on cost improvement and quality improvement – again, finance has a key role in ensuring these are planned, managed and delivered.
• Support the board. You have a key role in helping your board fulfil its function, by ensuring reporting to them is insightful, useful and reliable and helping them understand progress on quality and productivity improvement. You need to support strategy discussions on which services need investment, review services ruthlessly, and help the board confront reality and act accordingly.

You’ll need to push efficiency hard, anticipate risks, invest in things you do well and cut out inefficient practices – with quality as the driver not an optional extra. How will you achieve this? What will you do differently?

We have got to assume that in 18 months’ time public expenditure will be much tighter – but that,

unlike other parts of the public sector, we’ve got time to prepare. Plan your response now or the consequences for your organisation could be far-reaching.