Feature / On the right track?

A new initiative from the King’s Fund looks to track NHS attempts to meet service and productivity demands while undergoing significant reform. John Appleby explains

As if anyone in the NHS needs reminding, the next four years – and, I suspect, beyond – will be very challenging. Despite faring well compared with other Whitehall budgets, the service faces the worst financial settlement since its inception.

While politicians may argue about pledges to give the NHS a real-terms increase, the disagreements boil down to fractions of a percent either way. The reality for the NHS is that, this year at least, inflation is almost certainly likely to run ahead of the cash increase, leaving a small real cut.

On the ground, the financial pressures are tougher for primary care trusts required to hold back part of their (already meagre) budgets, and hospitals face real price cuts.

Organisationally, regardless of the ‘pause’ and the passage of the government’s reform bill, the NHS not just faces, but is actively engaged in, radical change. While the reforms are being rebranded as an answer to the financial squeeze and ever-growing demand, the need to improve productivity – to extract greater value from every pound spent – poses a real challenge for all.

Any one of these pressures would be enough to cope with at the best of times. Taken together, they represent a massive agenda for the NHS – an agenda (to paraphrase NHS chief executive Sir David Nicholson) that must be visible from space. Also visible from space must surely be the huge fog of uncertainty as to the outcome of efforts to manage the reforms and tackle the interlinked financial and productivity challenge.

Regardless, life goes on – financial plans are being implemented; organisations restructured; mergers and dissolutions planned; and, oh yes, the main business of the NHS, providing healthcare to patients in need.

Over the coming years, monitoring the impact of these different pressures will be vital. That is why the King’s Fund has produced its first report on selected NHS performance measures – to be updated quarterly.

Choosing which performance indicators to track was difficult. As former Conservative deputy prime minister Michael Heseltine once remarked when asked how many performance indicators an organisation needed: one is too few and 10,000 too many; somewhere in between is just right.

Ultimately, we chose measures that go some way to reflecting the most important issues to the public and patients and measure the impact of addressing the productivity and reform challenges confronting the NHS. There are many more indicators we could have used. The aim was not to be comprehensive, but to give an insight into how the health service is performing. So, waiting times, delayed transfers of care, hospital acquired infections and compulsory redundancies were selected.

While all these will to a greater or lesser extent provide an indication of the impact of efforts to improve productivity over time, harder and more direct measures available nationally and within the year are more difficult to come by.

In part to get a better handle on the productivity challenge, and to get a more qualitative feel for the financial situation NHS organisations are grappling with, we also surveyed a small panel of finance directors (see box, previous page). So what does our first quarterly round up reveal?

Finance panel

Perhaps not surprisingly, our panel of finance directors painted a fairly gloomy picture about the year ahead. They stressed the difficulty of continuing to manage demand for services, meet targets and maintain quality with the financial squeeze beginning to bite.

While most of the panel were confident they had met their productivity targets for 2010/11, more than two-thirds said they were ‘uncertain’ about meeting their targets for 2011/12. This perhaps reflects the tougher targets set for this year – 24 of our 26-strong panel said they had a target of 4% or above.

Panellists highlighted a range of plans for improving productivity in their area, including reducing lengths of stay in hospital, redesigning services to improve efficiency and workforce changes – in some cases cutting back on agency staff and in others ‘headcount reductions’. Some 12 of the 26 panellists identified closing hospital wards and reducing services as among the main ways savings will be delivered in their area.

Despite ministerial rhetoric about the gains to be made through back-office efficiencies, many were sceptical about the savings to be delivered through this route. Only six of the panellists identified back-office efficiencies among the main ways they anticipate productivity targets being met. Most called on the government to be more realistic about the challenges involved in finding the savings needed. In particular, a number of panellists called for a more realistic representation of the impact of tariff changes on their income.

Performance

The analysis of key performance data highlights a steady increase in waiting times for hospital treatment since waiting time targets were relaxed in June 2010. In February 2011, nearly 15% of inpatients waited more than 18 weeks before being admitted to hospital – the highest proportion since April 2008.

Protests from the Department of Health that these figures are unadjusted don’t wash – the adjusted figures show a similar trend. Latest data for accident and emergency waits also shows a sharp rise in the third quarter of 2010/11, with 3.5% of patients waiting for more than four hours, compared with 2% the previous quarter. While these rises in part reflect seasonal factors, they are not explained by this alone.

It’s not all bad news. The proportion of patients waiting more than six weeks for diagnostic services fell in February, reversing a steady increase since June 2010. Levels of hospital acquired infections continued to fall, with 711 cases of C. difficile and 46 cases of MRSA recorded in February 2011 – a fall of more than two thirds since hospital acquired infections peaked in 2008. And the number of delayed transfers of care fell slightly in March.

It is important to keep all this in perspective. Waiting times are still low in historical terms and the NHS continues to perform well. But when we publish our next report in July, we will have a clearer idea about the impact of the financial squeeze and whether this quarter’s figures are, as one commentator says, a ‘blip’.