Comment / Sense of direction on efficiency

It is not the over-arching efficiency requirement facing the NHS that is so daunting – although the figures can be eye watering. It is the fact that to get anywhere near them the NHS needs to be pursuing productivity improvements on numerous fronts all at the same time.

The HFMA’s last NHS financial temperature check – published in July - quantifies the scale of the immediate challenge facing both commissioners and providers. Providers were planning cost improvement programme savings for 2017/18 of 4.5%, while QIPP savings for commissioners averaged 3.9%.

By month 3, providers were already underachieving against their year-to-date planned target and were forecasting a shortfall on their year-end efficiency target (4.1% compared with 4.3%, measured as a percentage of spend rather than income, hence the difference from HFMA figures). There are particular challenges in realising these savings by recurrent means.

At month 2, commissioners were also forecasting a small shortfall on planned efficiencies.

The efficiency challenge is getting more demanding For commissioners, the current year’s target marks a further major step up from 2016/17, when clinical commissioning groups delivered £2bn of savings (currently forecasting £2.9bn for 2017/18). Providers’ target of 4.3% also compared with actual savings in 2016/17 of 3.7%.

And as the whole service knows, this is not a short term challenge. The ageing population and growing levels of long-term conditions mean that reducing absolute costs and meeting higher levels of demand with lower levels of growth will remain requirements for years to come.

Looking to next year, it appears the government will no longer enforce its 1% cap on NHS pay. This must surely be accompanied by extra resources. But, if the rises are unfunded, as with the recent announcement of pay rises for police officers, for example, there will be further pressure on the NHS to find efficiency savings.

Transformation is a major part of the solution. New models of care – focusing more on prevention, supporting patients proactively and treating in the most clinically and cost-effective way and in the right place – are key to the sustainability of the NHS and other international healthcare systems.

But traditional efficiency – doing the same for less cost or more for the same – also has a major contribution, perhaps particularly in the early years. And there is, in any case, a grey area between what is traditional efficiency and what is transformational change.

Hitting control totals in the short term – and delivering sustainability in the longer term – means tackling waste and improving productivity across the whole service. Somehow the NHS has to find the capacity to lead improvement work – small and large scale – in parallel. And it needs to do this while simultaneously bearing down on corporate costs – seemingly ruling out even modest increases in the management capacity that might support this comprehensive improvement approach.

Lord Carter’s recommendations on productivity improvement represent a good place to start – although the £5bn efficiency prize only goes part way to bridging the forecast £22bn spending gap by 2020/21. The recently announced nationally-driven reconfiguration of pathology services into 29 networks is an attempt to support delivery of Carter’s pathology ambitions. Many will see this as a good step forward in realising transformation scale change – but it will be hugely time consuming for local providers.

Meanwhile they must also make major progress improving procurement, responding to the Getting it right first time initiative and tackling delayed transfers of care – freeing up capacity to improve access initially and, eventually, perhaps enabling some acute capacity to be reduced. All this alongside multiple local improvement projects.

Commissioners also have a full agenda. Continuing healthcare is just one area of expenditure that is rising far faster than overall spending, amid significant pressures. But they need to deliver on this and other areas while also driving improvements through use of RightCare data.

It is a huge agenda and NHS bodies need to short circuit some of the time taken to discover what might work best in their local areas. The HFMA and NHS Improvement’s NHS efficiency map ­provides a tool to support NHS bodies in delivering both provider and system efficiencies. It signposts existing tools and reference materials and showcases a growing number of good practice case studies. A new case study this month for example examines the importance of empowering individuals and teams in the pursuit of further savings.

It is not a detailed roadmap to successful delivery of efficiency and transformation. But it provides a checklist of the key enablers for efficiency and highlights resources that are already available to support efficiency programmes. Organisations moving further and faster on their efficiency journeys should not leave home without it.