The public sector operates to different sets of values from the private sector whose primary objective will always be to concentrate on shareholder ‘return on investment’ value. i.e. profit. Indeed, different parts of the public sector have different governance arrangements. Because it is illegal for a council to run a deficit, service deterioration will always occur before financial failure. No councils are in deficit even though 30% of government grants have been lost in recent budgets.
For the NHS, however, financial failure by moving into deficit will always precede service failure. To ensure quality, standards are met as demand increases, the public rightly, will have it no other way. But, that is a tough balancing act for management in our healthcare system to control. The NHS really matters to people’s lives and the relationship between business management, clinical leadership and the healthcare system of providers, commissioners and regulators is more complex than the autonomy enjoyed in areas such as local government. It’ll always be difficult choosing between the public desire for the best health care and the cost of delivering it.
NHS trusts have reported a third quarter year end deficit of £886 million and the government are looking to harness this by seeking the NHS as a body to make savings of £22 billion by 2020. Senior figures at NHS England advise that, they expect the service to fall well short of its target, and that it will therefore need a further £7bn injection from the Treasury, on top of the £8bn already promised, in order to maintain standards of care – £15bn in all. The NHS is bracing for a bruising battle with ministers, who have told them not to expect any more than the £8bn and to urgently start making substantial savings.
“Our current working assumption is that we can make about £15bn of efficiency savings by 2020, maybe £16bn with a fair wind. There’s no way we’ll achieve the £22bn. That’s pie in the sky,”said one senior NHS official. Another said:
“Delivering the £22bn would involve unprecedented productivity gains. The £22bn is overly ambitious and not very realistic.”
It’s with this mind-set that the challenge lies. Clearly, doing nothing is not an option and with some speed, the NHS are now putting in place rigorous processes to monitor the performance of each trust across a number of key pressure points initially.
One area that is registering highly on every trusts radar is the increasing costs of workforce. Many trusts have over the years spent little time and attention to this, instead focussing some say rightly so, on the clinical needs of their patients.
Late 2015 the Trust Development Authority, who provide governance to NHS trusts instigated a new regime of controlling nursing costs, with tight timeframes on compliance, other high spending areas likely to follow quickly behind. The authority’s aims are simple, look at the ways trust procure nursing, what controls they have in place and where can with the application of best practice can savings be achieved? Indeed, one immediate step they encourage trusts to take is to work collectively as a consortium, buying group or partnership to regionalise nursing staff within predefined locations. With most trusts procuring individually, this is a paradigm shift in working practice with the added complication having to gain buy in from workforce not used to seeing the introduction of completely new procedures.
Over time, trusts have built strong relationships with the supply chain particularly, in a people oriented business, with recruitment agencies. It’s customary that, pay rates, agency margins and contract terms will be different, further complicating the buying and administrative processes. In fact it’s true 247 Time does not provide a mechanism for any disguised employed practices. This is all now to levelled across the whole of the NHS.
All this is of course, just the tip of the iceberg!