Making the Books Balance – Understanding the Financial Context and Efficiency Savings


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NHSScotland has an excellent track record in delivering and exceeding efficiency savings targets. In 2011‐12 we will continue to eliminate waste and drive modernisation programmes to achieve productivity and efficiency gains without compromising quality. This session will provide an overview of the challenges that lie ahead for NHSScotland but also the opportunity to ensure we make the best use of the resources that we have.

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  • According to the latest Government figures, Total Managed Expenditure (TME) is likely to rise to 48% of GDP in the current year, 2009/10, a level last seen in the 1970s. At the same time receipts from tax proceeds are expected to fall to levels last seen in the recession of the early 1990s. Since 1948-49 till now Expenditure and Receipts tend to follow a similar pattern. The previous exception was during the mid 1990s and the gap was then closed within 4 years. The current gap of 10% is the largest to date and the period over which it will be closed is still not certain.
  • Making the Books Balance – Understanding the Financial Context and Efficiency Savings

    1. 1. <ul><li>John Matheson & Stephen Gallagher </li></ul><ul><li>Quality Driven Financial Performance </li></ul><ul><li>Scottish Government </li></ul>
    2. 2. NHSScotland Event 1 2 3 Economic Overview Quality and Efficiency Current Perspective Horizon Scan SCENE
    3. 3. NHSScotland Event <ul><li>Economic </li></ul><ul><ul><ul><li>Overview </li></ul></ul></ul>
    4. 4. Total Managed Expenditure vs Current Receipts
    5. 5. Public Sector net borrowing
    6. 6. Two-Speed Recovery Two-Speed Recovery
    7. 7. International GDP Growth - Update
    8. 8. ‘ On the road from the City of Skepticism, I had to pass through the Valley of Ambiguity’ Adam Smith SCENE
    9. 9. % Annual Real Growth Rate in Scottish DEL Budgets <ul><li>IFS predictions – Dec 2009 </li></ul><ul><li>Reflects current use of EYF </li></ul>
    10. 10. Estimated Scottish Government DEL Expenditure – June 2010 Budget Results (2010/11 Prices) £39
    11. 11. UK Comprehensive Spending Review 2010 Scottish Government DEL Settlement 2011-12 to 2014-15 Change 2010-11 2011-12 2012-13 2013-14 2014-15 2010-11to 2014-15 £bn £bn £bn £bn £bn £bn % Cash terms Resource 25.9 25.4 25.8 26.0 26.1 0.2 0.8% Capital 3.3 2.5 2.5 2.2 2.3 -1.0 -30.3% Total DEL 29.2 27.9 28.3 28.2 28.4 -0.8 -2.7%
    12. 13. NHSScotland Event <ul><li>Efficiency is a dimension Quality. It can be safer care, more timely and can offer better patient experience. </li></ul>
    13. 14. Quality & Efficiency – Two sides of the coin “ To improve the overall quality and efficiency of NHSScotland while ensuring good value for money and achieving financial targets.”
    14. 15. Case study: NHS Tayside Older Peoples Services <ul><li>Project established to realise significant improvements, both qualitative and financial. By focusing on the patient and removing waste, NHS Tayside is delivering: </li></ul><ul><li>Reduced inappropriate admissions, </li></ul><ul><li>Reduced length of stay through focus on patient goal setting and partnership working (from 27 to 18 days), </li></ul><ul><li>Lower readmissions by shifting the balance of care, </li></ul><ul><li>Capacity and capability in staff to proactively manage and support more effective and efficient patient pathways, and </li></ul><ul><li>Potential to save £1.4m p.a . in net savings from service reconfiguration. </li></ul>
    15. 16. Case study: NHS Borders Enhanced Recovery <ul><li>Enhanced Recovery focuses on improving patient outcomes and speeding up a patient’s recovery after surgery. NHS Borders has successfully adopted and implemented this model of care for patients receiving planned major orthopaedic operations, resulting in a reduction in the length of stay in hospital for patients from an average of 7.7 days to a new average of 3.5 days. </li></ul><ul><li>This reduction not only represents a long-term productive opportunity for NHS Borders but also provides improved patient outcomes by reducing variability, decreasing the risk of infection, and ensuring that patients are active participants in their own recovery process. </li></ul>
    16. 17. We have a record of achievement…. <ul><li>NHS Scotland’s Health Boards delivered £262m of local efficiency savings in 2010/11, equivalent to 3.1% of baseline funding made available to NHS Boards. </li></ul><ul><li>This exceeded the minimum level of savings required by £61m and made it the third year in a row that NHS Boards have exceeded their efficiency targets </li></ul>
    17. 18. NHS Scotland Productivity <ul><li>No. of inpatient & day cases has increased every year since 2002/03 (1.41m in 2010/11) </li></ul><ul><li>No. of WTE has increased at similar rate but decreased last year </li></ul><ul><li>Number of staffed acute beds has reduced every year since 2006/07 (2009/10 average 17,099 beds); day case surgery up by 4.6% over the same period </li></ul><ul><li>ALOS for emergency inpatients from 4.2 days (06/07) to 3.7 days (09/10) </li></ul>
    18. 19. NHS Scotland Performance <ul><li>Scotland has lowest median waiting time for 7 of 11 procedures (UK Health Stats comparisons) </li></ul><ul><li>Scotland has lowest 90 th percentile waiting time for 7 of 11 procedures </li></ul><ul><li>99.9% patients waiting 12 weeks or less for 1 st outpatient consultation </li></ul><ul><li>99.6% of patients waited 6 weeks or less for key diagnostic tests </li></ul><ul><li>HAI – Since 2007, c.diff cases reduced by 73% </li></ul><ul><li>HAI - Since 2007, MRSA bacteraemias reduced by 61% </li></ul>
    19. 20. Scottish Patient Safety Programme 72% reduction in critical care c.diff 14% increase in ward hand hygiene 58% decrease in ward c.diff 23% increase in surgical briefings 15% increase in on-time antibiotics` 1 2 3 4
    20. 21. Efficiency and Productivity Framework <ul><li>How? </li></ul><ul><li>Support – supporting our workforce through engagement, partnership and placing quality at the centre. </li></ul><ul><li>Cost reductions – using the data to identify potential based on variability of care </li></ul><ul><li>Enablers – identifying, testing sharing and sustaining good practice. </li></ul><ul><li>Focussed Approach: </li></ul><ul><li>Work-streams identified and links made to QAB and Delivery Groups </li></ul><ul><li>Portfolio Board established to identify priority projects </li></ul><ul><li>Return on Investment </li></ul><ul><li>Collective approach to implementation of what works. </li></ul>“ To improve the overall quality and efficiency of NHSScotland while ensuring good value for money and achieving financial targets.”
    21. 22. <ul><li>Primary Care & Community </li></ul><ul><li>Patient Flow & Acute Services </li></ul><ul><li>Workforce Productivity </li></ul><ul><li>Evidence Based Care </li></ul><ul><li>Prescribing, Procurement & </li></ul><ul><li>Shared Services </li></ul><ul><li>Service Redesign & Innovation </li></ul>Service Redesign Work-streams: Reducing Variation, Waste and Harm
    22. 23. Three Phases of Activity <ul><li>Estimate Potentials based on variability </li></ul><ul><li>Meaningful comparison </li></ul><ul><li>Understanding blend of productivity, cash efficiency </li></ul><ul><li>Building the quality as well as efficiency case for redesign </li></ul><ul><li>2. Agree Priorities </li></ul><ul><li>Best practice actions </li></ul><ul><li>Case studies </li></ul><ul><li>Pilot/Project based activity with clear ROI </li></ul><ul><li>Agree what support required to deliver to scale </li></ul><ul><li>3. Benefits realisation and reporting, challenge to adopt, re-examine potential </li></ul>
    23. 24. Emerging portfolio 2011/12
    24. 25. What seems to make a difference? <ul><li>Strong CEO leadership </li></ul><ul><li>Clear Organisational Narrative linking Quality, Efficiency and Productivity </li></ul><ul><li>Good use of information to identify opportunities and drive improvement </li></ul><ul><li>Dedicated and rigorous Project Management </li></ul><ul><li>Clinical Leadership and Engagement </li></ul><ul><li>Clear system rules/norms (based on quality) and aligning incentives/sanctions </li></ul><ul><li>Delegated budgetary responsibility and bottom up idea generation </li></ul><ul><li>Directors focus on delivery of critical projects </li></ul><ul><li>Ownership of benefits realisation (quality and efficiency) across organisation </li></ul><ul><li>Agile, targeted improvement support to realise benefits within portfolio </li></ul>
    25. 26. <ul><li>Clear link to strategic objectives </li></ul><ul><li>Clear articulation of the place of continuous improvement in delivering significant quality and efficiency gains for the organisation </li></ul><ul><li>Evidence of triangulation in organisation between operational management, finance and improvement/modernisation teams </li></ul><ul><li>Table outlining projects, link to E&P themes, quality and capability benefits and the efficiency and productivity benefits </li></ul>Targeted Improvement – Case Study: NHS Lothian Scheme E&P quality themes Quality and capability benefit Efficiency and productivity benefit Implementation of self management – COPD Out-patients, community and primary care Person-centred approach, staff skills development HEAT T10 Savings of £460k pa expected; 2,200 em adm avoided
    26. 27. NHSScotland Event <ul><li>Current </li></ul><ul><ul><ul><li>Perspective </li></ul></ul></ul>
    27. 28. Five Year Perspective SCENE <ul><ul><li>Development of Strategic Narrative detailing Five Year Vision </li></ul></ul><ul><ul><li>Recognition of challenges facing NHSScotland </li></ul></ul><ul><ul><ul><ul><li>State of Scotland’s Health </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Demographic Profile </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Challenge of UK Finances </li></ul></ul></ul></ul><ul><ul><li>UK Barnett Consequentials will be passed on to NHS </li></ul></ul><ul><ul><li>Service change to be described in the context of quality improvement </li></ul></ul><ul><ul><li>Different service delivery approaches required at a local, regional and national level </li></ul></ul>
    28. 29. Health Manifesto Commitments SCENE <ul><ul><li>Delivery on Manifesto Commitments – Low in number </li></ul></ul><ul><ul><ul><ul><li>Alcohol Minimum Pricing Policy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Health and Social Care Integration </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Family Nurse Partnerships </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Early Detection of Cancer </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Further Investment in Dementia Services </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Ring-fenced Support for Carers </li></ul></ul></ul></ul>
    29. 30. Spending Review SCENE <ul><ul><li>Identify and Prioritise the spending policies which: </li></ul></ul><ul><ul><ul><ul><li>maximise economic recovery and increase sustainable economic growth </li></ul></ul></ul></ul><ul><ul><ul><ul><li>protect services for the most vulnerable </li></ul></ul></ul></ul><ul><ul><ul><ul><li>prioritise the most effective preventative spend </li></ul></ul></ul></ul><ul><ul><ul><ul><li>deliver actions to meet statutory targets on reducing greenhouse gas emissions </li></ul></ul></ul></ul>
    30. 31. Spending Review SCENE <ul><ul><li>Exploring scope for </li></ul></ul><ul><ul><ul><ul><li>further integration; </li></ul></ul></ul></ul><ul><ul><ul><ul><li>new funding mechanisms; </li></ul></ul></ul></ul><ul><ul><ul><ul><li>reducing duplication; and </li></ul></ul></ul></ul><ul><ul><ul><ul><li>reflecting on the key messages from the Christie Commission. </li></ul></ul></ul></ul>
    31. 32. Spending Review SCENE <ul><ul><li>Specific focus on the following areas:- </li></ul></ul><ul><ul><ul><ul><li>Work to reduce carbon emissions </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Early Years </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Post-16 Education </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Employability </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Adult and Social Care </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Support for Business </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Assets & Infrastructure </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Offending & Community Safety </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Delivering Services in Rural Areas </li></ul></ul></ul></ul>
    32. 33. Spending Review SCENE <ul><ul><li>Timetable </li></ul></ul><ul><ul><ul><ul><li>two months shorter than normal </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Cabinet meeting 28 th July </li></ul></ul></ul></ul><ul><ul><ul><ul><li>further Cabinet discussion 9 th / 23 rd / 30 th August </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Cabinet final sign-off 6 th September </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Spending Review and Draft Budget Announcement 21 st September </li></ul></ul></ul></ul>
    33. 34. Implications for Leaders (1) SCENE <ul><ul><li>The evidence base for what improves quality is clearer than for what reduces costs </li></ul></ul><ul><ul><li>The two agendas are related and leaders must connect them </li></ul></ul><ul><ul><li>Taking a broad and balanced approach to quality may improve clinical engagement </li></ul></ul><ul><ul><li>Increasing reliability and reducing variation matters </li></ul></ul><ul><ul><li>Have to do this with people and not to them </li></ul></ul>
    34. 35. Implications for Leaders (2) SCENE <ul><ul><li>Greater efficiency alone won’t be sufficient </li></ul></ul><ul><ul><li>Needs both short term and long term approaches (low hanging fruit and culture shift required) </li></ul></ul><ul><ul><li>A requirement not a choice to connect quality and cost given what we know about demography and demand. </li></ul></ul>
    35. 36. “ We look to Scotland for all our ideas of civilisation” Voltaire (1694-1778) SCENE