Health in a Cold Climate

1. Health in a Cold Climate Chris Ham University of Birmingham 19 October 2009

2. The challenge • NHS can expect ‘flat cash’ or very small real terms increases at best from 2011-14 • Cash savings of £15-20bn will be needed from 2011-14 (D Nicholson) • The NHS recession may well continue beyond 2014 • The likely length and depth of the recession is unprecedented

3. The response? • Salami slicing • Slash and burn • Achieve financial balance at the expense of quality • An intelligent response that releases cash and improves quality

4. What do we mean by efficiency? • Allocative efficiency is doing the right things e.g. allocating resources to achieve the most health gain for the population served • Technical efficiency is doing things right e.g. reducing unit costs by cutting lengths of stay or shifting care to more cost effective settings out of hospital

5. Technical efficiency in the NHS • This is where most of the attention has focused historically • Performance indicators were originally developed and applied in the 1980s • Progress has been made, especially in reducing lengths of stay and increasing day surgery rates • But wide variations remain and some areas are underexplored e.g. community health services

6. Transforming community services • New DH guidance on TCS has started to address this gap • The guidance identifies evidence for improving efficiency • TCS is likely to be an important new area of focus in future • Care closer to home and many other opportunities exist

7. Where are the costs you are going to free up? Variable Costs Drugs/prostheses etc Semi-Variable Costs People Fixed Costs Buildings

8. NHS Institute’s Approach • Better Care Better Value indicators • High Volume Care • Productive time series

9. Current Productivity Opportunity

10. Monitor and service line reporting • Work with 35 NHSFTs • Focus on performance at service/specialty level • Use information and incentives to drive improvements • Support via medical leadership and operational management

11. Three-year programme to fully exploitthe potential of SLM 2010/11 3. • Complete scorecard with • staff / workforce returns • 10. Embed reliable • performance planning/ • assessment process • 11. Use data to inform 3-year • planning round (critical) • 12. Identify clinical process • improvement projects to • deliver better quality and • efficiency returns 2. 2009/10 Incrementally increase understanding and performance • 6. Coverage: total trust • roll-out plan • 7. Complete information • systems on quality • and cost • Add quality and patient • experience returns to scorecard at both board • and service line level 2008/09 1. • Comprehensive review of organisational structure • Produce reliable SL • financial/other data • Assess corporate • strengths/weaknesses • Identify (few) SL leaders • 5. Devolve real decision making Start Now

12. A practical example of the impact • Darlington and Durham NHS FT identified a deficit of £1million in general surgery • It turned this round into a surplus over two years • It used a profitability driver tree and benchmarking to do this • Both quick wins and longer term opportunities contributed

13. Through bottom-up analysis and cross site benchmarking, we identified several quick-win ideas, and others that require deeper systemic change 1 2 7 6 5 4 3 8 9 10 11 12 • Reducing day-before admissions by 95% • Shifting more elective procedures to higher-margin day cases • Improving recording and income capture • Decreasing controllable DNAs • Decreasing number of beds through decreasing the bed capacity buffer available to meet variable emergency demand • Decreasing number of beds through streamlining elective demand • Increasing discharge timeliness through addressing blocking social factors • Increasing discharge timeliness through removing weekend holdups • Matching staffing levels/mix to demand though higher staffing flexibility • Improving outpatient profitability • Increasing theatre utilisation • Decreasing consumables costs **** Quick wins(achievable within 6 months) Longer-term opportunities (achievable in 12 months;require process redesign and/or significant behavioural change)

14. Allocative efficiency and the quality chasm • The IOM’s analysis has identified three aspects of quality failures in health care • Overuse of services e.g. inappropriate antibiotic prescribing, and over intervention in surgery • Underuse of services e.g. failure to deliver cost effective preventative interventions to all who stand to benefit • Misuse – medical errors, HCAIs etc

15. Variations • Variations in care are a major reason for quality failures and inefficiency • Wennberg and others distinguish between two sources of variation • Supply sensitive variations result from availability of services • Preference sensitive variations result from patient choices e.g. treatment of prostate and breast cancer

16. Allocative efficiency in the NHS • Can we reduce variations and improve quality of care? • Where is there evidence of inappropriate overuse of services? • Where is there evidence of underuse of services? • How can we reduce misuse and errors?

17. Key messages • There is huge scope for doing better with the current £100bn spend • A major focus should be on variations in clinical practice • Doctors and other clinicians need to be fully engaged • Information, incentives and leadership capacity are key ingredients

18. Policy levers • Health reforms were designed for expansion and are focused on planned care • NHS is entering recession and is addressing new priorities e.g. prevention and long term conditions • Many of the current policy levers need to be reviewed and revised

19. Sutton’s law • Willie Sutton robbed banks ‘because that’s where the money is’ • Much of the NHS budget is in acute hospitals • PbR and the FT regulatory regime will suck more resources into hospitals • Separation between commissioners and providers could lead to cost shifting and blame shifting

20. An alternative • Integrated systems have incentives to provide care in the most cost effective settings • Integration should ideally develop from primary care reaching out to CHS and social care and in to hospitals • Primary care networks and federations are needed to do this ‘at scale’

21. The evidence on integration • Kaiser Permanente uses one third of the bed days for the over 65s as the NHS for major causes of admission like stroke and hip fracture • The VA cut bed day use by 50% over 5 years when it shifted from a hospital centred system to an integrated system • The promise of integration now needs to be realised in the NHS

22. Focus on service and clinical integration • Organisational integration is likely to be a serious distraction • Organisational integration does not always deliver service and clinical integration • Focus on services where there is greatest scope for improvement (because of spend, need etc) • Local authority and third sector engagement is critical

23. Finally • Improving efficiency and releasing cash need to go hand in hand with improving quality • Technical efficiency and allocative efficiency both need to be targeted • A comprehensive approach is needed at all levels

24. Two key dimensions of productivity analysis (Peter Smith) System Organization Comprehensive Piecemeal Team Practitioner

25. Thank you C. Ham (2009) ‘The 2009 Budget and the NHS’ BMJ, 338; 1024-5 C. Ham (2008) ‘Competition and integration in the English national health service’ BMJ, 336: 805-07 C. Ham (2009) Health in a Cold Climate, London: Nuffield Trust c.j.ham@bham.ac.uk