Health committee tells it like it is

24 Jan 12
Judith Smith

Today's Health Select Committee report has many home truths to tell, and they go way beyond the headline-grabbing observations on the Health Bill

It is not surprising that Opposition MPs, trade unions, and segments of the media would seize on the latest report from the Health Select Committee. Its conclusion: that the NHS reform programme is causing 'disruption and distraction' adds much grist to their cause.

However beneath this headline-grabbing observation (which is in fact just one of several conclusions contained in the full report) lies a deeply thoughtful and useful analysis.

Stephen Dorrell MP and his colleagues have tried to answer an important question. One year into the £20billion ‘Nicholson’ challenge, is the NHS on track to deliver the productivity gains it needs to make if it is to keep up with an ageing population and rising technology costs?

Superficially, the answer seems to be yes. The latest figures published by the Department of Health indicate that PCTs and providers are making the required savings. Dig a bit deeper though and the situation looks less reassuring.

The financial position of those trusts which have not yet achieved foundation status is worsening: the sector is now forecasting a surplus of just 0.1% of income, with 7 NHS trusts forecasting an operating deficit of over £180 million combined - a marked deterioration from the previous quarter.

This matters because structural deficits within the acute sector inevitably have a knock-on effect on the resource available to commissioners to fund a full range of locally appropriate services, whether they be health visitors, urgent care centres or the myriad other types of support communities have come to expect.

There is anecdotal evidence to suggest that the savings that have been made to date have come about largely through ‘salami slicing’, in the form of recruitment freezes, changed referral protocols that limit access to some hospital care, and longer waiting times - the traditional fall-back tactics of the health service when times are tough.

Less apparent is evidence that commissioners and providers have engaged with the difficult work of tackling core spend, disinvesting in inefficient practices, or changing the way that services are shaped locally. Or - more precisely - that they are doing so at the scale and pace necessary to make a significant difference nationally.

The Department of Health estimates that 20 per cent of the productivity gains it wants made over the next five years should come from ‘service redesign’, moving more care into communities, investing in effective prevention, and ultimately reducing avoidable admissions to hospital.

Nuffield-funded research into priority setting by PCTs suggests that to achieve major service redesign through commissioning, a quantum leap will need to be made by clinical commissioning groups (CCGs). CCGs are going to have to build on the experience and expertise developed by PCTs in relation to priority setting; in particular the minority who engaged in this in a fundamental and ambitious manner, but go much further by tackling core NHS spend and facilitating robust local debate about how such resource should best be used.

The Select Committee’s report is essentially a powerful reminder that the longer the NHS defers this work, the harder the job becomes. The continuing struggle to get to grips with health and social care integration or the issue of hospital closures, being the obvious examples.

The Nuffield Trust agrees with this analysis. Any drive to improve quality and lower costs will have to entail much morecreative and radical thinking at the systems level. But simultaneously, there is also considerable scope (and this is not explicitly addressed in the Committee’s report) to greatly improve efficiency within hospitals.

This includes identifying and addressing unexplained variation within and across hospitals. For example, by ensuring that length of stay and day case rates are in line with international best practice; exploring ways of using new technology to improve hospital processes; rationalising back-office functions; and carrying out procurement according to national benchmarks.

The question going forward is whether Whitehall is prepared to give local bodies the support and encouragement that they evidently need to make these difficult changes. Possible measures would include the introduction of stronger incentives for hospitals to reduce variation, perhaps through the as yet to be finalised new NHS Commissioning Outcomes framework, as well as further help for commissioners in the form of national guidance and templates based on evidence from bodies such as NICE.

Admittedly this would run contra to the spirit of devolution that the Health and Social Care Bill seeks to enshrine. Nevertheless, a more centrally supported approach, led by the new NHS Commissioning Board is certainly plausible in a context of financial constraint.

Judith Smith is head of policy at the Nuffield Trust.

 

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