The introduction of the new NHS structures in April this year transformed the way patient health services in England are commissioned, with clinical commissioning groups replacing primary care trusts. The aim was to put clinicians at the centre of the commissioning process, base payments on quality of care, and give GPs more responsibility for managing budgets.
CCGs are tasked with using their knowledge of patient pathways to drive efficiency and eliminate functions that fail to meet patients’ needs. They are now responsible for commissioning the majority of secondary healthcare services – about 60% of the annual budget. They also have the freedom to ‘buy, build or share services’ via any provider meeting NHS standards.
The priority now is to drive further savings and improve clinical efficiency, arguably the greatest challenge facing the NHS. With budgets ring-fenced and allocated on a ‘flat-cash’ basis, rising patient demand means annual cost savings of some £5bn must be found. At the same time, standards of care are under intense scrutiny following publication of the Cavendish, Francis and Keogh reports, while A&E is said to be reaching breaking point.
Given that pay accounts for approximately 70% of NHS trusts’ costs, the obvious saving is to cut staffing levels. But with the political debate ramping up, the NHS can ill afford further negative headlines around failings in care or cuts to front-line staff.
A much better approach is to deploy this cost in a more effective way. This can be achieved by identifying instances where there is duplication or inefficiency at primary and secondary care level, and by optimising the flow of patients between them.
CCGs have already identified the benefit of working together with commissioning services across boundaries. Providers are also working more closely to attract as many patients as possible to ‘choose’ their services.
However, competition between providers based on quality and not price has created barriers to commissioning integrated services. With CCGs, clinical support units, and secondary care providers each operating as separate entities, managing their own budgets and costs, the result is a non-joined up approach.
For example, a patient arrives at a primary care facility; a clinician examines them and, if required, sends them to a secondary care facility where they are re-examined and provided specific treatment if needed. The patient is then discharged, but if they have to make a repeat visit, the whole process is replicated – with all the associated costs.
Looking at this scenario as a cost driver would suggest that the patient in question should be treated differently.
Ironically, restructuring itself has driven operational inefficiency into the commissioning system, due to the complexity of the 'buy, build or share' model, and the fact that doctors and clinicians tend not to be experienced in forecasting, management, and co-ordinating budgets or resources.
The separation of commissioning and provisioning also makes it harder to allocate cost on a per-patient basis, since there is no end-to-end view of the necessary data. Without visibility across the two, it is much harder to drive further cash-releasing or operational efficiency savings.
Managing data on an incident-by-incident basis gives cost per outcome. But without the ability to look at a range of cost drivers, it is not possible to identify efficient or inefficient interactions in the front end or back end. The handoff between services is particularly vital to understand. For example, where one service is using another as a front-end facility, changing the behaviour of the services involved could reduce cost for both in the longer term.
At a macro level, it is relatively simple to identify cost drivers. The difficulty is in breaking them down to a level that allows organisations to understand the drivers of cost and then to implement change. Many medical consumables, such as bandages and syringes for example, are purchased in bulk using agreed payment scales, but although the trust benefits from a discount, there is the potential for wastage if they are not used before their ‘use-by’ date.
Without the right data, it is difficult for trusts to employ logic over procurement protocol without wastage becoming a cost driver.
Inflation has been another key challenge, with clinical supplies and service costs reported to have risen by 8.7% in 2011-12. One of the impacts of this was highlighted in recent research, which revealed acute trusts were disproportionately targeting non-pay budgets in this year’s savings plans in the wake of the Francis report, while the Department of Health has announced that the NHS is looking for a saving in procurement of £1.5bn by the end of 2015-16.
Lessons can be learnt from the manufacturing supply-chain, where there is a need to assess the cost to produce, aligned wastage, the cost to expedite and the desire to achieve a just-in-time delivery. Much of this thinking could be transferred to the health sector, with pathways seen as an integrated process.
Information on the costs of treating individual patients provides a much more detailed understanding of the real costs of care incurred, enabling more informed management decisions. It also has the potential to engage clinicians, by making clearer the link between clinical decisions and aspects of efficiency cost-drivers and cost-effectiveness.
Adopting a more joined-up approach to healthcare data across NHS organisations could provide nurses, doctors and clinicians with greater insight, as well as improving the quality of care and optimising capacity and consumables. Core to the requirement of CCGs is the understanding and manipulation of national datasets, trust datasets and the commencement of data capture to fully understand the costs of services.
Today, many trusts consider data collection a burden imposed on them by external parties, and are often unwilling to collect data to support their own decision-making process. In other words, they tend to collect it to meet the measure rather than seeing it as a potential value-add.
The vast majority of trusts are going to have to raise their game, recognise the value of disciplined data collection and consolidation, and then use thorough analysis to make better decisions.
Although there is no single solution to achieving benchmarking and cost apportionment, both commissioners and providers have the opportunity to realise further operational efficiencies through the data and information available to them. There are also opportunities to achieve dramatic improvements in the quality of data and information they collect, and the way in which it is collected.
Following the warning from Geraint Lewis, NHS England’s chief data officer, that 'only a handful of trusts' are likely to meet the new data requirements from April 2014, certainly it is time for action. Only with the necessary data at their disposal can NHS organisations cast off the mistakes of the past decade, where budget has been spent in the wrong areas, to instead target those where real value can be added.
