Facing up to the cold hard reality

Everyone understands the need to achieve value for money, especially during these hard financial times. We do this every day when we’re out shopping, choosing cheaper brands to shave a few pounds off our overall supermarket shop. But accepting that the NHS also has no extra money to spend, and in fact will have to find massive savings over the next few years, seems a much harder pill to swallow.

This is partly because we are so passionate about our NHS, but also because the cost of providing healthcare to an ageing UK population continues to rise, making it more difficult to find savings. Even though the health budget has in theory been protected, the cost of providing care is rising at a much higher rate than inflation, meaning cuts in real terms.

The reality is that the NHS has been asked to make savings of up to £20bn by 2015. We shouldn’t underestimate the magnitude of this challenge. Whether you believe the Government’s proposed reforms to the health service will get in the way of making efficiencies, or in fact be a driver for them, the point is we need to be developing clear plans for how to deliver them.

As Paul Corrigan, a former health special adviser to Tony Blair, said recently: ‘For every few weeks that we fail to recognise the long term impact of these economics on the NHS, the NHS will be endangered. The quicker we all wake up to the need for a very different set of economics and resource use, the more chance the NHS has of sustaining a future.’

So how is the NHS responding?

The Health Select Committee’s report into public expenditure was published last month to much media attention. While the findings accepted that fundamental changes are needed in order to deliver the necessary savings, it also reported concerns that many NHS organisations are too focused on making short term savings which will not deliver in the long term. What the NHS should be focusing on, it argues, is changes in this first year that ‘will facilitate future redesign and yield further savings as the programme progresses.’

'Delivering sustainable cost improvement programmes', a joint report by Monitor and the Audit Commission also published in January, looked at evidence from NHS Cost Improvement Plans (CIPs). It found that many organisations have already made most of the more obvious cost reductions, such as vacancy freezes or cuts in the use of agency staff.

It also argues a more strategic approach is needed in order to find the next level of efficiency savings. And the authors support our view that value for money should not be achieved at the expense of quality:

‘A successful CIP is not simply a scheme that saves money. The most successful organisations have developed long-term plans to transform clinical and non-clinical services that not only result in permanent cost savings, but also improve patient care, satisfaction and safety.’

Improving quality and reducing costs can indeed go hand in hand, as demonstrated on a small scale by these award-winning Health Foundation projects.

It’s clear that the NHS could learn from these innovative examples of how existing resources can be reconfigured to improve care and make savings.

Let’s put value for money at the heart of QI

We know that unless the NHS meets the Nicholson challenge to become 4% more productive each year, services and patients will suffer the consequences.

That’s why we have made value for money an integral part of our quality improvement initiatives. This means supporting projects to measure the financial and efficiency improvements made as part of their work, alongside the quality improvements they have achieved. Through this we hope to discover what works, and can support the NHS to replicate it more widely.

Another big challenge is to make sure that the most important stakeholders of all, patients, are not forgotten in all of this. The Health Foundation’s Star programme is developing a support package for commissioners to help them involve patients in the difficult spending decisions the health service is currently facing.

By developing intelligent tools for data analysis and decision-making we hope to help the NHS make sensible choices in the tough financial times ahead.