NHS GRAMPIAN

EfficiencyProductivity

Introduction

Health Boards commit public funds, almost exclusively. It is therefore incumbent on them to seek best value in everything they do, optimise productivity and eliminate wastage by being as efficient as possible at all times. In supporting boards to achieve best value, the Scottish Government Health Directorate introduced some years ago a range of HEAT targets designed to monitor performance and help boards focus on areas where improvement is required.

HEAT is an acronym for;Health Improvement for the People of Scotland;Efficiency and Governance;Access to Services; and Treatment Appropriate to Patients; and consists of a number of targets linked to national outcomes.

This paper focuses on the “E” element in the context of a world economy where efficiency and productivity take on ever greater relevance and importance.

Aim

The aim of the paper is to provide Board Members with an overview of the financial and economic environment that NHS Grampian (NHSG) is likely to face over the next few years and strategies that are and will be deployed to ensure that best value will continue to be achieved in providing health services to the Grampian population.

Discussion

  1. 2009/10 is the second year of the current Comprehensive Spending Review (CSR) period. All boards will receive a basic 3.15% uplift on core funding with some boards receiving additional uplift to bring their allocations more into line with funding parity. NHS Grampian is one of those boards, receiving an additional £2.1 million recurring funding, bringing the total uplift percentage for the year to 3.47%. Based on current population profiles, this leaves NHSG around £10 million short of parity with the Scottish average, a shortfall which will be addressed, one hopes, over the next few years through phased parity adjustments.
  1. While 3.47% of uplift is to be welcomed, it is insufficient to meet all of our commitments in 2009/10. This is due to a variety of reasons. For example, inflation on medical supplies is substantially above average price inflation rates. This is partly down to the nature of the medical supplies sector itself but also as a result of new techniques and new technologies emerging that are to the benefit of patient care and safety. We also have the highest level of staffing ever recorded in NHSG with around 12,500 whole time equivalent employees in post. While this is to be welcomed, we must improve efficiency of processes to be able to pay for this level of staff numbers. Other factors that are pushing our costs above inflation include energy supplies, provision of Drugs both in hospitals and through General Practitioner surgeries and maintenance of some of our ageing properties.
  1. The current CSR suggests uplift of 3.15% in the third year which is 2010/11. However, the recent downturn in world economies has created a high degree of uncertainty with the UK Government seeking to withdraw substantial amounts of funding from the public sector. By how much that will affect Scotland and Health in particular remains to be seen but we have been warned to expect very tough financial settlements for several years to come.
  1. Coupled with ever-increasing demand for better, safer and faster services, this places efficiency and productivity in the forefront of everything we do. Along with many other Scottish Health Boards, NHSG is dedicated to applying Lean thinking as the strategic change methodology of choice. Supported significantly by the Scottish Government, NHSG is investing substantial amounts of time in developing and transferring key skills that will ensure the organisation can support its own programme of continuous improvement. It is through this process that NHSG will drive out inefficiency and waste, thereby delivering financially sustainable health service provision.
  1. In the shorter term, all budget managers are fully aware of the need to function within budgets at all times. Meeting the Government’s 2% per annum efficiency target (around £14 million in 2009/10) is exceptionally challenging in an environment where there is almost infinite demand for more and better services. However, that challenge must be met through maximising efficiency and prioritising how we invest the substantial resources made available to us.
  1. We can look at some strategies supporting organisational and service change in more detail:

6.1.CSI (Lean)

6.1.1.NHS Grampian has agreed to implement a strategic approach to organisational effectiveness and service redesign, adopting the Lean methodology. We have referred to this as Continuous Service Improvement (CSI).

6.1.2.CSI/Lean delivers improvements in quality, time and cost simultaneously. It does this by focusing on delivering what is important and valuable to the patient (and healthcare professionals) andby reducing waste, unevenness and over-burden in processes and pathways. In this context, waste is anything which keeps the patient away from the healthcare professional, or distracts the healthcare professional from delivering assessment, diagnosis or treatment. In line with our strategic approach to CSI/Lean, we are developing a set of policies and procedures to support staff wherever their roles and responsibilities are impacted by change. These policies and procedures will also be used to encourage cost savings through appropriate reduction in staff numbers or in staff costs through use of leaner skill mix; therefore the policies and procedures will both drive and support service change.

6.2.Policies and Procedures under Review and Development

6.2.1.Vacancy Management

6.2.1.1.Following approval by the OMT,a more robust Vacancy Management protocol is being developed. Key dates for the development are the Grampian Area Partnership Forum (GAPF) on 22nd April 209 and the Management Information Exchange on the 29th of April. The revised protocol will introduce a process of consistent,robust challenge at every stage of the process culminating in the Vacancy Management Panel sitting to consider applications. A distinction will be made between applications which include a redesign case including savings and those requesting straight replacement. Specific budgetary authority will be required for all new posts to pass into the process. Consideration is also being given to arrangements for managing deployment of temporary and agency staff.

6.2.2.Voluntary Early Release (VERS)/Voluntary Severance (VS)

6.2.2.1.Technical work to develop VERS to sit alongside the existing VS scheme is complete and the actual development is proceeding in partnership. Key dates for the development are at GAPF on 22nd April and the Management Information Exchange on 29th April. The actual launch will be following consultation.

6.2.2.2.Whether VERS or VS applies to individuals will depend on length of service, age and pension scheme membership. VERS applications will require a maximum pay back period of oneyear whereas VS, which involves retirement, will have a maximum payback of 2 years. Key assumptions are;the post will be discontinued; consideration will be given to creative redesign solutions; all applications will be considered by an Executive Committee and will require a compromise agreement.

6.2.3.Organisational Change Policy

6.2.3.1.This policy was originally developed to support the integration of the previous Trusts’ structure but it now needs to be revised to support staff through ongoing service improvement and redesign initiatives. The revisions will focus on clearer support for managers, career support for staff and more emphasis on workforce planning and redesign. This policy is currently out for consultation and will go to GAPF on 22nd April for approval.

6.2.4.Secondment Policy

6.2.4.1.A revision of the Secondment Policy is also ongoing. This policy works in conjunction with the Organisational Change Policy and supports the movement and development of staff around the system. The key change is to ensure that it links with redesign of services and provides development opportunities for staff. This policy is currently out for consultation with a closing date of 24th April. It will be submitted to the May GAPF meeting for approval.

6.2.5.Redeployment Policy

6.2.5.1.The third policy in the “suite of policies” to support service redesign is the Redeployment Policy. This policy is crucial for protecting staff and supporting re-skilling and redeployment to other roles so that we utilise our workforce to greatest effect. This policy will be released shortly for consultation.

Conclusion

As stewards of taxpayers’money, public sector organisations must deliver best value at all times. With uplifts in Health Service funding in the current CSR period of around 3%, with the strong possibility of a lower settlement in 2010/11, efficiency and productivity must be considered as a priority for all staff. NHSG is developing and deploying a range of strategies that will maximise efficiency while delivering very good patient care.

Recommendation

Board members are asked to acknowledge the need for NHSG to focus even more on efficiency and productivity than ever before, note the change strategies that are being applied in practice and, through its governance committees, seek assurance that staff, clinical and financial governance responsibilities continue to be met.

Paper presented by:

Alan Gall

Director of Finance

30 March 2009

Page 1 of 4