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Achieving
transformational change
– the key ingredients
needed to become a
high performing NHS
Chris Ham
Chief Executive, The King’s Fund
5 December 2013
The challenge
NHS will receive flat real terms increases at best
for the foreseeable future
Holes in the NHS ‘ring fence’ mean that some of
this increase will be transferred to local
authorities, especially from 2015/16
NHS has more or less delivered on Nicholson
challenge through pay restraint and tariff cuts
Much more needs to be done to navigate to 2020
without performance and patient care suffering
NHS England: Call to Action: £30bn gap by
2020/1 (could be smaller…. But still a gap)
Assumes ‘Need’
growth of 5.4% pa

£30bn
gap

Assumes ‘Need’
growth of 4% pa
£13bn

Uses actual GDP
def. + guess for
2018 on (+1%
2018 on)
Assumes GDP
def=1.7% pa

“The broad consensus is that for the next decade, the NHS can
expect its budget to remain flat in real terms, or to increase with
overall GDP growth at best.” Call to Action
The NHS productivity challenge:
Making £1 in 2011 buy £1.60’s worth of care in 2020
High quality care does not always
require extra expenditure
Every health care system suffers from waste and
inefficiency
In the US, states with high levels of spend have
outcomes no better than states with low levels of
spend, and outcomes are often worse
Waste and inefficiency often occur in care
transitions, e.g. delayed transfers of care, which
have wider repercussions
Distinguishing between warranted and
unwarranted variations is not easy
Tackling variations in care
Effective care: the challenge of under use
Supply sensitive care: the challenge of over use
Preference sensitive care: the silent misdiagnosis
Russian roulette for NHS leaders
Francis and other reports emphasise importance
of front line staffing in delivering safe care
The move to 7 day working is not cost free
Staffing levels in some providers may need to
increase to avoid future failures of care
With such a high proportion of spend going on
pay, where will the money come from?
Staffing and pay
Delivering future QIPP plans cannot ignore
staffing levels and pay
Incremental pay progression, extra pension costs,
and proposed pay increases add to the pressures
on the NHS
But the costs of agency/locum staff and high
rates of sickness absence need to be tackled
And opportunities also exist to cut back office
costs and improve procurement practices
The wider economy
As the economy grows again, this will be
reflected in pay increases in the private sector
The gap between the wider economy and the
public sector will widen
The BMA, RCN, Unite and others will not accept
pay restraint willingly
Debate over the pay review body illustrates the
difficulties that lie ahead
The view from our leaders
David Nicholson: politicians need to be honest
about what can be delivered with available NHS
funding
Malcolm Grant’s three options: impose user
charges, ration care, root out waste and
inefficiency (and don’t do the first two until the
third has been achieved)
Where should NHS leaders focus their
efforts?
Delivering improved performance in a large and
complex organisation requires action at all levels
If the Nicholson challenge has been delivered
mainly through crude national controls to date, a
different approach is needed in future
Each and every NHS organisation must redouble
its efforts to reduce waste and inefficiency
Organisations must work together in local
systems of care
Good quality care often costs less
Systems of care
The NHS needs to adopt a local systems
approach
How can organisations and clinicians work
together to deliver improvements?
Local authorities and the voluntary sector
should be involved
Integration is now supported by Ministers, but
policy settings do not always support
Long term conditions and integration
Much NHS spend is in acute hospitals and
arises from unplanned admissions
Many unplanned admissions involve people
with multiple and complex long term
conditions: a small proportion of patients
account for a high proportion of spend
The NHS needs to give real priority to long
term conditions and admission avoidance
Integration can play a key part in this, both
within the NHS and between NHS and social
care
Where next?
Providers will face increasing performance
pressures
An increasing minority are already struggling to
meet targets and balance books
Smaller hospitals appear to face particular
challenges
Extra funding is being provided to areas and
services under pressure e.g. South London and
winter pressures money
Service reconfiguration costs before it possibly
pays e.g. South London and Mid Staffs
Will this be enough?
The King’s Fund’s view
Now is the time to review fundamentally the
health and social care divide
The Barker Commission will report its findings
and recommendations in 2014
Assuming (heroically) the next two winters can
be navigated, the next government will face some
very difficult choices e.g. between building
surpluses or increasing public spending
Leading the NHS today is not for faint hearted

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Chris Ham: Achieving transformational change

  • 1. Achieving transformational change – the key ingredients needed to become a high performing NHS Chris Ham Chief Executive, The King’s Fund 5 December 2013
  • 2. The challenge NHS will receive flat real terms increases at best for the foreseeable future Holes in the NHS ‘ring fence’ mean that some of this increase will be transferred to local authorities, especially from 2015/16 NHS has more or less delivered on Nicholson challenge through pay restraint and tariff cuts Much more needs to be done to navigate to 2020 without performance and patient care suffering
  • 3.
  • 4. NHS England: Call to Action: £30bn gap by 2020/1 (could be smaller…. But still a gap) Assumes ‘Need’ growth of 5.4% pa £30bn gap Assumes ‘Need’ growth of 4% pa £13bn Uses actual GDP def. + guess for 2018 on (+1% 2018 on) Assumes GDP def=1.7% pa “The broad consensus is that for the next decade, the NHS can expect its budget to remain flat in real terms, or to increase with overall GDP growth at best.” Call to Action
  • 5. The NHS productivity challenge: Making £1 in 2011 buy £1.60’s worth of care in 2020
  • 6.
  • 7.
  • 8.
  • 9. High quality care does not always require extra expenditure Every health care system suffers from waste and inefficiency In the US, states with high levels of spend have outcomes no better than states with low levels of spend, and outcomes are often worse Waste and inefficiency often occur in care transitions, e.g. delayed transfers of care, which have wider repercussions Distinguishing between warranted and unwarranted variations is not easy
  • 10.
  • 11. Tackling variations in care Effective care: the challenge of under use Supply sensitive care: the challenge of over use Preference sensitive care: the silent misdiagnosis
  • 12.
  • 13. Russian roulette for NHS leaders Francis and other reports emphasise importance of front line staffing in delivering safe care The move to 7 day working is not cost free Staffing levels in some providers may need to increase to avoid future failures of care With such a high proportion of spend going on pay, where will the money come from?
  • 14.
  • 15. Staffing and pay Delivering future QIPP plans cannot ignore staffing levels and pay Incremental pay progression, extra pension costs, and proposed pay increases add to the pressures on the NHS But the costs of agency/locum staff and high rates of sickness absence need to be tackled And opportunities also exist to cut back office costs and improve procurement practices
  • 16. The wider economy As the economy grows again, this will be reflected in pay increases in the private sector The gap between the wider economy and the public sector will widen The BMA, RCN, Unite and others will not accept pay restraint willingly Debate over the pay review body illustrates the difficulties that lie ahead
  • 17. The view from our leaders David Nicholson: politicians need to be honest about what can be delivered with available NHS funding Malcolm Grant’s three options: impose user charges, ration care, root out waste and inefficiency (and don’t do the first two until the third has been achieved)
  • 18. Where should NHS leaders focus their efforts? Delivering improved performance in a large and complex organisation requires action at all levels If the Nicholson challenge has been delivered mainly through crude national controls to date, a different approach is needed in future Each and every NHS organisation must redouble its efforts to reduce waste and inefficiency Organisations must work together in local systems of care
  • 19.
  • 20.
  • 21. Good quality care often costs less
  • 22. Systems of care The NHS needs to adopt a local systems approach How can organisations and clinicians work together to deliver improvements? Local authorities and the voluntary sector should be involved Integration is now supported by Ministers, but policy settings do not always support
  • 23. Long term conditions and integration Much NHS spend is in acute hospitals and arises from unplanned admissions Many unplanned admissions involve people with multiple and complex long term conditions: a small proportion of patients account for a high proportion of spend The NHS needs to give real priority to long term conditions and admission avoidance Integration can play a key part in this, both within the NHS and between NHS and social care
  • 24.
  • 25. Where next? Providers will face increasing performance pressures An increasing minority are already struggling to meet targets and balance books Smaller hospitals appear to face particular challenges Extra funding is being provided to areas and services under pressure e.g. South London and winter pressures money Service reconfiguration costs before it possibly pays e.g. South London and Mid Staffs
  • 26. Will this be enough?
  • 27. The King’s Fund’s view Now is the time to review fundamentally the health and social care divide The Barker Commission will report its findings and recommendations in 2014 Assuming (heroically) the next two winters can be navigated, the next government will face some very difficult choices e.g. between building surpluses or increasing public spending Leading the NHS today is not for faint hearted