making the books balance – understanding the financial context and efficiency savings

John Matheson & Stephen Gallagher

Quality Driven Financial Performance

Scottish Government

1

2

3

Economic Overview

Quality and Efficiency

Current Perspective

Horizon Scan

SCENENHSScotland Event

NHSScotland Event

Economic

Overview

Total Managed Expenditure vs Current Receipts

30

35

40

45

50

5519

48-4

9

1953

-54

1958

-59

1963

-64

1968

-69

1973

-74

1978

-79

1983

-84

1988

-89

1993

-94

1998

-99

2003

-04

2008

-09

2013

-14

Perc

enta

ge o

f nati

onal

inco

me

Total Managed Expenditure

Current receipts

Public Sector net borrowing

30

50

70

90

110

130

150

170

£bn

0'8-09 09-10 10-11 11-12 12-13 13-14 14-15

Financial year

Public Sector net borrowing

March 2010 Budget

June 2010 OBR prebudget reportJune 2010 OBRbudget forecast

Two-Speed Recovery

Two-Speed Recovery

Annual GDP % Change

IMF GDP Forecasts for Advanced and Emerging & Developing Economies

Advanced economies Emerging & Developing Economies

Source: Reuters EcoWin

05 06 07 08 09 10 11 12 13

Perc

ent

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

9

Forecast

Average Growth 1998 - 2007

International GDP Growth - Update

United States United Kingdom Japan Euro Zone

Source: Eurostat

Q3 Q4 Q1 Q2

10 11

Pe

rcen

t

-1.00

-0.75

-0.50

-0.25

0.00

0.25

0.50

0.75

1.00

‘On the road from the City of Skepticism, I had to pass

through the Valley of Ambiguity’

Adam Smith

‘On the road from the City of Skepticism, I had to pass

through the Valley of Ambiguity’

Adam Smith

SCENE

-6%-5%-4%-3%-2%-1%0%1%2%3%4%5%6%7%8%9%

10%11%12%13%14%

00-01 01-02. 02-03. 03-04. 04-05. 05-06. 06-07. 07-08. 08-09. 09-10. 10-11. 10-11.Health

'11-12 '12-13 13-14

Since Devolution SR2007 Next SR

% Annual Real Growth Rate in Scottish DEL Budgets

•IFS predictions – Dec 2009

•Reflects current use of EYF

Estimated Scottish Government DEL Expenditure – June 2010 Budget Results (2010/11 Prices)

20,000

22,000

24,000

26,000

28,000

30,000

32,000

£ M

illio

ns

(20

10

-11

Price

s)

2009-10 2025-2616 years

£42 billion£39

UK Comprehensive Spending Review 2010UK Comprehensive Spending Review 2010

Scottish Government DEL Settlement 2011-12 to 2014-15

Change

2010-112011-

122012-

132013-

142014-

152010-11to 2014-15

£bn £bn £bn £bn £bn £bn %

Cash terms

Resource 25.9 25.4 25.8 26.0 26.1 0.2 0.8%

Capital 3.3 2.5 2.5 2.2 2.3 -1.0 -30.3%

Total DEL 29.2 27.9 28.3 28.2 28.4 -0.8 -2.7%

NHSScotland Event

Efficiency is a dimension Quality. It can be safer care, more timely and can offer better patient experience.

Quality & Efficiency – Two sides of the coin

“To improve the overall quality and efficiency of NHSScotland while

ensuring good value for money and achieving financial targets.”

Case study: NHS Tayside Older Peoples Services

Project established to realise significant improvements, both qualitative and financial. By focusing on the patient and removing waste, NHS Tayside is delivering:

Reduced inappropriate admissions, Reduced length of stay through focus on patient goal

setting and partnership working (from 27 to 18 days), Lower readmissions by shifting the balance of care, Capacity and capability in staff to proactively manage and

support more effective and efficient patient pathways, and Potential to save £1.4m p.a. in net savings from service

reconfiguration.

Case study: NHS Borders Enhanced Recovery

Enhanced Recovery focuses on improving patient outcomes and speeding up a patient’s recovery after surgery. NHS Borders has successfully adopted and implemented this model of care for patients receiving planned major orthopaedic operations, resulting in a reduction in the length of stay in hospital for patients from an average of 7.7 days to a new average of 3.5 days.

This reduction not only represents a long-term productive opportunity for NHS Borders but also provides improved patient outcomes by reducing variability, decreasing the risk of infection, and ensuring that patients are active participants in their own recovery process.

We have a record of achievement….

NHS Scotland’s Health Boards delivered £262m of local efficiency savings in 2010/11, equivalent to 3.1% of baseline funding made available to NHS Boards.

This exceeded the minimum level of savings required by £61m and made it the third year in a row that NHS Boards have exceeded their efficiency targets

NHS Scotland Productivity

No. of inpatient & day cases has increased every year since 2002/03 (1.41m in 2010/11)

No. of WTE has increased at similar rate but decreased last year

Number of staffed acute beds has reduced every year since 2006/07 (2009/10 average 17,099 beds); day case surgery up by 4.6% over the same period

ALOS for emergency inpatients from 4.2 days (06/07) to 3.7 days (09/10)

NHS Scotland Performance

Scotland has lowest median waiting time for 7 of 11 procedures (UK Health Stats comparisons)

Scotland has lowest 90th percentile waiting time for 7 of 11 procedures

99.9% patients waiting 12 weeks or less for 1st outpatient consultation

99.6% of patients waited 6 weeks or less for key diagnostic tests

HAI – Since 2007, c.diff cases reduced by 73%

HAI - Since 2007, MRSA bacteraemias reduced by 61%

Scottish Patient Safety ProgrammeScottish Patient Safety Programme

72% reduction in critical care

c.diff

14% increase in ward hand

hygiene

58% decrease in ward c.diff

23% increase in

surgical briefings

15% increase in on-time antibiotics`

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Efficiency and Productivity Framework

How? Support – supporting our

workforce through engagement, partnership and placing quality at the centre.

Cost reductions – using the data to identify potential based on variability of care

Enablers – identifying, testing sharing and sustaining good practice.

Focussed Approach:

Work-streams identified and links made to QAB and Delivery Groups

Portfolio Board established to identify priority projects

Return on Investment

Collective approach to implementation of what works.

“To improve the overall quality and efficiency of NHSScotland while ensuring good value for money and achieving financial targets.”

• Primary Care & Community

• Patient Flow & Acute Services

• Workforce Productivity

• Evidence Based Care

• Prescribing, Procurement & Shared Services

• Service Redesign & Innovation

Service Redesign

Work-streams: Reducing Variation, Waste and Harm

Three Phases of Activity

1. Estimate Potentials based on variability Meaningful comparison Understanding blend of productivity, cash efficiency Building the quality as well as efficiency case for redesign

2. Agree Priorities Best practice actions Case studies Pilot/Project based activity with clear ROI Agree what support required to deliver to scale

3. Benefits realisation and reporting, challenge to adopt, re-examine potential

Emerging portfolio 2011/12

What seems to make a difference?

Strong CEO leadership Clear Organisational Narrative linking Quality, Efficiency and Productivity Good use of information to identify opportunities and drive improvement Dedicated and rigorous Project Management Clinical Leadership and Engagement Clear system rules/norms (based on quality) and aligning incentives/sanctions Delegated budgetary responsibility and bottom up idea generation Directors focus on delivery of critical projects Ownership of benefits realisation (quality and efficiency) across organisation Agile, targeted improvement support to realise benefits within portfolio

Clear link to strategic objectives Clear articulation of the place of continuous improvement in delivering

significant quality and efficiency gains for the organisation Evidence of triangulation in organisation between operational

management, finance and improvement/modernisation teams Table outlining projects, link to E&P themes, quality and capability

benefits and the efficiency and productivity benefits

Scheme E&P quality themes Quality and capability benefit

Efficiency and productivity benefit

Implementation of self management – COPD

Out-patients, community and primary care

Person-centred approach, staff skills development

HEAT T10

Savings of £460k pa expected; 2,200 em adm avoided

Targeted Improvement – Case Study: NHS Lothian

NHSScotland Event

Current

Perspective

Five Year PerspectiveFive Year Perspective

SCENE

– Development of Strategic Narrative detailing Five Year Vision

– Recognition of challenges facing NHSScotland State of Scotland’s Health Demographic Profile Challenge of UK Finances

– UK Barnett Consequentials will be passed on to NHS

– Service change to be described in the context of quality improvement

– Different service delivery approaches required at a local, regional and national level

Health Manifesto CommitmentsHealth Manifesto Commitments

SCENE

– Delivery on Manifesto Commitments – Low in number

Alcohol Minimum Pricing Policy Health and Social Care Integration Family Nurse Partnerships Early Detection of Cancer Further Investment in Dementia Services Ring-fenced Support for Carers

Spending ReviewSpending Review

SCENE

– Identify and Prioritise the spending policies which:

maximise economic recovery and increase sustainable economic growth

protect services for the most vulnerable prioritise the most effective preventative spend deliver actions to meet statutory targets on

reducing greenhouse gas emissions

Spending ReviewSpending Review

SCENE

– Exploring scope for

further integration; new funding mechanisms; reducing duplication; and reflecting on the key messages from the Christie

Commission.

Spending ReviewSpending Review

SCENE

– Specific focus on the following areas:-

– Work to reduce carbon emissions

– Early Years – Post-16 Education – Employability – Adult and Social Care

– Support for Business – Assets & Infrastructure – Offending & Community

Safety – Delivering Services in Rural

Areas

Spending ReviewSpending Review

SCENE

– Timetable

two months shorter than normal Cabinet meeting 28th July further Cabinet discussion 9th / 23rd / 30th August Cabinet final sign-off 6th September Spending Review and Draft Budget Announcement

21st September

Implications for Leaders (1)Implications for Leaders (1)

SCENE

– The evidence base for what improves quality is clearer than for what reduces costs

– The two agendas are related and leaders must connect them

– Taking a broad and balanced approach to quality may improve clinical engagement

– Increasing reliability and reducing variation matters

– Have to do this with people and not to them

Implications for Leaders (2)Implications for Leaders (2)

SCENE

– Greater efficiency alone won’t be sufficient

– Needs both short term and long term approaches (low hanging fruit and culture shift required)

– A requirement not a choice to connect quality and cost given what we know about demography and demand.

“We look to Scotland for all our ideas of civilisation”

Voltaire(1694-1778)

“We look to Scotland for all our ideas of civilisation”

Voltaire(1694-1778)

SCENE