Kings Fund: Health leaders must be honest about financial challenges ahead - 3 Dec

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Local and national NHS leaders, as well as politicians, must be honest about the scale of financial challenges ahead and engage the public and health care staff about how they propose to deliver quality while reducing costs, says a report published by The King’s Fund today.

Windmill 2009: NHS response to the financial storm, considers how the NHS can best weather the approaching ‘perfect storm’ of resource constraint, rising costs and increasing demand fuelled by an ageing population and increasing patient expectations.

Report authors call for politicians to be open about the implications of the economic downturn for health spending. And, vitally, for government and regional health bosses to resist reverting to ‘command and control’ but instead encourage local commissioners to take a stronger leadership role across the whole of their local health care community in developing a response to budget constraints.

Authors also urge NHS managers to involve staff more in developing solutions for ‘worst case scenarios’ by using their knowledge of local circumstances to make decisions.

Windmill 2009: NHS response to the financial storm details the findings of a two-day simulation event, which involved 60 policy-makers, regulators, commissioners, managers, clinicians and patient representatives. Participants were given two near-future scenarios that posed questions about how primary care trusts and local service providers should start preparing for the less generous period of NHS funding ahead. Windmill 2009 was designed and facilitated by Laurie McMahon and Sarah Harvey of Loop2, and led by Alasdair Liddell, Senior Associate, The King’s Fund.

The King’s Fund Director of Policy, Dr Anna Dixon, said: ‘The Windmill simulation provided a fascinating insight into how the NHS is likely to respond to a serious downturn in the levels of funding in the near future.
‘It is clear that the NHS needs to start planning now and engaging staff and local people as it faces some difficult choices ahead. It’s vital that politicians are honest about the level of funding available and support local leaders in making these tough decisions.’

Report co-author Alasdair Liddell said: ‘There’s a danger that the recession will provoke the different organisations that make up the NHS to turn inwards and focus on their own survival as institutions rather than thinking about how they can work together to continue to provide the best service possible to their local communities. That might require new partnerships and innovative ways of working with others, so this certainly isn’t the time for private and third sector providers to be dissuaded from getting involved in providing NHS services.’

Co-author Sarah Harvey added: ‘PCTs have a key role in leading and co-ordinating these discussions in their local health economy. They must develop a framework of priorities that reflects both needs and evidence about where savings can be made.’

Link to PDF Document

Foreword: Windmill 2009
NHS response to the financial storm, considers how the NHS can best weather the approaching ‘perfect storm’ of resource constraint, rising costs and increasing demand fuelled by an ageing
The health service is about to enter a new era. After years of unprecedented growth, it faces the prospect of unprecedented austerity. Many of those responsible for running and paying for local health care services are aware that the good times are coming to an end, yet, understandably, there is uncertainty about the nature and extent of the challenges ahead.

The global recession has hit the British economy hard, and government borrowing is at an all-time high. Unemployment is rising and large swathes of the private sector have suffered significant losses. Thus far, the public sector has been protected by previous commitments, and by the decision to use government spending to prevent a deeper recession.

This situation will not last. A recent report from The King’s Fund and the Institute for Fiscal Studies suggests that even if the next government commits itself to ‘protect’ NHS spending, the room for manoeuvre will be very limited (Appleby et al 2009). Given rising demand and expectations, there will be little choice but to make significant savings.

The big question is how will the NHS respond? Unemployment and other by-products of the economic downturn will take their own toll on the health of the nation. Many of those responsible for the service today only have experience of running organisations during times of plenty. The traditional safety valves of longer waiting times for operations and procedures are no longer acceptable responses.

The official line, largely shared by government and opposition, is plausible but optimistic. It points out that the extra funding will not disappear overnight and that the health system should be able to cope with greater demand if it is managed more effectively. It also suggests that tougher times can be used as a catalyst to drive quality and productivity: through cost improvement programmes, adopting innovative practices and embracing technology. Others fear that less spending power will necessitate some form of rationing or restriction in services.

In either case, however, it is clear that the normal process of delivering NHS ‘efficiencies’ will not be enough. Given the scale of the savings that need to be made, doing a bit more of the same is not a viable option. There is a need in each area for a radical step change in how services are provided, where, and to whom. Anything less, and it is difficult to see how we can sustain the quality of care and the access to services that patients currently enjoy.

This was the context that prompted us to run another Windmill simulation. The first Windmill events, held in the early 1990s, were an attempt to understand how a new system with purchasers and providers would operate in practice. The idea was revived two years ago in Windmill 2007, when we used a behavioural simulation to explore how the health system might develop with the systems and incentives around at that time. The resulting report struck a chord with many and clarified key policy questions (Harvey et al 2007).

Since then, however, the outlook has darkened considerably, and we felt it would be useful to use the same approach to test how the various players in and around the health care system would respond to this very different scenario. Windmill 2009 provides some key lessons for policy-makers, commissioners and providers.

As in 2007, the Windmill simulation was designed and facilitated by Laurie McMahon and Sarah Harvey of Loop2, and led by Alasdair Liddell, a Senior Associate here at the Fund. We are enormously grateful to them for their expertise and their commitment to the project. But the success of the Windmill process also relies heavily on the experience and judgement of the participants – those who work in and use the health care system. I would, therefore, like to pay tribute to all those who took part in the simulation, including those who contributed to the moderation sessions or in other ways helped to craft the final product.

I believe this is a powerful and timely report. Important decisions will have to be made at different levels of the system – and each one will shape the health service of the future and help to determine whether or not it can survive and thrive. There are fundamental issues that need to be addressed: the way incentives are placed in the system, as well as the balance between choice, competition and diverse provision, on the one hand, and the degree of central planning and control, on the other. Likewise, we need to understand how far and how quickly the system can move to provide patients with more integrated care, in a way that overcomes the current gap between primary and secondary provision and the divide between health and social services.

In the last couple of years, there has been a greater effort to involve and engage clinicians, and with it, a greater focus on the quality of care and improving the patient experience. It is now more vital than ever that this shared commitment – to ensuring that services are safe, effective, patient-centred, timely, efficient and equitable – is sustained and strengthened (Institute of Medicine 2001).

I hope this report will be useful to everyone who wants to make health care better and that it will inspire us all to redouble our efforts to meet the formidable challenges that lie ahead.

Niall Dickson
Chief Executive, The King’s Fund

Key messages

• National leaders need to be honest about the scale of the financial challenges ahead.
• The Department of Health and strategic health authorities (SHAs) must resist reverting to ‘command and control’.
• Primary care trusts (PCTs) need to take a leadership role for the whole of their local health care system in developing a response to the financial challenges ahead.
• Commissioners need to improve their understanding of the costs and benefits of local services if they are to reduce spending and drive improvements in productivity.
• Commissioners and providers need to recognise that reducing variations in cost and quality will be necessary but not sufficient to deliver the level of savings required.
• Commissioners and providers need to grasp opportunities to work with the independent and third sectors, where these can make a contribution to innovation and improvement.
• Commissioning at every level needs to be clarified and strengthened.
• Commissioners should look for opportunities to work more closely with local authorities and ensure that the interface between health care and social care does not become a battleground.
• Commissioners should realise the productivity and quality gains in care outside hospital by reviewing and rationalising the estate and harnessing technology.
• Commissioners and providers must actively engage the public and patients in the process of change.
• Providers need to find better ways to engage staff and to consider all options to improve workforce productivity.

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