Management of Resources Within the Public Sector

Executive Summary

Since the ‘Comprehensive Spending Review’ in 2010 the National Health Service (NHS) has experienced significant budgetary constraints. Whilst the UK Government has protected the NHS budget, it is still the tightest funding settlements the NHS has ever experienced. Demand is growing rapidly as the population ages and long-term conditions become more common. Along with more sophisticated and expensive treatment options are becoming available and the cost of medicines is growing by over A£600m per year.

1. The NHS must take decisive steps to remove the barriers in how patient care is provided between hospitals, physical and mental health along with social care.
2. The NHS could save up to A£466m a year if doctors were less likely to prescribe multiple treatments of drugs to older people.
3. Target resources on clinical interventions that optimise health outcomes and to identify procedures that can be made more efficient.
4. The NHS could obtain over A£2bn over the next five years by selling off surplus land and buildings, according the Department of Health.

1. Introduction

This report identifies the decisions made by the British Government to reduce its National Deficit and how this will affect its Public Services. Every finical year the UK runs up a large budget deficit. This is where the UK Government spends more money than it can collect through taxation. In 2010 the UK Coalition Government set out plans for its unavoidable deficit reduction. This was an urgent priority to secure the UK’s economic stability at a time of uncertainty in the global economy. This was to provide long term stability in its public services and its welfare Systems. According to a report published the ‘Spending Review’ the Coalition Government inherited one of the most ambitious and challenging fiscal positions in the world. The commented that, Britain’s deficit was at its highest ever recorded in peacetime history. The state borrowed one whole pound for every four pounds that it spent. The interest payments on UK’S National Debt cost the UK around A£45 Billion a year or 3% of ‘Gross Domestic Product’ (GDP).

However, all the major political parties pledged to protect the National Health Service (NHS) from budget cuts in 2010, after a period of unprecedented growth there was a implementation of a ‘funding freeze’ in 2011. This would be the most austere period for the NHS in over thirty years. Even with this constant funding, the rising demands from an ageing population, along with higher public expectations, meant that there was a substantial ‘funding gap’ to be met by improvements in productivity and efficiency. Efficiency savings are still needed. The chief executive of the NHS Confederation, commented on the ‘Spending Round’: "Although the health budget has been spared a reduction, it is important to remember that NHS organisations are facing significant pressures to meet growing demand and improve quality, and still need to find substantial efficiency savings". He also mentioned that: "Maintaining the ring-fence for the NHS is vital, but it is also important that the health service gets to spend what is allocated to it” Therefore, long-term investment and innovation in healthcare must be seen as a key function of the UK’s growth strategy and not an anchor holding it down.

2. Results

2.1 NHS Spending

Funding for the NHS comes directly from taxation and is granted to the Department of Health by Parliament. When the NHS was created in 1948, it had a budget of A£437 million (around A£9bn in current value). NHS spending has continued to increase significantly, in 2003/04 the NHS budget was A£64.173bn and this drastically increased to A£109.72bn in 2013/14. Statistics show that Net expenditure of the NHS has increased by A£45.54bn between the years 2003 and 2013. Government Statistics on public spending show that NHS spending increased from A£104.405bn in 2011/12 to A£105.254bn in 2012/13. This amounts to a 0.8% rise in real terms year-on-year. In 2011/12 health spending was 0.3% higher than the previous year. In recent years, the NHS has managed to spend slightly under budget. This was not because demand for its services was reduced, but because of the use of effective mechanisms in place not to spend. Public satisfaction within the NHS, for its staff and for its quality of care received still continues to remain very strong. All of this has been achieved while applying a significant reform programme following the Health and Social Care Act 2012.

2.2 Spending Review 2010

In agreement with the Government’s commitment to protect public health, spending in the NHS will increase by 0.4% in real terms over the course of the Spending Review period. This will include a 1.3% increase in the resource budget and a 17% decrease in overall capital spending. The administration budget will also be reduced by 33% and reinvested to support the delivery of NHS services.

2.2.1 Table 1: Department of Health - Spending Review 2010

Sourced: (Department of Health , 2010) The health reform enabled the NHS to maintain the quality of services to patients. This settlement also included:

• Real term increases in overall NHS funding in each year to meet the Government’s commitment to protect public health spending, with total spending growing by 0.4% over the Spending Review period (see table 1).
• An additional A£1bn a year for social care, as part of an overall A£2bn a year of additional funding to support social care by 2014/15.
• New cancer drug fund of up to A£200m a year.
• Expanding
• Increasing access to psychological therapies
• Maintain funding for priority hospital schemes.
• Capital spending to remain higher in real terms than it has been on average over the last three Spending Review periods.

2.2.2 Efficiency Savings

To sustain the rising costs of healthcare and the relentless increasing demand on its services, the NHS released up to A£20bn of annual efficiency savings over the recent four years, all of which was reinvested to meet rising levels of demand and to support the improvements in. This included:

• Constantly improving workforce productivity.
• Implementing best practice throughout the NHS in the management of long term condition.
• Reducing inconsistencies in admissions and outpatient appointments.
• A 33% cut in the administration budget, including a reduction in the number of arm’s length bodies from 18 to a maximum of 10 by the end of 2014.

>2.3 Health and Social Care Act 2012

A fundamental part of the Government reforms, was the Health and Social Care Act 2012 introduced substantial changes to the way in which NHS in England was organised, improvements in the quality of social care and reform its funding. The Health and Social Care Act introduced a variety of vital changes to the NHS in England. These changes came into force on 1 April 2013. These changes included:

• Providing groups of GP practices and other professionals, known Clinical Commissioning Groups (CCGs) 'real' budgets to buy care on behalf of their local communities.
• Moving many responsibilities historically located in the Department of Health to a new, politically independent NHS Commissioning Board (NHS England).
• Implementation of a health specific economic regulator with a mandate to guard against 'anti-competitive' practices.
• Relocating all NHS trusts to foundation trust status.

2.4 Funding Freeze

Recent years have been extremely challenging for the NHS, a prolonged funding freeze in real terms, implementation of controversial reforms and the mistreatment of it users and the quality of care, in particular from the Mid Staffordshire NHS Foundation Trust. This NHS funding freeze will remain in place until 2015 and possibly further beyond. Regardless of the real term increase that is usually required to deal with the rising demand and the lack new treatments not readily being available. However, in 2011, the NHS has surprisingly succeeded to survive within its means, essentially as a result of curbing the wage bill. However, this may be difficult to continue because of rise in wages in the private sector. Meanwhile, there is a lot of engagement across the NHS to increase efficiency whilst protecting the quality of care.

3. Discussion

Since the implantation of the National Health Service (NHS) in 1948, the NHS has grown to become the world’s largest publicly funded health service. It has also become one of the most efficient and comprehensive health services. The NHS was created out of a long-held ideal that good healthcare should be readily available to all, regardless of wealth. This is still a fundamental principle that remains at the NHS core. With the exception of some charges such as prescriptions and dental services, the NHS remains free to any UK resident. There are currently more than 63.2m people requiring this service. It covers everything from routine treatments, to transplants, emergency treatments and end-of-life care. The NHS deals with over 1 million patients every 36 hours. The healthcare system is facing the challenge of significant financial pressures. As individual needs for services will continue to grow faster than the funding it’s allocated. Therefore the Department of Health must innovate and transform the way in which they deliver their high quality services, within the resources available.

To ensure that patient’s needs, are always put first. The NHS has gone through several vital changes in recent years. Such as; Increased levels of investment and reduced waiting times. Ongoing developments include the expansion of patient choice and the introduction of academic health science centres (AHSCs), first of which is the Imperial College Healthcare NHS Trust. The UK’s Government has identified a number of opportunities to cut costs in the NHS whilst protecting its frontline services. These include limiting its staffs pay and pensions, cutting back office management, the selling of assets, rationalising procurement and drugs purchasing. There are numerous discussions about value for money in the NHS. The Secretary Of State Jeremy Hunt. has overall responsibility for the function of the Department of Health (DH).

According to Hunt the NHS must save up to A£10bn a year by 2020 by diminishing its use of agency staff and management consultants, selling off unused property and reducing clinical mistakes, the health commented: “If we are to be truly financially sustainable we need to rethink how we spend money in a much more fundamental way.” A report published by Hunt the NHS England’s blueprint for the health service, which identified the need for a greater use of technology and innovation to improve patient healthcare in the NHS whilst delivering cost savings the public sector. These reductions in the annual budget of A£110bn will be assisted by an increase in innovation, according to Hunt. The health secretary also commented that a reduction in prescription errors could save the NHS up to A£551m a year, whilst selling off some of the NHS unused land and buildings could create significant savings, including A£1.5bn in London alone. Targeting agency staffing bills which have significantly increase from A£1bn to almost A£2.5bn. Guidelines set out in the report ‘Everyone Counts: Planning for Patients 2014/15 to 2018/19’ illustrate how the NHS budget is invested, to drive continuous improvement, to maintain high standards of care for all. The NHS is driven by quality in all that they do. It can no longer accept a minimum standard of care as acceptable. According to the Chief Nursing Officer for England Jane Cummings, practical application of technology on the front line will enable NHS nurses and other health workers to concentrate on what is important, providing meaningful and compassionate care to its patients. Becoming more efficient with data and technology could have the potential to create a substantial difference to patients, whilst enabling best value for taxpayers. 

4. Conclusion

The A£10bn of savings announced by Jeremy Hunt are realistic, however it will take up to five years to deliver these savings. It is imperative that the debate starts now and the NHS needs to look at where efficiency savings can be made, and to focus on clinical care and not just the back office jobs. The big question is whether these efficiencies can be made soon enough to reduce the requirement of unpopular cuts to health services. The NHS needs to ensure that accesses to all of its services are on an equal footing whether the patient’s needs are mental or physical. They must innovate the way they in which they provide care for the most vulnerable users excluded from society. However, high quality is not just an aspiration. There is urgency to plan strategically and to start making these changes that are required to deliver models of care that will be sustainable in the longer term. Therefore, the discussion remains about how the NHS will cope with a continued freeze on its overall funding. There is tension between national co-ordination and local decision making in the NHS about value for money. The NHS should try an implement a top-down best practice or it should let innovation and efficiency come from local decision making and accountability, with an acceptance of locally diverse provision.

5. Appendices

5.1 Table 1 Department of Health - Spending Review 2010

5.2 Recommendations

1. The NHS must take decisive steps to remove the barriers in how patient care is provided between hospitals, physical and mental health along with social care. The future of the NHS will need to provide greater care, delivered locally, but with some services provided by specialist centres. This should be organised to support people with multiple health conditions.
2. The NHS wastes around A£2bn a year and risk patient’s health by giving them excessive x-rays and treatments they do not require. The NHS could save up to A£466m a year if doctors were less likely to prescribe multiple treatments of drugs to older people. This can create adverse drug reactions, which account for 6% of all hospital admissions, which amounts to 4% of all hospital bed being used.
3. With future restrictions on NHS funding, another recommendation is to try to target resources on clinical interventions that optimise health outcomes and to identify procedures that could be made more efficient. The King’s Fund has suggested money could be recovered by reducing the length of stay in hospitals and using lower cost drugs.
4. The Department of Health estimates that nearly 8% of NHS land is underused, which could help to raise some A£2.5bn, equivalent to 50,000 nurses, between now and 2016.The Government has announced plans to sell off surplus land to boost health service funds. To modernise the NHS and to improve its efficiencies, the health service needs to be proactive and identify land that is no longer required or needed. This revenue raised from surplus land could be used to improve patient care.

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