A review of NHS Cost Improvement Programmes
We need a new approach to closing the NHS performance gap
It is no secret that the NHS is facing significant financial pressures. The issues and economic arguments are well documented; as is the underlying challenge of ‘balancing the books’ by 2023, requiring system wide savings of around £27bn. Whatever the future financial settlement the ageing population, availability of new treatments, higher consumer expectations and increasing clinical complexity means the NHS will have to deliver more; improving care outcomes within ever limited resources.
For many years, a key response to financial short-falls has been to pursue provider cost improvement plans (CIPs) with the objective of delivering 2% – 6% savings per annum. These plans typically depend on a range of interventions focused on managing cost pressures and overruns, investment decisions and non-recurring savings. CIPs are sometimes referred to as: ‘financial improvement programmes’, ‘productivity initiatives’ and ‘efficiency plans’ but whatever they are called, the fundamentals remain the same. There is now even increased reliance on these productivity initiatives. Delivery of substantial provider CIPs are assumed in Sustainability and Transformation Plans (STPs).
But how effective are these initiatives and are they the solution to the improved sustainability of NHS providers? Strasys conducted an analysis of NHS acute providers from 2012 to 2017, analysing their financial, regulatory, quality and operating performance, with the backdrop of CIPs and evaluated how the performance differs over a period.
We discover that NHS cost improvement programmes may offer short term benefits but do not work in the longer term; leading to increased costs in the long run. More importantly, we find that there is a correlation between the quality and financial performance. Through interviews, observations and our own experience working with NHS Trusts we examined current practice and suggest a better way to achieve long term sustainability.
Naeem has over 20 years of experience helping organisations solve complex business challenges and innovate. He has worked with governments, multinationals and has recently been supporting NHS organisations to create greater patient advocacy.
David has over 30 years of experience working across the NHS within provider and commissioning organisations. As finance director, he has led many organisations in complex environments through change including financial turnaround and reconfigurations.