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The revised NHS Operating Framework was published on 21st June 2010 and most comment is likely to focus on the removal or reduction in national performance targets.
Alongside these changes however, the updated framework targets significant reductions in management costs in coming years.
It seems Strategic Health Authorities (SHA) and Primary Care Trusts (PCT) will face the greatest initial focus, though local management teams will determine how this is delivered.
The government is seeking to reduce NHS management costs by a total of £850m by 2013, a saving of 46% overall - the first £222m being planned for the coming year.
Andrew Lansley, Health Secretary said -
"Management costs in Primary Care Trusts and Strategic Health Authorities have increased by over £1bn since 2002/03, with over £220m of the increase taking place during 2009/10. Costs now stand at £1.85bn and it's our intention that during 2010/11 we will remove all the management costs that have been additionally incurred during 2009/10, to get back to the level of 2008/09. Then in subsequent years, we will go beyond that, with a further £350m reduction in 2011/12."
So that's £222m in 2010-11, £350m more by 2011-12, with the remaining 278m being saved by 2013-14. In the revised operating framework, SHAs are being encouraged to go further, ensuring "all possible efficiencies are realised".
While recognising the controls implemented by the Efficiency and Reform Group at the Cabinet Office do not formally apply, the revised framework tell NHS organisations they should demonstrate "similar discipline" in relation to spending on consultancy, marketing and ICT spend, recruitment procurement for goods and services as they "progress their quality and productivity plans".
The Kings Fund has reacted by highlighting the need to continue invest in leaders who can engage frontline clinical staff in improving quality and efficiency, stating -
" ... improving NHS efficiency will not come primarily from cutting the waste of managerial overheads. Given the NHS faces a shortfall of up to £21 billion a year, improving productivity at the frontline will have the most impact ..."
How will your organisation respond to the challenge of reducing management costs?
For further information, please contact:
Vince Lammas
Attractor Consulting Limited
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
www.attractorconsulting.com
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Thanks for the comment (my first) - which is really appreciated.
I agree NHS organisations have to motivate and utilise the aptitude, skills and experience of its better managers to improve services.
The NHS needs more of the right kind of managers, leaders prepared to communicate with their own teams, involving them and building ownership for local actions which improve services to patients and carers while reducing costs.
Experience suggests organisations often need to bring in external skills to support such work, but local ownership and delivery are vital.
I accept LEAN does look promising but it isn't really new, having much in common with earlier systems-based interventions in NHS service re-design. I am witholding judgement until sure this isn't yet another "fad".
Managing performance is, indeed, about motivating people to achieve and you highlight those poor performers who, I agree, need attention - either support to improve and deliver more, or to find alternative roles that better suit their skills - in the NHS or elsewhere.
Where this isn't happening now, it indicates weaknesses in line and operational management that need to be addressed.
The government is well meaning in seeking to reduce management costs which are largely related to agency and consultancy fees. NHS organisations must begin to adopt a culture of tapping into the skills of the staff they have in position already as opposed to the current over reliance on consultants and agency staff. There are many multi-skilled managers in the NHS who are underused and under valued and who have therefore resorted to doing the minimum possible to secure their monthly remuneration. The use of performance management and capability procedures should root out all those under performers and encourage those who are in the job because they want to be to strive to achieve even more despite limited resources. The adoption of lean thinking in the NHS is long overdue as is payment by results for all organisations.
Management costs in PCTs and SHA increased £220m in 2009/10 going onto 1.85bn 2010/2011’
It is the same government that caused the increase in management costs within the PCTs’ and SHAs’ and it is the same government that is marking changes. ‘Take the wool off your eyes first before reaching out to the other person’
If there were no consultants and agencies working in PCTs’ and SHAs’: PCTs’ and SHAs’ work performance expectancy would never be achieved.
PCTs’ and SHAs’ would never be able to achieve/meet targets, inspect healthcare environments, advice and provide guidance to the public, patients, staffs, manage complaints. And so on.
Probably some PCTs’ and SHAs’ have overspent and have duplications with what they do, those should look about and implement lean management without compromising.
Working in the independent sector I feel as a nurse Iam I more aware of cost .This however shouldf not effect the care the patient recieves .If every health care worker was aware of the cost of the materials, test & the equipment they use .Staff would be more careful & less wasteful.This would make ,I feel a considerable contribution to cost cutting without effecting patient care.Education & training must not be cut from budgets or the patient & the service will suffer.
Cutting costs and reducing waste are wonderful ideas. However, for as long as people are 'employed' by the NHS and 'do not work' for the NHS, they will always have the support of trade unions. The rot is not just at the bottom but at the top as well. Unfortunately, it is the middle management that is going to suffer. There is no way of distinguishing between effective and non-effective managers. Effective managers in the NHS are at the mercy and goodwill of their seniors and the non-effective ones are shielded by the unions.
"For every thousand hacking at the leaves of evil, there is one striking at the root." - Henry Thoreau.
I am afraid 'the white paper' may not be 'the one'.
My greatest concern with the cost saving going on within the NHS is that staffing will be the soft target. Not filling vacant posts using a recruitment freeze and prohibiting the use of Bank staff will save money. However, in the outbreaks I have been involved in lack of staffing has always been an exacerbating factor.
Whilst the middle management grade will come under the harshest pruning, I fear that there will be inevitable collateral damage to other staff with repercussions for Infection Control practices and a knock on effect for patient safety.
