As anyone with any experience in repairing things will tell you “you can’t fix it until you know which bit is broken”.
But is the NHS broken? Maybe the more important question is whether we view the NHS a problem or an asset? Does it need fixing because it’s broken or does it need improving so that it can be better still?
The NHS is the most cost-effective health system in the world according to the Commonwealth Fund report “Mirror, mirror on the wall”(1). But we don’t have any way of measuring whether our hospitals are as efficient as our overseas counterparts in day-to-day delivery of healthcare (2).
However, three cost and efficiency issues for the NHS are critical right now:
- Workforce: the cost of agency nursing
- Junior doctors: new pay and conditions contract
- Procurement: the new procurement processes being implemented and the relationships with suppliers
Workforce and agency staffing
The NHS employs 1.3 million staff, and had a pay bill of £45.3bn in 2013/14. Of that total, the bill for nurses was £19bn. A focus on safer staffing levels and an increase in the rate of nurses leaving the profession of 29% in the last two years has led to the doubling of agency nurses (3).
The unprecedented rise in the amount that the NHS spends on agency nursing staff is set to be at least £980 million. According to the Royal College of Nursing (RCN) there are an estimated 20,000 nursing vacancies in the UK but filling them is difficult as a result of workforce cuts, reductions in nurse training places, years of pay restraint and attacks on terms and conditions. This has caused many nurses to leave and also encouraged many others into agency work (4). The RCN is calling for serious workforce investment and sensible, long-term workforce planning. The money currently being paid to nursing agencies would, the RCN estimates, pay for 28,155 permanent nursing staff with the right balance of skills and experience.
Training qualified staff to fill those vacancies is currently the responsibility of Health Education England (HEE) who try to balance the requirements for future medical and non-medical workforce, training the existing staff and balancing local and national needs as well as prioritising workforce decisions in the context of wider systems and strategic goals. And all within an annual budget of £5bn of taxpayers’ money. The current HEE ‘Investing in people’ document (5) recognises the gaps but claims: “this does not automatically mean increased training is a necessary parallel response”, and adds “if we always respond … by increasing training, then we risk condemning ourselves to a system in which we use all our resources on the future workforce rather than the current”.
The HEE lays much of the blame for the need for new training places at management’s door. Apparently it is the result of a “leaky bucket effect” where “employers are failing to retain and develop their skilled staff”. Perhaps the authors of the report should have paid a little more attention to what the RCN says about how nurses feel they are being treated: the word ‘morale’ does not appear in the HEE report. The Royal College of Nursing’s 2014 pay consultation survey revealed that 96% of nursing staff felt undervalued and underappreciated (6); even the NHS’s own survey found 59% of staff feeling that the NHS does not value their work!
This challenging juggling act for the HEE is all set to change with the very new proposals to completely scrap nursing bursaries announced on 25th November. This proposal is allegedly to increase the number of student training places from 20,000 to 30,000 within the next four years in line with increased demand for nurses. According to George Osborne, nurses should fund their education through loans like the rest of the student population, except nurses – training on the job, working unpaid for almost 50% of the time – are not like other University students. The reason that it is even possible is because the HEE can be removed from the NHS budget ring fence, as yet another cut to non-frontline areas of NHS activity and funding.
Junior Doctors pay and conditions contract
As part of a plan to build an affordable seven-day-week NHS – where non-emergency health services are also available outside office hours and during the weekend – the Health Secretary proposed new pay and conditions for junior doctors. The new proposal, which many view as both a reduction overall earnings and unsafe working hours, has been a source of intense debate and resulted in overwhelming support for industrial action (76% of junior doctors). This was called off at the last minute but negotiations are still on-going. Safety concerns due to tiredness have been raised regarding the working conditions of frontline medical staff. The proposals set out pay and conditions including a 11% pay-rise, but simultaneously reveals longer working hours and unclear direction post-2019, highlighting both political incompetence and mismanagement of the NHS for many individuals. Politicians have the audacity to claim the doctors concern is that they will lose money.
Industrial action is not taken lightly; in fact this is the first time in NHS history that junior doctors were prepared to provide no care whatsoever as part of strike action. The cost-neutral offer of November 2015 is the basis for further negotiation. The BMA, NHS Employers (acting on behalf of the employers of junior doctors) and DH will work collaboratively to develop and oversee new contractual terms and conditions of service for junior doctors. Allowing negotiations to progress, NHS Employers have agreed to extend the timeframe for the BMA to commence any industrial action by four weeks (to 13 January 2016); the BMA agrees to temporarily suspend its proposed strike action; and the Department of Health agrees similarly to temporarily suspend implementation of a contract without agreement. The saga continues…
The good news is that an e-procurement system is being put in place that will, for the first time, provide the NHS with a catalogue-type system for purchasing. The system will depend on the implementation of global GS1 coding and PEPPOL messaging standards throughout the NHS. Once in place, these systems will enable the NHS to control its non-pay spending much more accurately. There will also be spinoffs in patient safety as the GS1 barcodes will be accessible at any point in the supply chain (7). The role of the e-procurement strategy meshes well with the Carter recommendations which estimate that the introduction of the standards will allow every NHS hospital in England to save up to £3m each year while improving patient care (2).
Superficially, at least, this all seems very positive, but in advance of the full implementation of the new systems, significant savings are still to be delivered over the next four years and NHS purchasing departments are quite open about their desire to pass the problems of achieving these savings on to their suppliers. Healthcare Arena has seen letters from NHS Purchasing consortia explaining that although they recognise that “the private sector has its own pressures and the zero-inflation policy will potentially have an impact on your business” they are happy to rely on the suppliers’ “continued goodwill in helping us to move forward”! That degree of buck passing would probably lead to disciplinary action if it were directed at an internal department, but in this case it is directed towards external suppliers.
The most recent interim guidance from the Carter review is quite clear: the primary savings that can be made in the area of procurement will come from internal NHS organisational improvements (2). Carter reviewed procurement data from 22 hospitals and noted in the interim report that
“we collected all accounts payable and purchase order data … for the last two years and only 18% could be matched” (2).
The report also noted the variation in inventory management practices and concluded that:
“…there are greater savings to be had by managing the demand for products through better inventory management rather than price reductions.” (2).
Nevertheless, the purchasing consortium offers suppliers a number of ways they can help to reduce their prices, including: extending current contracts with improved prices, waiving carriage charges and retrospective rebates. Ironically, the consortium also suggests that suppliers might like to offer a discount for early payment … and therein lies a further issue: quite a few NHS Trusts have surreptitiously moved to 60-day, and in some cases, 90-day payment terms.
This is in direct conflict with the government’s position on large customers working with small business suppliers, which has been clearly stated: small businesses should be paid within 30 days of providing an invoice. However, some of the NHS Trusts have stated that their new 60-day terms apply for all suppliers, effective immediately. This is not a defensible position for taxpayer-funded organisation and is, in fact, in breach of NHS terms and conditions which state:
9.6 The Authority shall pay each undisputed invoice received in accordance with Clause 9.3 of this Schedule 2 within thirty (30) days of receipt of such invoice at the latest. However, the Authority shall use its reasonable endeavours to pay such undisputed invoices sooner in accordance with any applicable government prompt payment targets.
If the proposed Enterprise Bill is enacted then we can expect that the new Small Business Commissioner will be looking into the NHS’s procurement performance, especially in areas that have already been identified as causing dispute between small suppliers and large customers, which includes extended payment terms and discounts for prompt payment (8).
It is now time-critical that the Government and NHS pay urgent attention to:
- “Joined up” workforce planning for both the long-term, and the interim period, while new medical staff with a scheduled reduction in the use of agency staff
- Safe and fair treatment for NHS staff, delivering professional high-standard care should be rewarded with a reasonable wage and both safe and fair working hours
- Proper rationalisation of procurement processes and implementation of e-procurement systems with enforcement of terms and conditions that meet the Government’s guidelines
So, if the NHS is already the most cost-effective healthcare system in the world in terms of value for money for the taxpayer, the only real way to have a significant additional impact is for the taxpayer to be prepared to pay more for healthcare. In its final section, Healthcare Arena looks at the challenges facing the NHS today. If the NHS is to continue delivering a first class service, increased funding, improved education and transparency are key to its future success.
If you would like to comment on any of the issues raised by this article, particularly from your own experience or insight, Healthcare-Arena would welcome your views.
- Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally [Internet]. [cited 2015 Sep 23]. Available from: http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror
- Carter. Productivity in NHS hospitals – Publications – GOV.UK [Internet]. [cited 2015 Sep 23]. Available from: https://www.gov.uk/government/publications/productivity-in-nhs-hospitals
- The cost of short-term planning – £1bn on agency nurses in 2014/15 – Frontline First [Internet]. [cited 2015 Sep 23]. Available from: http://frontlinefirst.rcn.org.uk/sites/frontlinefirst/index.php/blog/entry/nhs-runaway-agency-spending-report/
- RCN. The cost of short-term planning – £1bn on agency nurses in 2014/15 [Internet]. 2015 [cited 2015 Sep 18]. Available from: http://www.rcn.org.uk/newsevents/news/article/uk/the-cost-of-short-term-planning-1bn-on-agency-nurses
- Health Education England » Workforce plan for England 2015/16 [Internet]. [cited 2015 Sep 23]. Available from: https://hee.nhs.uk/2015/02/05/workforce-plan-for-england-201516/
- RCN responds to Health Minister’s comments on pay and morale [Internet]. 2015 [cited 2015 Sep 22]. Available from: http://www.rcn.org.uk/newsevents/news/article/uk/rcn-responds-to-health-ministers-comments-on-pay-and-morale
- NHS e-procurement strategy – Publications – GOV.UK [Internet]. [cited 2015 Sep 23]. Available from: https://www.gov.uk/government/publications/nhs-e-procurement-strategy