Grant Thornton recently carried out a survey of NHS provider finance directors on their Cost Improvement Programmes (CIPs). Results showed that the average CIP target for NHS trusts in 2011/12 was 5.1%, yet by the end of the year the average saved was 4.8%, 91% of the initial target.
For 2012/13, the average CIP target is the same as the previous year, and 4.9% for 2013/14. These results were supported by a recent study by the King's Fund which produced similar findings.
This clearly puts some context around the challenge facing NHS trusts looking to cut costs. The amount that needs to be saved isn't changing substantially year on year, yet the accumulated savings needed over the next few years are large and challenging.
The situation gets worse when targets are missed, with year on year targets having to increase to make up for those when targets haven't been reached. When asked specifically how they plan to achieve their CIP targets for the next couple of years, nearly nine out of 10 finance directors identify service redesign as playing a major role over the long-term.
Financial directors recognise that while headcount and pay reduction are an important part of reducing costs, they can only be taken so far. Fundamentally redesigning patient pathways (the way that patients receive care), offers a way to make costs savings while also actively improving the whole patient experience.
This kind of service redesign can come in many guises, from combining all outpatient appointments (consultation, X-ray, pathology) into one hospital visit; to looking at how aspects of treatment can be delivered in the community.
These pathways will need to centre on the patient's needs and be delivered in the optimum location, avoiding unnecessary duplication, intervention and tests.
However, this type of fundamental change is clearly much harder to put into practice than other cost saving initiatives. It can be difficult to implement at the best of times, and it takes a substantial amount of time to plan – time which many NHS directors simply don't have as they struggle with the limited resources at their disposal.
Less staff means that management is being forced to do more with less, and has to concentrate on running the service without the freedom to step back and take stock. As a result, although finance directors may have identified how patient pathway redesign could be used to cut costs, they have been unable to create worked-up plans for these redesigns.
It is a significant change and requires more cross-organisational coordination than other money-saving measures, meaning it is often easier to focus on incremental smaller gains.
Changing patient pathways is not something that has to be approached in a vacuum, and financial directors should look at how they can get the whole organisation involved. One aspect of our study looked at how clinical staff view CIPs.
Only 22% of financial directors felt their clinical staff saw CIPs as an opportunity to improve quality while reducing costs. The majority (53%), were neutral, believing the goal of the CIPs is to cut costs without having an impact on quality.
In our discussions around the survey, it is clear that those trusts that have a major focus on continually improving standards appear significantly more successful at delivering on-going financial savings. NHS managers should engage with clinical staff to identify the areas where services can be redesigned in a more efficient manner.
However, when seeking this engagement, it is important to stress the role that CIPs can play a part in improving quality, as well as cutting costs. For example, reducing waste or duplicate appointments improves quality but also saves money.
Ultimately, CIP targets mean NHS management is faced with a task that is going to get progressively more difficult. Once the obvious cuts have been made, reaching the savings targets becomes harder.
Implementing fundamental changes to patient pathways will play a major role in future cost savings, but it is only by embracing this now, working with clinical staff, realising the scale of the task and allocating resources appropriately that trust managers can ensure they can continue to reach their cost-cutting targets over the next couple of years.
Bill Upton is partner and head of healthcare at Grant Thornton UK LLP.
Guardian Professional.
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