Week Commencing 4th December 2017
5 Insights You Need to Know
Welcome to the NHS WEEK THAT WAS, a Monday synopsis of the most important things that happened last week, with a degree of interpretation. No waffle, no minor news – just the significant stuff to ensure you are current. Enjoy!
After such a huge week previously, I am not sure we could cope with another and fortunately it was quieter. Perhaps the best way of describing it was as ‘aftershocks’ to last week’s seismic commotions. That said, some of the aftershocks were a fair way up the Richter Scale and I have seized a little chronological licence by including some of today’s new sin this update, given their pertinence and links to the recent past. Let’s hope the week produces more or next week’s news will be very short!
1. FUNDING HONESTY EMERGING
Friday saw the VERY public resignation of the King’s College Hospital NHS Foundation Trust chair, Sir Bob Kerslake, marked with a letter to the Guardian headlined “I’m quitting as a hospital boss: dire NHS funding problems give me no choice” and adding later “I do not do this lightly as I love King’s but believe the government and regulator are unrealistic about the scale of the challenge facing the NHS and the trust..” This is a highly experienced, senior individual and former head of the civil service, someone who knows Government intimately and another high-profile leader to effectively place their career head on the block, rather than be party to what they see as a fantasy with very real consequences for both staff and patients. My belief, supported firmly by our biological risk-management neurology, is when senior, formerly Government-sympathetic individuals put themselves in the firing line, you have to consider that the head down alternative is seen as worse.
If the touchpaper was lit on Friday, the explosion came on Monday. In a Health Service Journal interview, Jim Mackey, recently ex-CEO of NHSI, flung enough insult and mud at King’s performance and behaviour that you’d have thought they were literally the only ‘bad boy’ in the NHS. This was followed by King’s being put into financial special measures. The gist of Mr Mackey’s outburst was that everybody else seemed to be ‘trying’ to address financial control totals but King’s ‘never’ delivered on a single financial commitment. However, that is perhaps a touch rich when we have had literally a stream, recently, of Trusts reporting deterioration of their planned finances and a departure from their forecasts and control totals. In each case, there is a strong suggestion that they were in effect forced by NHSI to agree to totals that were wholly unrealistic and had they not, would have been denied literally organisational life-saving funding through the STP/control total process.
As for King’s specifically, their finances have deteriorated by a very significant amount. Sir Bob cites the problems associated with taking on Bromley and yet despite that the Trust has managed to achieved savings of £80m in each of the last two years, a rate that is twice the average but clearly not enough for NHSI.
As if to scupper his own argument, Mr Mackey said directly that the NHS should abandon the Payment by Results Tariff system, the continuation of which he said, and I quote, was “pointless” because it was “so far out of sync with actual cost”. That sounds like a pretty damning indictment of the deployment of funds to providers (which we must remember is also the mechanism for mediating CIP targets) and one would expect that the bigger you are and thus the more work you do (er… like King’s perhaps), the greater the negative impact of the imbalance. So perhaps Mr Mackey is really saying that providers, especially big ones, are set up to fail but expected to do so quietly, with a stiff whiskey and a revolver in the study, not publicly, via the Guardian.
What we are seeing emerge here is some honesty, in all its messiness, as dishonesty (or ‘keeping honest opinions to oneself’) is no longer seen as palatable or even remotely possible, given the magnitude of the problems. This includes, in recent times:
- Series of major Trusts saying “and here’s what our financial position REALLY is”
- The ex-Head of NHSI saying the tariff system is wildly disconnected from true costs
- The current (nearly ex???) Head of NHS England saying “we just can’t do it on an extra £1.6bn”
Overall, I think we have to conclude we are financially broken, with Brexit breaking the camel’s back and everybody getting a share of the hump, as winter arrives… with a vengeance.
And how well supported his assertions are:
2. MORE MERGER EMERGES
I recently shared with you what looks like the evolving merger of NHSE and NHSI and thus the possibility of a single CEO and the likelihood, given his recent public statements, that it isn’t Simon Stevens. The possibility was sort of denied by the assertion that it couldn’t happen because the Health & Social Care Act 2012 seemed to prevent it, which I pointed out was legislation that had also been placed in the firing line by Mr Hunt himself.
Well, as an aftershock to those revelations, Mr Mackey, in the aforementioned interview, stated openly that he would rationalise the regulatory bodies, starting first as a collaboration with joint Board appointments, seeking to save as much as £1bn in funding. That sounds VERY like my conclusion from last week!
His comments covered regulatory bodies and CCGs, both of which must be feeling somewhat nervous at the proclamation. Again, it is important when considering such news not to look at a single wave height but also the frequency and the average wave height. So, what has our coastal webcam revealed about the potential storm erupting? So far…
- Mr Hunt signalled the end of the Health & Social Care Act 2012 (especially competition and independence)
- He also said very clearly everybody should ‘just do what the centre says’
- Mr Mackey appears to be suggesting that NHSE and NHSI should merge, as part of a marked reduction in regulators
- He is also suggesting a radical overhaul of commissioning
- Further, he is suggesting the market-making approach to funding – PbR and Tariff – is defunct and needs to change
So, in summary, that seems to suggest we are due a MAJOR, positive SEISMIC shift in the healthcare plan sometime soon. STPs were announced in the week before Christmas 2015, so two years on it is intriguing to wonder just when we might be told something official.
3. CHALLENGING GOVERNMENT AGENDAS…
In what is becoming a news narrative, rather than individual stories, we are seeing increased rebellion against what many see as the increasingly secret dealings of a Government masking an agenda that seems to be on the point of implementation. One component of this is a lawsuit seeking to halt the progression of Accountable Care Organisations, under the suggestion that they are back-door privatisation of the NHS and a mechanism for moving towards an American-style system.
This was brought firmly back into the news this last week when it emerged Stephen Hawking had joined the lawsuit. The ongoing spat between him and Mr Hunt is well-known. Mr Hawking said “I am concerned that accountable care organisations are an attack on the fundamental principles of the NHS”, as well as “They have not been established by statute, and they appear to be being used for reducing public expenditure, for cutting services and for allowing private companies to receive and benefit from significant sums of public money for organising and providing services.”
The goal of the lawsuit is to force a judicial review into the implementation of ACOs, which would be a very open wound for the DH and Mr Hunt.
The Department of Health responded “We strongly resist the misleading claims in this action; it is irresponsible scaremongering to suggest that Accountable Care Organisations are being used to support privatisation and harm the fundamental principles of the NHS… The NHS will remain a taxpayer-funded system free at the point of use; ACOs are simply about making care more joined-up between different health and care organisations.” The last statement doesn’t really address the growing concerns, which centre around the introduction of major private provider groups or chains (or ACOs, as the Americans would call them), care from which might be paid through an insurance-based system. There’s nothing inconsistent with that in the DH statement, even if the statement itself seeks to sound like ‘no change’ in the NHS.
I would have to add that the recent interviews and speeches by Mr Hunt and Mr Mackey can only add flames to the wildfire of concern. Mr Hunt himself has alluded to scaremongering and yet he is a co-author of that 2005 policy book suggesting that the NHS needed to be denationalised, opened up to both private and public provision and funded by an insurance-based system. Call me cynical but ACOs, coupled to pulling back from NHS organisational independence, suggestions of a departure from the PbR funding mechanism and disbandment of CCG commissioning, all sound very much like building blocks of or stepping stones towards just what Professor Hawking and colleagues are concerned about. Anybody been consulted yet? Thought not.
It’s a view that Labour seem to hold too, given their assertions this week that MPs should be allowed to debate and vote on “secret” plans for the NHS that they claim could lead to greater rationing of care and privatisation of health services. Labour says ministers are trying to push through the creation of ACOs without proper parliamentary scrutiny. Surely ‘just doing it’ (in secret) would never cross the minds of ministers… except for perhaps with Brexit, drug funding decisions, STPs etc etc
The section on healthcare in the Mr Hunt et. al. booklet makes for interesting reading: The Booklet!
4. WINTER FRAILTY IN PERSPECTIVE
There is much concern currently over the effect of this winter, with a host of news articles on different aspects of what can only be described as system frailty.
Dragging in a news item that should have been in last week’s synopsis, Dame Pauline Philips, national urgent and emergency care director at NHS England, informed their recent board meeting that there was a genuine risk associated with nursing numbers and recruitment problems, saying that nurse staffing levels will ‘determine NHS winter capacity’ and especially the availability of beds.
Opposition MPs accused NHS leaders of unacceptable secrecy after they decided to no longer to reveal just how many hospitals have come under such pressure during winter that they have to declare an alert. NHS England will not publish this winter’s figures for the number of trusts forced to issue an alert under the Operational Pressures Escalation Levels (OPEL) framework system. You will recall the outcry last year when Trusts reported on their ‘black alert’ status, which for some was a near-daily process. In my decade plus long scrutiny of behaviour in the system, this tends to happen when the DH or Government knows the figures are so bad they do not want to discuss them, either cancelling reporting or changing the make up so you can’t follow the trend. I guess we’ll only know as time progresses.
This week also saw one of the largest care home chains come horribly close to collapse. Four Seasons was granted a stay of executive based on terms that are reported as impossible to meet. It’s not the first of course but the timing couldn’t be worse. The chain carries 17,000 social care beds and so failure would likely have a significant impact on social care resilience (if we can even use the words together), with a likely house of cards effect emerging, as capacity is eaten up, worsening the DToC situation at a time when the NHS cannot open sufficient beds of its down. The knock-on effect of this is a severe worsening of elective care performance and thus a collapse of financial performance in quarters 3 and 4, a situation already worsening at an alarming rate as I have already covered.
The precariousness of the system is in major part due to the convergence of a whole series of pressures at the worst possible time, those being:
- Increasing demand being omnipresent
- The financial instability of the private social care system due to increased minimum wages and yet legislated staffing levels
- Social care funding reductions amounting to £6.3bn
- Huge reductions in care and nursing staff applying to the UK from the EU
- Scary rate of nursing vacancies, leavers and sickness due to pressures and no payrise for ‘quite some time’
- Inability of the NHS to open more beds, in part due to funding and in part due to no staff
- The steady decline of primary care performance, following its own recruitment crisis
The NHS Providers report issued on Thursday this week highlighted an improvement in the DToC figures, following a significant push and that additional funding. Before we get too excited, it is worth noting that the Q2 DToC rate was 5.2%, well above the government target of 3.5%. More concerning is that despite this improvement, Q2 bed availability actually went down year-on-year to 127,614 beds open, 2% less than the same quarter last year. It’s difficult to calculate the exact effects but as DToC-blocked beds are only a proportion of available beds, the 2% fewer beds overall is likely to represent a very significant reduction in capacity against a 4% increase year-on-year in A&E attendances (October 2017 vs. October 2016).
As if we needed a final, final straw, this year is predicted to bring one of the most virulent flu strains for 20 years, based on Australia’s experience of H3N2, a strain that also particularly affects older people over 80 and to a lesser extent young children aged five to nine years. Whereas moves to mitigate the effects are under way, by increasing vaccination of NHS frontline staff to a target of 75%, the operational reality is likely to be one of significantly increased admissions, especially of those with existing respiratory illness or frailty.
In summary, it is difficult to conclude other than this doesn’t look good. As the cold bites in no uncertain terms, it is likely that all services could be hit by a tsunami, the worst effects of which will be at the hospital level, given the current state of A&E and the already eye-watering DToC & funding crises. I’d so love to conclude it differently because there are likely to be bodies unnecessarily involved in this winter.
5. THE SIGNS OF SUPPLIER EXODUS
And finally, in what appears to be benign news by comparison but is serious in its implications, this week sees the announcement that London hospitals are having to rapidly rethink things like transport arrangements due to the collapse or exit of external providers. This set of news items re-surfaces a fear I have shared on many occasions, that as austerity hits the NHS like a blizzard, the knock-on effect on private providers of NHS-related services is equally significant but without the safety nets.
Over the last few years, with ever increasing CIP targets and control totals, we have seen an alarming trickle-down effect on providers, including:
- Tender price pressures pushing contracts to the bone and arguably to the point of certain failure
- Payment delays to suppliers becoming normalised at levels that are unsustainable
Over recent weeks, we have seen plenty of reports and discussion about finance departments delaying payments because they genuinely do not have the cash and yet have been so explicitly ‘told’ to hit control totals that this is the only option. Whereas there are mechanisms to protect Trusts from outright door-closure in a financial collapse, private providers do not have the same protections and so we are seeing an increase in the following behaviours or events:
- Early exiting from contracts and an increase in contract failures
- Strategic decisions to avoid types of work or even the NHS as a whole
- Moving hospitals etc onto advance payment terms
- Outright denial of supply
For our own part, we have had uncontested invoices delayed by up to 138 days, which is very significant for providers without the Treasury behind them. One of the greatest risks to the financial integrity of the system is for a wholesale shift to advance payment terms out of self-protection by suppliers. If you can’t afford to pay them by day 138, you sure as heck can’t find the cash upfront. It is very difficult to quantify the magnitude of this problem but we need to consider that if all payments are delayed by say 4-5 weeks on average, a switch to upfront payment in a single year is as much as a £5bn increase in cash requirements during that year. The new £1.6bn just isn’t going to dent that. The scenario is hypothetical and an overstatement. However, the direction of travel isn’t and the pressures it will cause only have to be 10% of that overstatement to be fairly catastrophic. We are already seeing the effects in 111 services, out of hours, certain volume supplies and more.
In Quick Summary
This week’s summary appears to be a dark ditty about an NHS ‘nuclear’ winter in 2017/18. I have long predicted that the DH and Government will wait for the darkest of days to announce plans they have undoubtedly had for a very long time but which would be politically impossible to lead into reality except in… the darkest of days.
The shifting of accountability to the local level, along with the managed failure through funding and oversight mechanisms, coupled to increasing suggestions about what we do need, all seem to have a consistency to them. It is vital that we don’t interpret events through the lens of what we already believe is happening, a cognitive trap of fitting the interpretation into the conclusion, not reaching the conclusion through interpretation. However, whichever end you start from, this week’s news, as an extension of last week’s announcements, certainly doesn’t give us a forecast of sunshine and may just be predicting an imminent hurricane that redefines the landscape.