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Plan for cuts, David Nicholson warns NHS Confed conference

NHS chief executive David Nicholson has warned the NHS must plan for real terms cuts, despite protestations from the government and the Conservative opposition that they would continue to give it real terms increases. Read on for video interviews with David Nicholson and managers attending the NHS Confederation conference 2009 in Liverpool.

“I’m a manager, not a politician,” Mr Nicholson told the NHS Confederation annual conference in Liverpool.

“Sometimes there are downside cases and we need to make sure we cover these downside cases. It’s great politicians have said they will increase [funding] in real terms. I believe they absolutely want to provide more resources for the NHS. But if they give us extra money the taxpayer will expect more for it. So even if they give us more money we will need to do even more with it.”

His comments followed shadow health secretary Andrew Lansley’s pledge to national broadcasters that a future Conservative government would give the NHS “real terms” spending increases, even if that meant 10 per cent cuts for other parts of the public sector.

But Mr Nicholson told the conference it was vital the NHS started to change now in order to manage the likely downturn in its funding. He said he was worried managers would put off dealing with the issue for another 12 months, which would lead to a repeat of the deficit turnaround period of 2004 to 2006 which he told HSJ was marked by having to move “so quickly sometimes we didn’t manage our staff as well as we could have done”.

“If we don’t think about it again until Christmas and we just carry on we will get to the end of 2010-11, suddenly the money will dry up and we will have to rush around trying to solve the problem,” he said.

‘Nightmare scenario’

He warned a nightmare scenario could follow: “It will be winter then and there will be lots of ambulances waiting outside hospitals. The waiting lists will start to bulge; managers and clinicians will be at loggerheads.”

He said clinicians would be talking about quality while managers would be talking about cuts and politicians would inevitably start describing the model as unsustainable and the need for “some kind of massive reorganisation”.

“We can see that could happen if we deal with this the way we have dealt with things in the past,” he said.

He dismissed the proposition that user charging may be the solution to the financial tightening. He said before such proposals were explored the NHS should first address issues like variation in performance, poor value procurement and back offices and the “huge numbers” of patients who were treated in hospital when they didn’t need to be. That left direct cuts to patient care and the “NHS package” a “long way” away, he said, adding that some of those proposals may contradict the new NHS constitution.

He said if the NHS acted now, and looked at what changes needed to happen locally and what needed to happen from the centre, it was in a “good place” to make the necessary changes without the need for panic or a “big disaster”.

He told the audience: “We have delivered everything we have been asked to do and should be very proud of that. We haven’t just done the same old things in the same old way”. Radical reforms such as choice and foundation trusts had also been successfully introduced and patient and public satisfaction was higher than ever.

“That wasn’t done by politicians, commentators or academics. It was done by people in this room and I thank you for your hard work and efforts.” But he added: “That is only as good as what we do tomorrow.”

Delegates’ responses to David Nicholson’s speech

‘Passionate and earthy’

Chesterfield Royal Hospital foundation trust non-executive director David Whitney, who was director of Trent Regional Health Authority from 1985 to 1990 and Central Sheffield University Hospitals trust chief executive from 1990 to 2001, said: “I know David, he is very passionate and very earthy and says it as it is.

“He was really trying to give a focus on the managerial aspects rather than the political aspects of the healthcare system.

“The NHS needs to be aware of what’s coming on the horizon – it is very easy after the period of the last 10 years of massive growth to lose sight of what’s going to happen in two or three years and we clearly need  to start planning for it now.

“[However] I remember well during the 1980s and 1990s when we had nil growth. We could not even afford pay awards and I had to find savings for that, as chief executive of Sheffield University Hospital.

“That’s reality, that’s how we’ve been planning, it’s part of the core business of NHS management.”

IT is a ‘big piece in the jigsaw’

St Helens and Knowsley trust chair Les Howell said: “I think we are all very conscious that things are going to change. Our board is preparing for the future.

“We are preparing for a foundation trust application anyway so we are reviewing all our systems and approaches, so I think we are conscious as a board and executive team that is something we have to keep doing.

“I agree there needs to be a review [of policy]. I think there are too many policies and they don’t all join up together. They sound good as individuals but the totality is not obvious to anyone.

“The link between PCTs and trusts certainly needs to be reviewed. And clearly there is a big piece in the jigsaw to do with IT. It is not good enough to keep promising – if it doesn’t catch up now it will never catch up.”

Leaders must have a ‘sense of confidence’

Norfolk and Waveney mental health partnership trust chief executive Pat Holman said: “I think it would be quite useful to acknowledge that some trusts have actually had very tough times over the last few years.

“For two years running we had to take 10 per cent out of our costs. We are very experienced and very ready for what is coming.

“I think if we’re going to be good leaders its essential to have a sense of confidence and take that back into the organisation.

“I think there’s a lot that can be learned and shared and that sits alongside the system working together. It’s just not been designed to do that.

“I think some of the things that are being proposed like innovation – that was driven out with the targets. If you want an organisation that innovated you have got to be tolerant of failure. If you fail you have got to not be punished.

“[Also] I wonder if we can afford the commissioner-provider split over the next few years. We constantly take money out of the provider services and talk about efficiency, [but] we’re always talking about the providers. What about the efficiencies in those that are commissioning whether in primary care or in PCTs?

“One thing I would pick out from Andrew Lansley’s speech was his desire to put GPs back in the driving seat. We’ve not really seen evidence of their ability to think or behave strategically. They are the one area of the NHS that I don’t think has had a great deal of intervention.”

Visit www.hsj.co.uk/confed for the latest news from the conference

Readers' comments (7)

  • and he can't afford a tie on his salary...............

    ye gods!

    Unsuitable or offensive?

  • REMOVE THE EXPENSIVE AND PROFLIGATE MANAGEMENT CAUCUS AND JUST PAY EVERY DOCTOR PER ITEM OF SERVICE RENDERED.

    HENCE IMMEDIATE SATISFCTION ABD FAIR RECOMPENSE..

    THE DOCTORS IN 1945 AGREED WITH THE B.M.A. NOT TO HAVE A SALARIED SERVICE.

    NOW WE HAVE LAZY DOCTORS AND A HUGE MANAGEMENT PAID EXTRAORDINARY SALARIES.

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  • Politically allowing the NHS to become seriously strapped for cash could be the catalyst that allows a mixed economy of private and public investment - a two tier service seems inevitable of basic services funded through taxes and insurance payments to access the full service?

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  • But we already have a two tier health system, if not a three or four tier one.

    If you live in london, or birmingham or manchester or newcastle you already have access to the best medical brains; not if you live elsewhere and go to your local DGH

    If you have money, or a company that joins a scheme, you have access to (almost) whoever you like, when you like

    If you have no money, a dodgy local gp and live in a sink estate you get access to a different level of healthcare.

    Is every consultant as good as the next one? does every hospital provide exactly the same service across every specialty? This country has always had a multi-tier Health Service, and always will. To suggest we can have otherwise is a nonsense put about by politicians too lazy or unable to engage the populus in a proper debate.

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  • presumably the efficiency drive will be supported by the DH and they will start with some very easy quick wins such as:

    saving the millions of pounds wasted in the form of underspends at Foundation Trusts

    Reviewing the DH/Labour HRG4 policy which has led to PCTs paying millions more for the same activity.

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  • Sarah FRASER

    The NHS is no different to many other sectors having to find new ways to deliver value for money.
    I agree with almost everything the NHS Mgt Board has to say with two provisos
    1) I feel one of the substantial issues is in the implementation of change. I am less enthusiastic about innovation and new ideas than I am in helping people (who usually know what needs to be done) get things changed. This is incredibly more difficult that is seems. Most staff I encounter have fab and very simple ways to both improve quality and reduce costs, yet they come up against technical and bureaucratic barriers. The issue is not what but how - and now.
    2) Most groups I work with in the NHS blame another group for the financial woes. My dream is for each group/level to focus on what they can change and to spend less time worrying about someone else's job. This does not mean they lose touch with the system they work in but rather take responsibility for implementing their own role and being accountable for it.

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  • Could aspirin help ease the pain of the 'credit crunch'?

    David Nicholson highlights the challenging financial climate facing the NHS over the next five years. In addition, the NHS Confederation have asked whether dealing with the financial downturn is the 'greatest ever leadership challenge for the NHS?'.

    The NHS Confederation has identified the need for 'courageous decisions' to be made during the ‘credit crunch’. Within these difficult economic times, in which new medicines and devices are likely to bring further cost pressures, it is important to maximise the benefits of existing low-cost interventions.

    Aspirin is a readily available medicine that is inexpensive. The increased use of low-doses of the medicine in the population could lead to reductions in the number of cases of heart attacks, strokes and possibly cancer. These benefits could save substantial health and social care resources although there would also be an increase in the number of undesirable effects from aspirin, such as bleeding.

    If 'courageous decisions' on policy are to be made during the ‘credit crunch’, then the increased use of aspirin could, alongside other public health interventions, make an important contribution to both the control of disease and reducing cost pressures. This might also lead to paradigm shift in policy, namely moving resources from expensive treatment towards a preventive agenda which empowers informed choice and self-care. Such a shift might also bring into question the role of combined medications, such as the 'polypill', in which the pharmaceutical industry will have an interest in profit.

    Before making 'courageous decisions', there may be opportunities to take an inventory of those interventions that have played an important role in delivering the objectives of the NHS. Aspirin has already made a contribution and could have a potentially increased role in future. In the US, the Agency for Healthcare Research and Quality has published healthy ageing leaflets which include the possible role of aspirin. In the UK, perhaps this might be expanded to a health education campaign on the benefits and risk of aspirin.

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