The productivity challenge facing the whole NHS may well hit hardest those services traditionally most vulnerable to funding cuts - but there is scope to cope, says King’s Fund senior researcher Chris Naylor.

Traditionally, funding for mental health services has not fared well when the NHS has tightened its belt. During the deficit crisis of 2005-06, mental health services in some parts of the country came under significant pressure. The use of block contracts makes mental health budgets particularly vulnerable to being squeezed.

As the £20bn productivity challenge facing the NHS begins to bite, there are growing concerns for the future among providers and users of mental health services.

However, a growing consensus suggests there are significant opportunities to reduce costs in mental health without reducing quality, and conversely to improve quality without additional cost. There is also evidence that investing in improved forms of mental healthcare can deliver substantial savings in other budgets, by reducing service use in primary care, hospitals and elsewhere.

A report published by The King’s Fund and Centre for Mental Health describes the main opportunities, and gives guidance for commissioners and service providers on how productivity in mental health can be improved.

There are at least three areas which should be immediate priorities for commissioners: reducing unnecessary bed use; reducing out of area treatments; and improving the interface between mental and physical healthcare.

Less unnecessary bed use

Despite the significant developments in community based mental healthcare over the last 20 years, there is still scope to do more to help people avoid unnecessary time on wards.

Inpatient services are an essential component of care for some people and should be valued accordingly, but there are a number of ways in which inpatient facilities could be used more efficiently, potentially saving millions of pounds while freeing up beds for those who need them most.

Crisis resolution and home treatment teams can help reduce bed use and represent a high value investment. Teams exist across the country but in some areas are failing to meet their full potential as a result of inappropriate skill mix, ineffective management arrangements, limited access to psychiatric expertise, inadequate capacity to provide 24/7 coverage, and limited awareness and understanding of the teams’ work among referrers.

Modelling by the National Audit Office suggests that up to £50m could be saved annually by improving the use of crisis resolution and home treatment teams and reducing variation between areas.

New models for acute inpatient care can also provide a good return on investment. The goal here should be to forge better connections between inpatient teams and professionals working in the community, so that service users can be discharged as soon as they are ready, and receive the appropriate support when this happens.

Trusts such as Norfolk and Waveney Foundation Trust and Bradford District Care Trust have developed innovative models for this, with considerable success (see box, below). If the results achieved in Norfolk and Waveney were replicated nationally, this could generate savings of around £58m a year.

The starting point for commissioners should be to benchmark their use of inpatient beds against other areas. The Audit Commission found 20-fold variation in bed use between PCTs (see graph, in the Related Files column). Knowing where you stand in this distribution can be a useful first step. In areas with high levels of bed use, commissioners may then seek to understand the reasons lying behind this, and intervene as appropriate.

Out of area treatments

Out of area treatments are something many commissioners are already focusing on. They are highly expensive, and there is evidence that some people placed out of area could be treated locally at lower cost if resources were redirected into local services.

Commissioners will need to tailor their approach to their own context, but common elements of a strategy to reduce the use of out of area treatments may include strengthening provision of supported accommodation and other residential options, rehabilitation services, and in forensic cases, step-down and intensive community services.

To reduce out of area treatments, commissioners will need to ensure local services staff have the appropriate skills in working with those with complex needs, such as people with substance misuse problems, personality disorder, neuro-developmental disorders or learning difficulties alongside mental health problems.

There may also need to be cultural change in some services so that practitioners and managers accept that supporting people with complex needs is part of their responsibility and ensure training is provided to staff.

Some areas reduce the need for out of area treatments placements by 50 per cent (see box, below). Replicated across the country, it would represent a net saving of around £65m while also giving several thousand people care that is more suited to their needs.

Improving physical health

As well as improving value for money within mental health care, commissioners can make savings in other budgets by strengthening the interface between mental health services and other parts of the system. There is huge potential for closer working between professionals to reduce costs in general practice, hospitals and elsewhere.

An obvious area to begin is the large number of people with long term conditions and comorbid mental health problems. Research shows that by providing better support for their psychological needs, the costs related to treating people’s physical illnesses can fall substantially, for example, by reducing unplanned hospital admissions.

Releasing these savings will require an expansion in screening, development of collaborative care arrangements between primary care and mental health specialists, and provision of appropriate interventions, for example based on cognitive behavioural therapy. Improved access to psychological therapy services will need to play an important role in this (see box, below).

The interaction between mental and physical health is particularly important in the case of older people. Providing mental health liaison services in acute hospitals and care homes can improve clinical outcomes while reducing the need for hospital admissions and GP consultations.

Dementia should be a high priority for commissioners and service providers alike. An estimated £300m is spent each year on hospital beds for people with dementia who could be supported more appropriately in the community. By any measure, investing in services that allow people with dementia to be discharged sooner would be money well spent.

Spreading good practice

Numerous examples of good practice from across the country illustrate that there are many opportunities to improve productivity in mental healthcare, and that there are also opportunities to reduce costs in other service areas by developing new service models in mental health.

By seizing these opportunities mental health commissioners will be better placed to avoid cutting highly valued services, and to meet the productivity challenge by improving rather than sacrificing quality of care.

New models for inpatient care

Improving discharge processes in Bradford District Care Trust

In Bradford, each psychiatric ward is led by a dedicated inpatient consultant. This fixed point of contact allows professionals in community mental health, crisis resolution and home treatment teams to establish stronger relationships with inpatient teams, and makes it easier for nursing teams to organise discharge.

The team staff review patients with ward nurses daily. New technology for joint working between inpatient and community teams: electronic patient records and progress notes give community professionals real time information on admitted service users, allowing them to update on developments, such as changes to care plans or risk assessments.

Integrated acute care pathway in Norfolk and Waveney

Norfolk and Waveney Mental Health Foundation Trust has introduced an innovative model for adult acute services in which each locality has an integrated team led by a consultant psychiatrist. The team aims to deliver a seamless service by providing home treatment, crisis resolution and inpatient care. This structure has helped the trust reduce its use of inpatient beds by almost a third between 2005 and 2008, by reducing both admission rates and lengths of stay, and has saved around £1m a year.

Reducing out-of-area treatments in Islington

Of 40 people placed in non-forensic out of area treatment by NHS Islington and the local authority, 25 were assessed as potentially able to relocate back to their local area and 13 moved successfully, mainly to independent accommodation. The savings were reinvested into local supported accommodation services. The assessment indicated that these people had been over-supported in their previous placements.

Psychological support for people with long-term conditions

Support for angina in Liverpool

An innovative disease management programme based on cognitive behavioural therapy has been provided by the UK national refractory angina centre in Liverpool since 1997.

The programme aims to tackle patients’ misconceptions about angina and associated maladaptive behaviour and to improve their psychological wellbeing.

Evaluation has demonstrated that as well as reducing symptoms and improving quality of life, the intervention is associated with a 33 per cent reduction in hospital admissions over the following year.

This represents a fall in hospital costs of £1,337 per patient a year.

Diabetes in Salford

In Salford, the improving access to psychological therapies service has developed a new care pathway for people with diabetes and comorbid depression or anxiety.

The service provides sessional input into the community diabetes clinic, and has trained diabetes professionals in screening for mental health problems.

The report Mental Health and the Productivity Challenge is available at