Service line management can empower frontline clinicians to make the changes the NHS needs for future viability. The big challenge is changing the way NHS organisations are managed, says Chris Calkin.

To release the creative energy of frontline staff to find solutions and implement change, effective service line management will need a change in management culture and philosophy from board to ward.

Just implementing the “tools” of service line management on their own will not deliver the full benefits. The challenge facing the NHS requires a commitment to change the way in which many NHS organisations are managed.

One thing can be in no doubt: targets for quality, performance or finance are here to stay. As the new strategic health authority clusters bed in there is a renewed vigour in the Department of Health and the Treasury for ensuring the NHS delivers the performance to justify its funding.

After years of cost reductions, often focused on salami-slicing budgets and tackling non-clinical areas, it has been clear to most trusts for some time that a different approach is required. The NHS has to challenge clinical areas on performance, delivery and cost-effectiveness and to develop those elusive outcome measures.

One of the important lessons to come from the Mid Staffordshire Hospital care scandal is that cost improvements are now risk-assessed for the impact on patient safety and experience and signed off by the medical and nursing directors.

The pressure on hospital budgets has never been greater, with increasing emergency activity, an aging population and increasing technology and drug developments, all while the tariff is reducing in real terms. Add to this trusts with private finance initiative hospitals, where the level of spend that can be influenced has reduced significantly, and the challenge has never been greater.

Clinical power

In 2010 the HFMA, NHS Confederation and Academy of Medical Royal Colleges made a joint statement on improving quality and productivity in the face of financial pressure. It said: “Identifying opportunities for improvements and efficiencies and then realising them can only be achieved through a partnership between clinicians and general and financial managers.”

Aligning objectives

Never before has it been so important for the NHS to work together as a team across all professions and align clinical and managerial objectives. This requires an acceptance that services have to be clinically, operationally and financially viable and must have patient safety and quality integral to the organisation’s culture. The Academy of Medical Royal Colleges recognised this in a joint statement agreed with Healthcare Financial Management Association and the NHS Confederation in 2010 (see box, above).

Trusts have to be better at providing strong leadership to create an environment where devolved management can deliver better and quicker decisions. As the pressure continues to deliver targets the desire to centralise control and decision making becomes, in many cases, impossible to resist. Perversely this is just the time when the NHS needs to devolve management.

University Hospital of North Staffordshire Trust has undertaken a three-year development and implementation programme of service line management, which means managing individual clinical areas as distinct operational units. The benefits of implementation are significant and growing (see box, below). The traditional top-down managerial style is being challenged in many trusts. Increasingly devolved management is being introduced to give clinicians at the front line more managerial responsibility. However with responsibility there has to be transparency, accountability and responsibility. 

Benefits of SLM

  • Improvements for patients in better access
  • Cultural change – seeing the whole of the challenge, clinically, operationally and financially
  • Improved team working involving doctors, nurses and managers acting together
  • Faster, more responsive decision making that works for the service line without compromising the trust’s position
  • Improvements in productivity and profitability
  • Strategic view of the service being taken and its place in the trust’s portfolio of services
  • Acceptance that trusts need to tackle unprofitable areas of activity
  • Implementing change in clinical areas that previously would have been a challenge
  • Ownership of information and the recognition that the solution to more accurate information often lies with the service line
  • Peer pressure to improve performance

In a recent survey by the Association of UK University Hospitals nearly 50 per cent of trusts had a service line strategy agreed and 70 per cent had appointed clinical leaders of service lines (see graph, attached right). Clearly, despite the perceived risks of devolving responsibility a significant number of trusts are moving in that direction. However, only 22 per cent had agreed the reward and consequences approach and only 30 per cent had agreed a strategy for unprofitable services.

Information has been the Achilles heel of the NHS, often being inaccurate, incomplete and untimely. This is despite decades of initiatives to improve information processes. Information on costs is part of the service line toolbox. In September’s Harvard Business Review Robert Kaplan and Michael Porter argued that in the US system “there is almost a complete lack of understanding of how much it costs to deliver patient care, much less about how these costs compare to the outcomes achieved”. Their hypothesis is that too much focus is placed on analysing costs at specialty and department level rather than viewing costs over the whole of the patient treatment/care cycle.

This may appear to challenge service line reporting in support of programme budgeting but I do not believe it does. It emphasises the point that no service provider is an island and that costs, like clinical pathways, must be viewed in total and not in isolation. This indicates the future direction of travel and the need for service line principles to operate across organisational boundaries.

Kaplan and Porters’ hypothesis could also be perceived to challenge the current investment in patient level costing. A Department of Health survey in 2010 identified that 65 per cent of trusts sampled had implemented or were implementing patient level information and costing systems (PLICS). Add to this the trusts that are planning to implement PLICS and the number increases to 86 per cent.

Has PLICs gone past its use-by date? I would argue not. Increasingly it is seen as a clinical management tool to identify and understand the implications of variation in practice. It is another tool in the service line management box. As important is the culture change required to use that information effectively.

And when we have got the information, we know not only what but who is losing us money. Then the difficult and challenging debate begins. The key issue is to look for solutions. At an early stage of developing service line reporting North Staffordshire introduced a break-even graph for service lines. How many more operations, outpatients and so on would the service line team have to do in a year to move from loss to profit? Often the answer is not many. Broken down over a year it often amounts to no more than one extra patient per outpatient clinic per consultant and a similar position for theatres.

Even with this level of information the conversation can begin. Not just with managers and finance, but between the consultants. Theatre lists and outpatient booking rules can be changed with no long consultation period. The consultants understand the problem, can see a solution and recognise the need for change. 

But what this demonstrates is that it is not about the numbers, but about the organisation having the confidence that when provided with the right information consultants can and will identify the same or even better solutions than may have been identified previously.

Achieving viability

By adopting a management of change approach to implementing service line management the culture is changing at North Staffordshire. There is now a widespread acceptance that loss making services cannot continue. Will this lead to wholesale closures of non-profit services? I do not believe that it will. Looking to what is best practice, examining the clinical pathway and using PLICS to understand clinical variation between consultants will identify where clinical and financial viability may be achieved in many cases.

Where long term financial viability cannot be achieved it is highly probable that clinical viability is also unachievable. This will lead to some of the more difficult areas to influence, manage and change in the NHS being challenged, but from within.

This will create the development of cross-provider alliances and networks so services can be provided not only safely but cost-effectively.

The performance management framework is a key part of service line management. Holding clinicians to account requires agreed rules up front and is the mechanism by which we make devolved management a reality and not an abdication of responsibility by senior managers and the trust board. A clear, firm, fair and transparent effective performance management system is an essential part of devolved management.

Centralisation disempowers people. Service line management has the potential to deliver changes in behaviours, at all levels in the organisation.

Instilling a new philosophy and management culture in the organisation is as essential as getting the “tools” of service line management in place. People have to own the problem.

If everything is decided elsewhere it is somebody else’s responsibility. Service line management gives us the opportunity to succeed by empowering frontline clinical staff.

How to implement SLM

  • Have a plan – this is major organisational and cultural change from board to ward
  • Gain commitment across the whole organisation – clinicians are enthusiastic
  • Tool up – this is not a part time add-on to somebody’s job
  • Sort out the rewards and consequences strategy
  • Work out the decision rights – what responsibilities will the service lines have?
  • Think through the performance management strategy and integrate changes into your framework
  • Develop and resource the training/organisational development plan
  • Don’t wait for the information to be perfect but develop an improvement plan
  • Identify the criteria for becoming a service line and what is the assessment process
  • Be realistic about the timescale for achieving benefits – this is a long term solution

The author would like to acknowledge University Hospital of North Staffordshire Trust, Haq Khan, Alan Tonge, Mark Lindsey, Lee Outhwaite and the Association of UK University Hospitals.