Cuts in jobs and pay loom in savings proposals

Research by auditor Grant Thornton shows more than half of the 34 NHS organisations surveyed expect these to be the three “major contributors” to 2012-13’s cost improvement programmes.

Of the hospital, mental health and community trusts participating in the study, 29 said service redesign would be a key component and 27 planned a related “reduction in workforce numbers”. But the research, carried out with the Healthcare Financial Management Association, indicated a lack of detail in some cases over how service redesign would be achieved.

Clive Mellor, associate director of Grant Thornton’s healthcare advisory division, told HSJ some trusts had reached a point where they could no longer make their savings by “salami slicing” and had to think more radically.

He said organisations would have to invest in project management teams to work out the details of service redesign projects and make them happen. “The trusts that are finding it easier to plan and deliver the savings are the ones where there is a constant focus on driving quality,” he added.

Like HSJ’s research into trust savings plans for 2012-13 (news page 4, 21 June), the Grant Thornton survey found finance directors planning an average CIP of roughly 5.1 per cent of turnover - the same as last year. The auditor’s survey showed them achieving 91 per cent of their 5.1 per cent CIP target in 2011-12, the same percentage achievement as in 2010-11.

None of the respondents to the latest survey identified a negative effect on safety or patient experience resulting from the past two years’ CIPs, although only 14 out of 33 organisations said they had led to a positive effect on “quality/outcomes”. Fourteen of 33 respondents said there had been a negative effect on staff morale.

According to the report, most respondents said outsourcing would make only a “minor contribution” to savings this year, with several finance directors suggesting that “most functions have already been assessed for possible outsourcing or formally market tested”.

“Market testing had often led to the retention of services by the in-house provider, with cost and efficiency often cited as the reasons for selection,” the report said. “In some cases the costs of transfer, including redundancies and system implementation were seen as prohibitive.”

It added that trusts saw the retention of human resources departments as important when having to make job cuts.