'Dangerous' management cost cuts must be revised

NHS Confederation chief executive Mike Farrar warned the plan to slash £850m of management costs from strategic health authorities and primary care trusts by 2013-14 had already left the NHS “perilously close” to being unable to deliver.

In an interview with HSJ, he said there was a strong relationship between management capacity and the quality of care.

He said: “We’re already quite low [on managers]. It’s quite dangerous. We absolutely support taking out wasteful processes if you can, but you do need a quantity of management… to do the job.”

NHS chief executive Sir David Nicholson admitted to HSJ this week that management levels in commissioning bodies were “absolutely close to what I would regard the minimum to run the system”. But he added: “However, part of the issue is the way we run the system.” Shared back office functions were part of the solution, he said.

Sir David added he would expect “a lot of the back office services around clinical commissioning groups and the NHS Commissioning Board to be run as one system”, mentioning finance and HR as two likely candidates.

“We think by doing that, you can generate the management you need on the ground to do the real service design changes.”

Sir David said the government would not review its management cost savings target, as the money was needed to meet efficiency targets.

SHAs and PCTs were told last year to reduce management costs by £222m in 2010-11 and £350m in 2011-12, to bring costs down to less than £1bn. By 2013-14, they should have achieved a 45 per cent reduction on 2009-10 management costs.

The overall administration costs of the NHS are meant to decrease by one-third by 2014-15, compared with 2010-11.

Delivering these savings was made tougher after the government announced last week that SHAs would survive for an extra nine months, until April 2013, and the NHS commissioning board would have “local arrangements” similar to PCT clusters.

Mr Farrar said: “In terms of the plan for delivering management costs [savings], factored into that is SHAs [being abolished in] 2012.” But he said there may be a “degree of slack” as the savings targets were exceeded last year “by a reasonable margin”.

Sir David said there was “clearly an issue” about the “timing” of management savings due to the extended lifespan of SHAs. “One of the arguments for clustering SHAs into four groups [is that] we can’t afford to maintain 10 statutory bodies [for a longer period]”.

Managers in Partnership chief executive Jon Restell said it was unclear how the target was affected by the stay of execution for SHAs and the fate of PCT clusters.

He added: “The net result of the Future Forum exercise seems to us to be an increase in the demand for managers.  The government should bite another bullet and relax its targets and even consider reversing them in the short term.”

King’s Fund director of leadership Kate Lobley agreed, saying: “The numbers to show the NHS is over managed just are not there, and the announcements last week made the need for managers even more important.”

A Department of Health spokesman said any need for changes to the target was being considered and new guidance would be issued if required.