The second in our three-part series on turnaround success stories shows how three more trusts took radical action to stop the rot

East and North Hertfordshire trust

East and North Hertfordshire trust is emerging from a torrid financial past like a phoenix from the flames.

In 2004-05 the trust started to recognise the impact payment by results was having on the organisation. In summer 2005 turnaround experts from PricewaterhouseCoopers were brought in - the trust was the second in the country to call in the experts and puts its progress down to this early start.

The PwC report recommended the trust take greater financial control and look at long-term decisions regarding reconfiguration of services.

An external turnaround director was brought in during the same year and according to the chief executive found nothing new, but worked with the trust to bring about a discipline of process the organisation had not previously had.

Chief executive Nick Carver says: 'We think we will have a small surplus of£1m. We have managed to do this while reducing waiting times and we are able to do it because we started early.'

The trust has set up a dedicated trauma list to prevent the disruption of planned surgery and outsourced routine medical transcription to India, another first.

Other cost saving measures included centralising medical records and reducing use of agency nurses - one of the main drains on trust resources.

In 2004-05 the trust, which has about 2,300 nursing and midwifery posts, spent just£577,000 on agency staff, one of the lowest bills in the country. In 2005-06 this went up to£619,000, including£126,000 for the Mount Vernon Cancer Centre, which the trust took over from April 2005. But in 2006-07 the agency spend was back down to£567,000 despite the extra costs.

Mr Carver adds: 'We were£18m in debt in 2000, but by 2004-05 we had a new dynamic attitude, made radical changes and got down to a£7.5m deficit.

'We used available capital for invest-to-save schemes such as a pharmacy robot to automatically dispense medicine so pharmacists could get on the wards and advise on treatments. The robots have improved stock control and speeded up dispensing.

'Pharmacists are experts in their field and we don't want them spending time putting labels on bottles. The robots cost£400,000 to install and save us around£400,000 a year,' he says.

Other initiatives included a nurse roster system, a piece of software to improve efficiency and effectiveness across shifts. The capital spend was£300,000 and it makes revenue savings of£250,000 annually through reducing use of overtime, and bank and agency nursing costs.

Pathology order communication software was bought to increase the efficiency with which pathology tests are requested and results made available. It also gives the pathology team far greater control over reducing the amount of unnecessary or duplicate tests that may be requested. The capital cost is£300,000 and£500,000 is saved every year.

The centralisation of health records has allowed the trust to reduce the number of duplicate, missing and incomplete files. As a result, fewer patients will be treated on emergency files or have outpatients appointments delayed or cancelled. The cost of the measure was£250,000, with ongoing savings of£200,000 per year.

Mr Carver says: 'We are not focusing on medium-term financial prospects. We are, like the private sector, looking three of four years ahead.

He feels moves to shift care into the community won't be viable unless 'we change the way we provide services'.

The trust currently has three hospitals: Lister in Stevenage, the Queen Elizabeth II in Welwyn Garden City and the Mount Vernon Cancer Centre.

And Mr Carver says there is 'duplication of services' in Lister and the Queen Elizabeth II. The trust wants to have one district general hospital with surgery, accident and emergency, intermediate care and inpatient day-case surgery, and a local hospital with pathology, radiology, antenatal care, minor surgery and urgent care. A consultation found consolidation of services at Lister to be the preferred option.

The last investment in buildings at the trust was in the 1970s when a maternity unit was built.

'People in Hertfordshire have little experience of what is possible. People sometimes travel to London or Cambridge for care and there is a danger that this mobility will move expert care out of East Hertfordshire,' he explains.

The public consultation was launched on 12 June and runs until 1 October.

In 2005-06 the trust had a£22.4m deficit. Its final year-end position for 2006-07 was a£1.5m deficit, which is 0.6 per cent of the total£269m budget.The trust's target - part of its agreed three-year financial recovery plan - had been set by NHS East of England at a deficit of no greater than£7.5m. A small surplus is forecast for 2007-08 - the final year of the current financial recovery plan.

Victoria Vaughan

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Shrewsbury and Telford Hospital.trust

'We have got out of the old dinosaur NHS way of thinking,' explains David Heath, theatre services delivery manager at Shrewsbury and Telford Hospital trust. 'There is no magic wand in getting staff to change their mindset, it's about convincing them things can be done and changes can work.'

The trust has certainly managed to transform its position from potential debt crisis nearly two years ago to potential surplus this year.

Finance director Steve Shanahan explains: 'By August 2005 when I came on board, the trust was predicting a year-end deficit of£17.4m with a six-month position of£8.9m. However, in the six months from September 2005 to year-end, we managed to get that deficit down to£12.1m.'

Mr Shanahan believes turnaround made the difference. 'We would have done it anyway eventually but being on the Department of Health's list of the 18 [most indebted] trusts and having no choice but to have Pricewaterhouse-Coopers come in, we had to get on with it,' he says.

The first thing the management team did was put a 'very robust process in place to control vacancies'. Mr Shanahan says that if any department or manager wanted to recruit a new employee it had to be signed off by the chief executive and if it was the appointment of a new doctor it had to be agreed by the medical director, the finance director and the chief executive.

'And if the medical director and I agreed the appointment, that did not automatically mean the chief executive would,' he admits.

Chief executive Tom Taylor is sanguine. 'We have focused the organisation on delivering by setting a strong strategic vision,' he says. The trust's mission statement has an almost missionary zeal to it: 'Two clinically sustainable hospitals in a financially viable teaching foundation trust that puts patient care first.'

Mr Taylor is proud of the slogan and believes the message has been gradually hammered home to staff. 'We have made it very clear that we could lose our independence if we do not make it as a foundation trust by July 2008.' Mr Taylor says one of the main things the trust needed was a stable leadership. 'I was the fourth chief executive in 12 months and we did not have a finance director for the first six months,' he admits. 'We needed to get the trust on the map for the right reasons.'

He highlights a visit to the trust last month by Conservative leader David Cameron, saying proudly that 'senior politicians don't visit hospitals with problems'.

'The change has come through strong leadership, improved financial control, internal performance management, reduction of waste and better health economy working,' he adds.

The trust, Mr Taylor says, has had no 'silver bullet' to turn itself around. Rather, small measured changes have added up to a big difference. Examples are using only second-class post and not investing in new office furniture.

Mr Heath is equally enthusiastic about the changes. 'In theatres, we were in a spin and heading for a crash and efficiency had always been a problem,' he explains. 'So we looked at our supply chain and how the whole department was placing orders.' Analysis of the supply chain for theatres was given a kick-start by the much lauded lean thinking methodology.

'We realised that ordering was being done by grade clinical staff and we needed to get them back into theatre.'

The theatre team took on three dedicated stock- management staff to free up the 5.6 whole-time-equivalent staff it had been taking to make orders. Another initiative involved the team analysing theatre sessions. The team has gone from 35 cancelled sessions a month to none by developing a four-weekly spreadsheet that shows when clinical staff are unavailable.

'This works to our advantage because if there are sessions that are vacant we can choose to fill them with other staff or close them.' Mr Heath, who has worked in the NHS for 26 years, says the reason these initiatives and the turnaround as a whole have worked is because there is a 'bottom-up approach'. 'It was not management dictating this but asking staff to help implement and embrace change.'

The trust has come a long way, and this year is aiming at a£4.1m surplus. 'I am hopeful that this is achievable and we hope to be a foundation trust by July 2008,' adds Mr Shanahan.

Helen Mooney

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University.Hospital of North.Staffordshire trust

University Hospital of North Staffordshire trust finance director Mark Mansfield sums up the challenge for his trust with absolute precision: 'The thing that made us different from normal organisations was£42.7m.'

This£42.7m was the amount of deficit the trust was facing over 2006-07 and 2007-08. And it had two years to recoup it.

One year into the challenge and the trust is reporting good progress, thanks to turnaround help from the DoH - including consultants and capital funding - and new and old staff at the organisation driving change fast. There is a new chair, acting chief executive, finance director, strategy director and turnaround director.

While acting chief executive Julia Bridgewater says the trust is ahead of expectations and it is important to congratulate staff, she warns: 'It's really important that the first point we make is that we don't think we have turned around yet.

'We are facing the right direction. We are not there yet.'

Looking at the numbers makes the reality of delivering savings and increased revenue - and where they come from - clear:£21m from the staff bill;£5m from such things as cost improvement programmes;£4m from procurement, estate rationalisation and cheaper housekeeping;£1m from non-clinical income such as car parking; and the rest from contribution from income.

The average number of staff at the trust in 2005-06 was 6,450. In 2006-07, there were 5,996 and in 2007-08 the whole-time equivalent workforce will be 5,740.

Original expectations were that 1,000 staff would have to go, with strong concerns over redundancies. Instead, divisional responsibility for vacancy management has resulted in just 50 compulsory redundancies, just over 100 voluntary redundancies and 70 staff served with notice.

'Really tight vacancy management has been painful for staff covering vacancies,' says Ms Bridgewater. 'It has been very difficult on the ground and caused lots of anguish but it means the impact of compulsory redundancies has been less than anticipated.'

The overall staff profile has changed in line with new pathways of care and bed closures. This change has coincided with an increase in day surgery, more admissions on the day of surgery and reductions in length of stay. An extra 140 day beds since November 2005 have helped push the day case rate for 25 procedures from 68 per cent to 83 per cent. Overall length of stay has improved 11 per cent from 2005-06 to 2006-07.

Mr Mansfield makes no bones about the trust not doing anything radical or different from what plenty of others are already doing. In fact, he is 'stealing slavishly' from them. 'I have files of other people's turnarounds,' he says.

But Ms Bridgewater says that what is an achievement is the speed of progress. At the heart of this is what is described as a 'board boot camp' last year, bringing cohesion and clarity of strategy. That was supported by consultant input from Ernst & Young and Deloitte and then played out through some fundamental change. The trust's divisions were restructured, reducing their number from six to four - surgical, medical, treatment centre and clinical. Income and expenditure is now reported for each and the success of change is attributed to the direction of clinical directors, divisional directors and general managers.

DoH capital funding has also allowed the trust to reshape its emergency care pathway. The trust operates on two sites - the Royal Infirmary and the City General - but a£247m private finance initiative project will create a new single site. Ahead of that, the merger of A&E on one site and a medical admissions unit on the other onto a single site with a single emergency short-stay ward means a more effective and productive way of dealing with emergency patients, reducing length of stay and taking out some 7,000 ambulance movements across the site a year, adds chair Mike Brereton. The saving this year, and on a recurrent basis, is worth£1.4m.

The executive team insists that the pain of change has been felt across the board - the trust's management cost is down from 13.2 per cent of turnover to 9.6 per cent. Ms Bridgewater recognises there have been difficult decisions and Mr Brereton admits 'you can cut too deep', but the fact is the trust is ahead of schedule to solve the problem of a significant deficit.

'The leaders of this process are the clinical directors and heads of division and general managers,' says Mr Mansfield. 'They are the heroes of this piece. They have made it happen.'

Alexis Nolan