North by North West: Will savings require job cuts?

How to save £29m

You have to admire the ambition in Greater Manchester, although time will tell whether the region is trying to do too much too soon.

With the ink still drying on the landmark Healthier Together decision (which covered emergency services) the city of Manchester is already moving on to the next big shake-up of acute care.

At the behest of Manchester City Council – by all appearances the dominant partner in its relationship with the three clinical commissioning groups – an independent review has concluded that work should get started on ‘single service’ care models in eight different specialties.

Single service is of course a loose definition, and can range from services being centralised on a single site, as in the case of cardiac surgery, to the three main hospital providers sharing the same clinical teams, patient pathways and protocols.

Potential consolidation of obstetrics and paediatrics was put forward more tentatively, no doubt with a mind to how “service closures” in these specialties tend to get emotions running high.

The review concluded the changes could bring recurrent savings of up to £29m between Central Manchester University Hospitals Foundation Trust, University Hospital of South Manchester FT and North Manchester General Hospital.

It’s obviously early days, but many in the NHS get pretty sceptical when numbers like this are quoted. The changes are unlikely to deliver savings quickly, and implementation will require significant funds for redundancies, restructuring, and stranded estate and equipment costs.

Fears around staffing reductions could also create significant tension. Redundancies as a result of reconfiguration are always tricky to predict, but I do know of an influential voice in Greater Manchester that says there needs to be a far more blunt conversation about what staffing levels the NHS can afford.

The logic goes that around two-thirds of NHS spending goes on wages, so if we’re going to be making £22bn efficiency savings at a national level, that’s about £14bn to find from the pay bill.

Applying this to the Manchester single services would suggest a £20m cut to staffing budgets, equating to a headcount reduction of about 660 (at an average salary of £30,000).

This is obviously back of the envelope stuff, and there are other influential voices who see the logic as pretty outlandish. Savings are not necessarily the same thing as cost reductions, and barring a miraculous drop in demand, it’s unlikely budgets will actually be cut by £29m.

But there is no doubt that changes of this magnitude will create plenty of nerves and twitchiness among those whose careers have been forged in the existing structure.

Slightly less bleak than average

If the financial situation looks challenging for Greater Manchester, then it looks pretty much impossible in Cumbria.

Last week I collated financial performance data for each of the 44 newly defined health systems across England, each of which are required to submit a financial “sustainability and transformation plan” by June.

Looking at the combined performance of providers and clinical commissioners, the 2015-16 in-year deficit in Greater Manchester was clearly sizeable, at 2 per cent of overall income, but relatively small compared to som other STP areas.

Cumbria looks to be the second most financially troubled area in the country, with a 9 per cent deficit. Just as well it’s part of NHS England’s “success regime” then?

Merseyside and Cheshire’s combined deficit was also 2 per cent, while Lancashire came out better than I expected, with a 3 per cent deficit. Although this just means things are slightly less bleak than average, rather than being a reason to celebrate.