Cuts aren't the only option: when faced with reduced funding, managers should explore all the options before wielding the axe
Headlines about the NHS and local government cutting services to save money are becoming increasingly frequent. However, should these cuts be taking place and who should be called to account? Let's first consider the NHS.
The press seem to blame health secretary Andrew Lansley for reductions in NHS services, but is it his fault that NHS trusts and hospital chief executives are reported to be cutting services rather than delivering savings through efficiencies? The real issue is that the NHS needs to deliver very large – arguably £20bn – of savings by 2014-15 to keep pace with increasing demand and new treatments. But government does not have the power to force it do so. As much decision-making responsibility lies with chief executives of trusts and hospitals, much of the accountability must lie with them.
It is clear that large efficiencies are deliverable. The National Audit Office indicated that fragmented purchasing is costing the NHS more than £500m a year and the Department of Health believes that £1.2bn could be saved through properly co-ordinated procurement. Hospitals are not making use of opportunities that already exist.
More recently, the Public Accounts Committee criticised the NHS for its unco-ordinated approach to buying medical equipment. In my experience, the difference between the free for all that we have at present and a joint approach for buying high-tech equipment, typically, can be 20%.
One thing the NHS is not short of is knowledge of how to deliver savings. For example, why is it that the average in-patient stay in private hospitals for hip replacements is six days and in the NHS it is eight and a half days? Similarly for knee replacements the figures are six and eight days respectively. The implication of these statistics may be that cash savings and better outcomes can be compatible.
On the more mundane matters of energy, some hospitals have introduced means to run their equipment at the lower voltage for which they were designed, rather than the higher voltage of the UK energy supply. Arguably, this not only saves energy, but extends equipment life.
There are many ways to save money and some excellent local initiatives, but they are implemented unevenly. One useful approach would be for the Department of Health to publish an inventory of savings opportunities and initiatives that could be adopted widely. Whether or not the £20bn efficiency target is realistic, this would enable the general public to challenge the local NHS managers to demonstrate that they are taking advantage of all the efficiency opportunities available to them before making any service cuts.
Turning to local government, funding reductions have proved a catalyst for innovation and entrepreneurialism. There are some great initiatives and examples of great leadership. However, as in the NHS, there is often a reluctance to take advantage of these initiatives, opportunities and best practices. Fully co-ordinated approaches to procurement, construction and waste management are long overdue. The joint service delivery approach of three London boroughs (Hammersmith and Fulham, Westminster and Kensington and Chelsea) looks promising.
An approach by many London councils to implement a joint finance system is another example, and some excellent research has been done on social care: what works, what doesn't, what delivers best outcome for least resources. Again, perhaps it is time to build on previous work and to create a complete inventory of efficiency initiatives and opportunities to help senior managers and chief executives, but also to enable the general public to challenge any service cuts.
Public sector chief executives and senior managers are highly paid compared to their predecessors. However, many were appointed when times were good. Some may not have the leadership skills, experience, the right personality and the overall capability to manage efficient and accountable organisations in increasingly lean times. Publishing inventories of opportunities and best practices would enable the general public to call to account those who fail to take advantage of them. Central government would have transferred the "big stick" to those who should wield it – the taxpayers and those who receive the services – which is exactly where it ought to be.
Colin Cram is a public sector consultant specialising in procurement and is a former director of the North West Centre of Excellence
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Read the complete post at http://www.guardian.co.uk/public-leaders-network/2011/nov/02/managing-nhs-cuts
Nov 02 2011, 07:12 AM
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