Hospital cuts and review of whole local NHS as “perfect storm” of increasing financial pressures batters our hospitals

Staff from Monitor (the NHS competition enforcer) were at the Calderdale and Kirklees Joint Health Scrutiny Committee (JHSC) meeting on 25 March to explain what Monitor is doing about our Hospitals Trust deficit.

In 2015/16 and 2016/17 the short term plan comes down to making cuts (aka “efficiency savings”), as recommended by Price Waterhouse Cooper accountancy company, and also using all the Trust’s cash reserves to pay off the deficit. CHFT will present this short term plan in  May 2015.

In a Groundhog Day moment, the JHSC heard that CHFT’s longer term strategic financial plan for a cost-saving “reconfiguration” of the hospitals is likely to include proposals for putting all acute and emergency services on one site. And there will also be a review of the whole “local health economy”, to be carried out by all the area’s NHS organisations and both Local Authorities.

This sounds like a replay of the two year Strategic Review that concluded with its Report in February 2014. Except this time Monitor will be involved.

The Strategic Review’s costs included nearly £1m consultancy fees, that the CCGs paid to PA Consulting.

Kemi Oluwole, a Senior Regional Manager at Monitor, said that as a result of its 2014/15 deficit, Calderdale and Huddersfield NHS Foundation Trust (CHFT) is in breach of Monitor’s provider’s licence, along with about half of the 149 Foundation Trusts.

Monitor’s Regional Director, Paul Chandler, said that increasing financial pressures on NHS Foundation Trusts have now caught up with our hospitals Trust and created a “perfect storm” for it.

Some kind of consultation in September 2015

Both CHFT’s strategic financial plan and the “local health economy” review will be made public in September 2015. (More info below, in section September 2015 date for long term plan for hospital “reconfiguration”)

Calderdale and Greater Huddersfield Clinical Commissioning Groups (CCGs) could also start public consultation in September 2015, on their plans for the Right Care Right Place Right Time hospitals “reconfiguration”. The two CCGs will make his decision together, depending on the outcome of Calderdale Clinical Commissioning Group’s July/August review of whether its new community services have cut acute hospital admissions.

Dr Matt Walsh, Calderdale CCG’s Chief Officer, said that the Right Care Right Place Right Time hospitals “reconfiguration” won’t deliver the funding cuts that are needed, but it will provide a clinical rationale for the hospitals shake up. He said there will have to be compromises and these will have to be talked about in the consultation.

Dr Walsh is talking to the hospitals Trust about the capital costs of the Right Care hospitals shake up. He said it’s not clear what they are or where the money would come from to pay for them. This needs clarifying before consultation.

The JHSC Chair, Cllr Elizabeth Smaje, said the JHSC wants:

  • the proposals for the consultation engagements and wants to be able to comment on them in time
  • input to the statutory public consultation
  • to scrutinise the trade off between quality of hospital care and the efficiency cuts
  • to find out if patient care is the driver of these changes

Trust’s cash reserves will run out next year

CHFT is in the middle range of NHS Foundation Trusts’ deficits for 2014/15, but this is likely to change significantly in 2015/16 and it needs fixing now before that change kicks in.

By the end of 2016/17, the Trust will have spent all its cash reserves in order to fund the deficit.

Paul Chandler told the JHSC,

“They will run out of money next year. Once they run out of cash reserves, they’re dependent on the Department of Health to fund staff and running costs that quality improvements will require.

The Trust won’t make efficiency savings that damage patient care and when the Trust runs out of money, as it will, Monitor will make sure it has the money.”

Why is our hospitals Trust in deficit?

Paul Chandler, Monitor’s Regional Director, said that financial pressures on NHS Foundation Trusts have increased. These have now caught up with Calderdale and Huddersfield NHS Foundation Trust and have created a “perfect storm” for the organisation.

Mr Chandler and Ms Oluwole identified the financial pressures on our hospitals Trust as:

  • the impossibility of making year-on-year “efficiency savings” of 3-4%, while also increasing staffing levels and levels of patient care
  • CHFT is spending a lot on contract and agency staff
  • the costs of the PFI contract for Calderdale Royal Hospital
  • the costs of running the hospital across the two sites in Huddersfield and Halifax

Efficiency vs quality is where the Trust’s “come unstuck”

CHFT is continuing to invest in increased staffing, but the cost of this “puts pressure of efficiencies” – these being the £millions of savings each year that the Trust is required to make.

Mr Chandler said,

“The Trust’s focus on quality is right up to a certain point. But investing in quality and improving services means they can’t make the required efficiency savings. This is where the Trust’s come unstuck.”

Calderdale Councillor Malcolm James asked what Monitor meant by saying the cost of  quality was a driver of the deficit.

Mr Chandler gave as an example the higher number of clinical staff on wards than at other hospitals. He said CHFT was spending more on staff than other hospitals would do.

Cllr James asked if CHFT had been providing poorer care before they increased staffing levels. Mr Chandler replied that CHFT has been a high performing hospital over a number of years and it needs to make 3-4% efficiencies a year.

CHFT is spending a lot on contract and agency staff

Monitor said that CHFT is in the mid range nationally for contract and agency staff costs, but higher than most Northern Foundation Trusts.

The number of agency staff has really gone up. CHFT is spending a lot on contract and agency staff because of:

  • a shortage of supply of regular staff
  • safer staffing requirements
  • “its own internal capacity to cope with fluctuating demand” – this seems to be code for the fact that CHFT has cut its staff to the bone, so can’t cope with increased admissions of patients except by hiring agency staff.

Mr Chandler added that the locum/agency staff spend has increased faster in Trusts with two sites. For example, he said that every A&E should have 10 consultants. So closing one A&E would mean CHFT would only need 10-12 A&E consultants instead of 20.

As it stands, CHFT has nowhere near that number and so has to rely on a high number of A&E locums.

Costs of the PFI contract

Mr Chandler said that the CHFT PFI contract that runs from 2001 – 2061 is unusually long, at 60 years compared to the standard 30 year NHS PFI contracts. The total interest payable is higher for CHFT than for other shorter PFI contracts.

Despite this burden, Mr Chandler said the PFI contract was not the primary reason for the deficit.

Paul Cooney, from Huddersfield KONP intervened to point out that it was originally a 30 year contract but it had been secretly renegotiated to a 60 year contract and CHFT staff were only told about this well after the event, at the Right Care Right Place Right Time staff briefing in February 2014.

The Chair Cllr Smaje told Paul Cooney to be quiet and to send questions in writing to the JHSC.

Jenny Shepherd intervened to say that it was important for the JHSC to allow members of the public to speak. She said she had reported on the 60 year contract on the Upper Calder Valley Plain Speaker website around a year ago; as members of the public seemed to know facts that no one else in the meeting knew about, it was vital to let them speak.

Councillors expressed their shock at finding out that the contract was for 60 years.

The JHSC Chair Cllr Smaje asked the CHFT Finance Director when the PFI contract had been changed. He said it was before he joined CHFT four years ago, and he will find out when it was renegotiated and who did it.

Cllr Molly Walton said the secret renegotiation was “outrageous”, and wanted to know why it was changed and why it didn’t come before the Scrutiny Committee.

The split hospital site in Halifax and Huddersfield is expensive

The Monitor Regional Director Paul Chandler said that delivering two hospitals’ worth of services is “the right thing for access to patients, but expensive to do.”

He continued,

“Finances are one issue compelling the clinical case for looking at whether two sites is in the best interest of patients or whether it would be better to consolidate services in one bigger specialist hospital.”

Ms Oluwole said,

“CHFT’s configuration on two sites has an impact on financial sustainability going forward. Monitor is working with the Trust on how to deal with that going forward.”

What is Monitor doing about the Trust’s deficit?

Monitor has accepted the Trust’s “enforcement undertakings” – a strange term that seems to mean its plans to toe Monitor’s line.

These are:

  • By mid May 2015, to identify “internal efficiencies and internal measures” for 2015/16 and 2016/17 that will “deliver financial stability”. I think this means cut spending in order to stop the deficit getting worse.
  • By September 2015, CHFT and the 2 Clinical Commissioning Groups to come up with a long term plan with “stakeholder input”, whatever that might mean.

2015/16-2016/17 CHFT plan – making the cuts that Price Waterhouse Cooper recommended

For the short term (2015/16 and 2016/17) measures, CHFT is implementing the recommendations of a review by Price Waterhouse Cooper:

  • to increase the “Cost Improvement Programme” – ie cuts
  • to set up a prorgamme management office to strengthen this.

CHFT has appointed a “Turnaround director” to carry out the Price Waterhouse Cooper recommendations.

The CHFT Finance Director said that the “Cost Improvement Programme” will be able to deliver over and above Monitor requirements. But this won’t close the deficit, because of the two sites issues and agency staff costs. He said it’s possible to run the hospital on 2 sites, but not with the need to make “efficiency” cuts.

Tension between efficiency cuts and patient safety

Calderdale Councillor Chris Pillai asked whether the “Cost Improvement Programme” “efficiencies” will damage the hospital services.

Mr Chandler, the Monitor Regional Director, said there is a robust system to identify negative impacts and mitigate them so the Trust don’t make savings at the expense of patient safety.

But the CHFT Finance Director said there is a tension between increasing standards of patient care and cutting staff costs. CHFT continues to invest in staffing and the cost of this puts pressure on efficiencies.

Quality impact assessments of efficiency savings are crucial and the Board needs to look at these carefully.

Kirklees Cllr Barraclough asked how Monitor and CHFT intend to balance out quality versus efficiencies.

Mr Chandler said that they will leave the deficit for next year and the Trust have to use their cash reserves this year to fund the deficit and next year too.

They will run out of cash reserves next year and once they run out of cash reserves they’re dependent on the Department of Health to find the staff and running costs this will require.

(“This” presumably being the continued investment in increased staffing?)

The current deficit is £4.3m.

September 2015 date for long term plan for hospital “reconfiguration”

Ms Oluwole said that this long term plan needs engagement with wider stakeholders and Monitor is working with NHS England to help the Clinical Commissioning Groups and CHFT.

In reply to a question from Cllr Smaje, Ms Oluwole said that the long term plan that will be presented in September will review the whole “local health economy”, based on what it might be possible to consult the public on.

It will look at the “reconfiguration” (code for “cuts and closures”) of the local health service and this will involve cooperation and competition issues.

Cllr Smaje asked if the proposals that will be put forward for public consultation in September will be for engagement or public consultation.

Mr Chandler said that isn’t yet clear but it’s a date for everyone to aim for, and Monitor can update the JHSC in the summer.

He said it will involve CHFT, the two CCGs, NHS England, the local authorities and patient groups.

Ms Oluwole said that once the CHFT’s strategic financial plan is drawn up, there is a need to identify patient benefits and to review the case for change for long term changes put forward by the CCGs and CHFT.

Monitor will provide support with working out the financial case and NHs England will provide support on the clinical case for change.

How this sits with the consultation on the Right Care Right Place Right Time hospital shake up

Dr Matt Walsh, Chief Officer at Calderdale Clinical Commissioning Group, said that the fit between the timeline for consultation on the Right Care Right Place Right Time shake up of the hospitals, and Monitor’s and the hospital Trust’s timelines, depends on a Calderdale CCG’s Governing Body review in July/August 2015.

This will look at the evidence about whether Care Closer to Home (CC2H) and Quality Improvement schemes like Quality in Care Homes  are reducing demand for acute hospital services.

If the review shows that this is happening, it will allow a September 2015 consultation to go ahead on the hospitals “reconfiguration”. The CCGs are working on new models of hospital care between now and the summer.

Cllr Smaje said that this comes too soon to know how the new CC2H system affects hospitalisation in winter.

Dr Walsh spoke in gibberish, saying

“All we can do is model through based on the current model. We wouldn’t want to overscore the consultation on that basis. Consultation doesn’t change the system overnight – more questions will be asked in consultation that will help determine the end state. Then we have to work out the timeline for implementing the outcome of the consultation.”

Trying to decode the gibberish, Dr Walsh seems to be saying that, far from being a consultation on all options for the future of the hospital – a legal requirement for any statutory consultation – the Right Care Right Place Right Time consultation will be on the option that the CCGs have already decided on – to reconfigure the hospitals in line with what they’ve already decided to take out of the hospitals and put into the community via the CC2H scheme.

Dr Walsh said that the Right Care Right Place RIght Time reconfiguration of clinical services isn’t going to deliver the funding cuts that are needed but it is important for clinical purposes for the consultation. The consultation needs to explain the rationale for reconfiguration and Dr Walsh said this is about money AND quality.

He said the CCGs’ consultation proposals have to “tick boxes” for organisations like the Clinical Senate and NHS England.

He said what is needed is an “uber timeline” that articulates how and when all the various changes will be made.

Cllr Smaje asked for an explanation of how the CCGs, the hospitals Trust and Scrutiny will know if the CC2H services are working well.

The GHCCG Chief Officer said that the CCGs will hold providers to account through the use of outcomes based indicators. Readiness for consultation will be based on a series of metrics/indicators, eg the extent of change to hospital admissions as a result of the Better Care Fund.

Dr Matt Walsh said that in the recent “development session” with the JHSC, the CCGs had agreed they would share their framework for measuring the outcome of reduced demand for hospital services and they need to “have a dialogue” about how they will share this with Scrutiny.

RCRPRT has 3 interconnected elements:

  • two Care Closer To Home (CC2H)  programmes, one run by Greater Huddersfield CCG and one run by Calderdale CCG
  • changes to the hospitals services

Dr Walsh said that the Right Care Right Place Right Time programme is “moving at pace in terms of the requirement for hospital change” but the CCGs had decided to change the community services first (CC2H) and use evidence from this about when the right time to consult on hospital services would be.

For the CC2H programme, Calderdale CCG decided to work with the existing “providers” – CHFT, the mental health Trust SWYPFT and Locala, which provides two walk in centres in Calderdale.

Greater Huddersfield CCG decided to “undertake a competitive dialogue process” for commissioning CC2H. It will award the contract in mid-May and mobilise the services in October 2015.

Posted from here.

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