Busy time for the Confederation: Health Service Review

The NHS Confederation – the membership body of NHS bodies – is having a busy year and the next few months are set to get even more hectic. It is not merely that the financial crisis could bear down on the NHS in ways that risk undermining the service: it is also that the looming general election means the Confederation has to seriously consider how policy and practice across the NHS could change in 2010 and beyond. 


Consequently, Nigel Edwards, the NHS Confederation’s director of policy, moves rapidly between back-to-back meetings, sparing time to give an almost breathless interview to Health Service Review.  He says this year is not only arduous, it is also challenging.  And given the financial crisis afflicting all public bodies, it is no shock which of those challenges he sees as the number one priority.


“Money – the financial situation – and how people are responding to this,” says Edwards.  This challenge includes understanding the implications for reshaping service delivery in response to the cost pressures.


The second priority is to analyse how any change of government – or a change of approach post-election, even if there is no change of government – would affect the NHS.  But there are also other matters that are near the top of the agenda.  “There is unfinished busines about regulation,” says Edwards.  “There are also issues around the non-foundation trusts and PCT provider services.”


While the shape of the political debate in the next few months is reasonably clear, the likely policy responses remain unresolved.  “It depends a bit on who wins the next election,” explains Edwards.  “There is some convergence, but the parties do differ in detail.  For example, what is public health and how do you improve it.”  Another difference between the parties is the shape of the future regulation of NHS trusts and the extent to which those regulators focus on the financial state of trusts. 


“There is a tendency to say that the Conservative policy is not radical, but some aspects of it are radical and could have major implications over time,” Edwards suggests.  But, he adds, that does not mean that any conceivable outcome of the election would lead to a backtracking on NHS reform, for example on the purchaser-provider split. 


“I think both political parties have the separation of provider arms as a major and non-negotiable bit of their policy framework,” says Edwards.  There is more difference, though, when it comes to presumptions of which types of organisation are most likely to win contracts for service delivery.  This follows recent statements by health secretary Andy Burnham that the NHS is the preferred provider of services.  “There is some wobble on preferred provider, but that is not to do with money.  That is about the politics.”


Despite this, Edwards believes there is a similar approach overall by the parties regarding the need both for competition, in some instances, and collaboration, in other situations.  “It should be possible to have contestability and collaboration, because you need both in different parts of the system.” he says.


However, Edwards concedes, there is a significant problem in making progress where long-term savings need short-term costs, or where improved service standards require investment.  “Any policy development which requires further funding, particularly capital, is at risk,” he says. 


Edwards accepts that the Nuffield Trust’s evaluation of the impacts of the different ways that governments in England and the devolved nations have addressed NHS service delivery is potentially significant.  But, he says,  it is “not immediately clear what it means”.  The findings suggest clear variations in terms of outcomes and productivity according to the type of approach adopted by government, with England apparently doing better in terms of improving outcomes and productivity.


“The difference is probably explained by the willingness of governments to confront producer behaviour,” Edwards suggests.  It would seem, he believes, that devolved health ministers and their governments are less willing to confront pruducer interests and more susceptible to “producer capture”.


This apparent difference of approach also seems to have a bearing on why the NHS Confederation operates in England (it also has parallel bodies the Welsh NHS Confederation and Confederation Northern Ireland), but does not have a separate organisation for Scotland.  “Scottish members decided that they have such close relationships with the members [MSPs] in Scotland that they don’t need a separate organisation,” explains Edwards.


What the Nuffield study does make clear is the practical difficulty of converting additional funding into productivity improvement, unless it is matched by specific and strong systems of performance management.  The additional challenge, believes Edwards, is achieving productivity improvement “without sacrificing quality”, as happened in the past when the emphasis was very much on productivity and cost reduction.


Future efforts to improve productivity are likely to focus on two issues: reducing variations in quality and cost across the NHS and making better use of property assets to reduce fixed costs by rationalising the NHS estate.  Edwards believes that it has to be a ‘given’ that estate rationalisation is possible.  “There’d better be, or we are all in trouble!,” he says.  “But it isn’t easy.”


In fact, much of the concentration on NHS improvement in the future will be on assets and finance.  There is a clear recognition by the Confederation that professional accountants must – and do – play a key role in the management and reform of the NHS.  “Accountants are fairly central to an awful lot of what happens,” says Edwards.  “But it is essential they get into conversation with clinical colleagues.”  Increasingly, explains Edwards, accountants are working closely with practitioners and doing so away from the central finance offices – and this development is very positive.


In fact, accountants are pivotal to achieving one of the reforms most necessary in the NHS: the move towards supplying programme budget information that focuses on the cost per activity and outcome, rather than, for example, the cost of employing doctors and nurses.  That reform is essential for managers to understand what is being achieved by the money that is spent. 


“At the moment there are clinical decisions and financial decisions and they are different,” says Edwards.  “But in reality, every financial decision is a clinical decision.”  Improving that linkage is “at the heart of most of the reform,” he argues.


While accountants must become closer to the heart of NHS decision-making, Edwards cautions against going too far in recruiting accountants to fill the boards of trusts as non-executive directors.  “I suspect quite a lot of [non-executive directors] have finance backgrounds,” he says.  “They are increasingly recruited for their professional backgrounds.  But you don’t want non-executive directors who start to do the second guessing and trying to sit in the accountant’s chair because they were an accountant ten years ago.  But there are benefits from having people who bring financial skills.”


Similarly, the NHS Confederation also values the skills held within ACCA and is happy with the record of joint work with ACCA, which it hopes to continue.  “We have worked closely with ACCA on a number of joint projects and on policy areas of joint interest,” explains Edwards.  “There are opportunities for us to get expertise from ACCA.  I would like to see us do more of that if we can.”


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