Operational Productivity in NHS Providers

Jim Cunningham Excerpts

Wednesday 1st July 2015 Westminster Hall

[Dr Matthew Offord (Hendon) (Con)]

I beg to move,

That this House has considered operational productivity in NHS providers.

It is a pleasure to serve under your chairmanship, Mr Pritchard, and I welcome the Minister to his role. I believe this may be his first Westminster Hall debate, and I am greatly pleased that I am the Member who secured the debate.

The national health service featured heavily in the recent general election campaign. I recall speaking at several hustings and telling my constituents that I recognised that this Parliament would witness an increasing demand for NHS services. On occasion I was challenged on how the additional £8 billion highlighted by the Stevens review would be found. My response, then and now, is that the greatest efficiencies can be identified within current services without undermining patient care. Such a view is shared by Simon Stevens, but most interestingly it is a view shared by others, including my constituents Philip Braham and David Green, who established a medical recruitment company called Remedium Partners. I am pleased that both gentlemen are here today in the Public Gallery.

Having met Mr Braham and Mr Green before the election, I was eager to re-establish contact with them earlier this month to discuss their ideas about NHS efficiency in employment. It is possible that more cynical Members will say that this is more evidence of the Conservative party seeking to introduce greater private sector involvement in the NHS for others to make a profit, but that would be an incorrect assertion to make. In fact, I found our discussion focusing on opportunities to save the NHS more money and prevent its resources being plundered by unscrupulous individuals.

The publication of Lord Carter of Coles’s interim report, “Review of Operational Productivity in NHS providers”—hence the title of this debate—two days before our meeting could not have been more fortuitous. The report outlined four areas where Lord Carter believes greater efficiencies could be achieved to allow additional moneys to be spent on front-line care. One objective in seeking today’s debate was to air the issues and to place them on the public record. Lord Carter’s efficiencies within the NHS include saving £1 billion from improved hospital pharmacy and medicines optimisation, £1 billion from the NHS estate, £1 billion from improvements to procurement management, and £2 billion from improvements in workflow and encompassing workforce costs.

Workforce costs is the area that I intend to focus on in this debate, as I have discussed it directly with my constituents and because just a 1% increase in workforce productivity could achieve as much as £400 million of savings. This is a significant and important area of the work of the NHS. Lord Carter believes that the £2 billion figure would be achieved without making anyone redundant and without seeking to increase the responsibilities of staff, nor would it mean decreased levels of remuneration for future employees. What it does mean is a greater command of management control on non-productive time, which are the periods when staff emphasis is not on direct patient care—days and shifts of annual leave, sickness and training. It also includes better management of rosters, improved guidance on appropriate staffing levels and skill ranges for certain types of wards.

The NHS is one of the largest employers in this country, employing more than 1.3 million staff in more than 300 different types of roles. In the last year that figures were available, the cost to the NHS budget was £45.3 billion, the largest proportion of the £118 billion budget. The cost of nurses alone totals £19 billion, and with the increased number required for safer staffing and a third increase in the number of nurses leaving the profession in the past two years, the reliance on agency nurses will see this figure rising.

[Mr Jim Cunningham (Coventry South) (Lab)]

When the hon. Gentleman talks about increasing the productivity of staff, can he itemise which staff he is referring to and say how much would actually be saved?

[Dr Offord]

We are talking about all the different staff. There are 300 different employment roles in the NHS, so we are talking about everyone across the NHS, but I hope later in my speech to come to the specifics of clinicians and the use of agency staff for that sort of role.

--- Later in debate ---

[Karin Smyth (Bristol South) (Lab)]

Thank you, Mr Pritchard, for calling me to speak.

I agree with the hon. Member for Hendon (Dr Offord) that of course there are always efficiencies to be made, and ways of considering how they can be made; NHS managers and staff, including clinical staff, spend a great deal of their time doing that. My intervention about counter-fraud was meant to suggest that that work becomes part of the way that people start thinking about their work as public servants. However, this debate needs to be widened out beyond the individual savings that have been mentioned. As the King’s Fund has said, the greatest savings achieved in the NHS since 1948 were made since 2010, largely through reductions to pay and central budgets, and some restructuring. Having said that, I am slightly sceptical about the savings that can be made through restructuring.

We need to move this debate on to a discussion about quality in its widest sense, because quality is an organising principle of the NHS; ultimately, quality will deliver greater savings and contribute towards the £22 billion target. It will also involve people much more in the management of their healthcare, so that we save money that is currently spent on public health interventions. We must also ensure that when people use the health service, they understand where savings can be made. If we were able to involve patients and others much more in that debate, we would find more good examples of what we have been discussing. There are some great examples from Bristol, particularly around environmental savings. There have been some fantastic projects to reduce consumption of energy, both at Universities Hospital Bristol NHS Foundation Trust, and at North Bristol NHS Trust. There is also the reskilling that takes place within the community services organisations, to make better use of the highly skilled community nurses and to help people with the flow in and out of hospital.

However, all these measures require the system to be stable and require some transitional support to allow the transformation to happen. At the moment, I am not sure that the NHS feels it has the support to make that happen, as individual examples that will not yield overall results are being picked out. I welcome this debate about productivity, but I hope that we can have a degree of political honesty about the scale of the challenge of the £22 billion cuts.

[Mr Jim Cunningham]

The hon. Member for Hendon (Dr Offord) talked about efficiency, which is one thing; productivity is something totally different. Productivity is what the individual produces, whereas efficiency is really about how the individual works. Does my hon. Frind agree?

[Karin Smyth]

I agree with my hon. Friend. It is the environment in which an individual works and is supported into work that helps to boost productivity. I think we would all agree that generally people want to be as productive in the service as they can be, and they are very cognisant of their role as public servants. As I say, I would like to see political honesty and discussion about the scale of the £22 billion cuts. It is hard to see where they will come from, regardless of pay restraint, cuts to services and major reconfigurations. Those changes may need to happen, but there needs to be honesty across all parties in the House to support their introduction.

There is wide-scale agreement about the problems that the NHS faces, beyond the items that the hon. Member for Hendon mentioned, but now that the election has passed it is time for us to consider the solutions that can be achieved to support staff in making that transformation, and in making the NHS highly productive, as well as one of the most efficient services in the world.

[Mike Weir (Angus) (SNP)]

I am glad to speak in this important debate under your chairmanship, Mr Pritchard. I congratulate the hon. Member for Hendon (Dr Offord) on securing it.

Obviously, in Scotland the situation is slightly different, because the NHS is devolved, but many issues cross over, wherever our health services are located. I was very interested in some of the points made. NHS Scotland has produced a framework for efficiency and productivity going up to 2015. We recognise that it is essential to be more efficient and productive, to ensure careful use of the public purse.

To an extent, the situation in Scotland is slightly different, because the NHS budget has been protected from cuts as a result of the Scottish Government’s action. However, we still face inflationary pressures arising from demographic changes and increasing drugs and staff costs, which mean that NHS boards will need to make a minimum of 3% efficiency savings just to break even.

I was interested in what the hon. Gentleman said about the many issues faced by the NHS, particularly in England. I understand that much of the savings to date have been made by freezing staff salaries, squeezing prices paid to hospitals for the treatment they provide and cutting management costs. I wonder whether there is a correlation between those savings and the frauds and difficulties in some hospitals, which he mentioned. We all want to cut management costs, but sometimes there is a cost to doing that, because if management is cut back it cannot have the same hands-on experience of what is going on in all areas of the operation. That has to be weighed in the balance when we consider such savings.

The hon. Gentleman talked about the Carter review and the time spent by people on the frontline, whether with patients or doing other things. Again, that has to be built in. The hon. Member for Coventry South (Mr Cunningham) made a good point about the difference between productivity and efficiency. A staff member could be deemed much more efficient if they just dealt with patients, but down time for staff has to be worked into the system, because any doctor, nurse, or other NHS staff member will be working at a high level for very long periods. There are dangers if down time is not built in.

All of us would want savings made where they can be safely made, but the hon. Member for Bristol South (Karin Smyth) made an interesting point about the King’s Fund, which estimates that another £30 billion of savings will be required by 2020-21. The Government have made much of the fact that they will put another £8 billion into the NHS. Although I am sure that is welcome, it still leaves £22 billion in savings to be achieved through productivity improvements. With the best will in the world, I find it difficult to envisage £22 billion of savings being made through productivity improvements in the NHS. If it can be achieved, that is fair and well, but it does seem a very tall order, as the King’s Fund stated.

An organisation cannot keep freezing staff wages forever; there will have to be a change in that regard. Management costs cannot be cut indefinitely, because, again, management is needed to run the system.

[Mr Jim Cunningham]

Admittedly, it has been some years since I was involved in negotiations relating to productivity, and so forth, but the fact remains that there are consequences if people are not paid a decent wage. I worked in industries where wages were frozen and saw the consequences. The only way to increase productivity in the NHS and maybe save money—I use the word “maybe” advisedly—is by having incentives. That is the only way it can be done. It was not clear, in the speech made by the hon. Member for Hendon (Dr Offord), what percentage of people would have time off. There is a tolerable, acceptable percentage in that regard, but I was not clear what the percentages were.

[Mike Weir]

The hon. Gentleman makes a good point. He is right about incentives. A happy workforce will be a much more productive workforce. There is a danger of putting increasing pressure on the workforce, especially in the NHS, where mistakes can be disastrous and can do a lot of damage in the long term, both to the system and patients. We have to be careful about some of these things. I was interested in what the hon. Member for Hendon said about the cost of agency workers. I think we would all agree on that point. It would be preferable to have full-time staff in the NHS, but agency workers are used for a reason: shortages.

The hon. Gentleman also talked about people from outside the EU working in the NHS, but again, this shows that there needs to be a more holistic Government policy. The Government recently announced an earnings threshold of £36,000, under immigration policy, for those who have been working in this country for six years. Many nurses working in the NHS throughout the United Kingdom are not earning that sort of money and have been in the NHS for many years. The Royal College of Nursing stated that if this policy was imposed, thousands of nurses could leave the NHS and could have to leave the UK. That is not in the best interests of the health service at the moment. When considering efficiency savings and how the NHS can better work for all our constituents throughout the UK, we have to think about such things .

[Mike Weir]

The hon. Gentleman read my mind: that was my next point. Agency nurses are causing a drain on resources, because we have to employ so many already. That will not get any better if nurses cannot work in the NHS because of immigration policy. These people did not come to this country a few months ago; some have been here for many years. Many of these nurses are working in hospitals in all parts of the UK, whether Scotland, Northern Ireland or England. They are also working in the care system.

The Government are making a bad situation worse, perhaps because of other pressures on them to do with immigration, and are not dealing with the realities of the health service. Training new nurses to take the place of those who may leave will not happen overnight. It takes years to train a nurse properly. If these people have to leave suddenly, they will leave a huge hole in the NHS. That raises a question about the sustainability of the system. In summing up, the Minister might like to consider that; and perhaps he will take the matter up with Home Office colleagues and discuss the impact this policy may have on the NHS.

Efficiency savings are fine where they can be made. We are all looking for efficiency savings, and we understand that there can be some. For example, there are some interesting responses in the Carter review on medicines and prescriptions. Savings could be made there. A lot of medicines can be wasted if prescriptions are too large. Such system changes can save money, but it is wrong to look for the silver bullet that is going to change things and produce the £22 billion in efficiency and improvement savings.

[Mr Jim Cunningham]

If the hon. Gentleman thinks back 12 months or so, he may remember that it took a long time for the Secretary of State to reach an agreement with the pharmaceutical companies because some issues were held up. We should consider that. It seems to me that a gun was held to the Secretary of State’s head on costs.

[Mike Weir]

Again, the hon. Gentleman makes an excellent point. One difficulty with the NHS is the cost of medicines. All our constituents are pushing us to get costly new medicines on the NHS for diseases, including rare diseases. They might be extremely costly in the first instance for good reasons, but demand always increases costs in the system, and it is difficult to deal with that. The pharmaceutical companies have a role to play in that, because much of their business comes through the national health service. If cost savings can be made by negotiating with those companies, that should be done. I am sure that the Secretary of State will at all times try to persuade them on that point, but I am not so sure how well he will do, given the competing pressures from constituents and Members for new drugs to be made available on the NHS. None of these issues are easy, and I have some sympathy for Ministers who are struggling with them, especially given the pressures on all areas of Government spending, but I urge caution in looking for simple solutions.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

Thank you, Mr Pritchard. I apologise for having had to step out of the Chamber for a minute or two. I expected the speech of the hon. Member for Bristol South (Karin Smyth) to be a wee bit longer. It is always a pleasure to speak on these issues, and I thank the hon. Member for Hendon (Dr Offord) for bringing this subject to the House for our consideration.

The Carter report is important. Members will know that health is a devolved matter in Northern Ireland, and the responsibility for health falls clearly on the Northern Ireland Assembly and my party colleague Simon Hamilton, but it is important that we consider the issues and the recommendations in the report. I will speak to that in a few minutes, but first I pay tribute to all those who, despite the numerous difficulties facing us, make our NHS one of the premier care services in the world.

The tireless work of the doctors, nurses, surgeons, technicians, pharmacists, auxiliaries, cleaners, cooks, porters and those who work in admin behind the scenes has not gone unnoticed. I am sure everyone here would start by thanking them for their contributions, their efforts and the exhausting work they do. I thank them for their smiles to the patients and families, sometimes when the workers are so exhausted they can barely stand. I thank them for staying those extra 10 and 15 minutes beyond what they are paid for to make a patient comfortable. I thank them for choosing to come to work and sometimes having to face abuse from tired and perhaps frightened people. I thank them for retaining their dignity and helpful nature. In this debate, we do not stand in judgment on the NHS or the workers; rather, we look at the procedures in place and how we as Members of Parliament can help to make the NHS, which we are fortunate to have across all the regions, more effective for everyone.

[Mr Jim Cunningham]

The hon. Gentleman mentioned long hours. Some of the young trainee doctors are doing a 12-hour day, seven days a week. That can go on for months. That is not exactly conducive to good morale in the national health service, is it?

[Jim Shannon]

None of us here said that it was. It is important that our doctors and the staff are not over-tired.

The Carter report sets out how efficiencies can be delivered. The hon. Member for Angus (Mike Weir) who spoke before me clearly outlined the issues. The title of the debate refers to Lord Carter’s review of productivity in hospitals, and the interim report of that review, “Review of operational productivity in NHS providers”, which was published on 11 June. We all know that Lord Carter of Coles was appointed by the Health Secretary to chair the NHS procurement and efficiency board in June 2014, to review the operational productivity of NHS hospitals and to establish the opportunities for efficiency savings across the NHS. To do that, Lord Carter and the review board worked with a group of 22 NHS providers across England, and I think that what they have found in England will be replicated for us in Northern Ireland and for our colleagues in Scotland and Wales. There are lessons to learn, so we should take note of what the report says.

As I said, an interim report was published on 11 June outlining the work that has been carried out and the interim recommendations and next steps. The full report is to come in the autumn, and I look forward to seeing what it says. Back home, people are sick to death of the term “efficiency savings”, the idiotic behaviour of Sinn Féin and the Social Democratic and Labour party and others and the funding penalties we are facing. Our NHS is being asked to do the impossible and be more efficient than it is, but when I look at the findings of the interim report, I see things that may extend to our running of the NHS in Northern Ireland. That is what the Carter report is about, and I am sure the Minister will give his thoughts on that shortly. The report sets out ways we could ease the pressure off front-line services and enable the functioning of our country while we wait for action to cease the penalties and see Northern Ireland receiving what she is entitled to—what we would be getting, were it not for the inability of Sinn Féin to do what its Members were elected to do and work for the people. That, however, is a different debate for another day, and I accept that.

The interim report suggests that the NHS in England could look to make savings of some £5 billion per annum by 2019-20 and reports three major areas of opportunity. The first is hospitals getting a stronger grip on the utilisation of resources, particularly in four areas: workforce, hospital pharmacy and medicines, estates management and procurement. The second is achieving greater productivity in hospital workflow—how patients move through the system—and the subsequent use of assets such as operating theatres. I have always felt we could look at that, and the Carter report has examined it and offered some ideas on how it could work. The final area is gaining a better understanding of the need for hospitals to develop sub-acute services, either on their own or in collaboration with others, to facilitate the discharge of patients. It is about making it work better together.

We need a way of ensuring the highest quality of patient care, delivered at the lowest price possible to ensure that more funding can be diverted to cancer drugs. Members will know that I have advocated ensuring the availability of cancer drugs across the whole United Kingdom, rather than that being down to postcode. In Northern Ireland, we would like to use prescription charges to put some money towards cancer drugs. I know that the Government have given a commitment and that there is some help for the devolved Administrations when it comes to cancer drugs, but not to the extent that we would like. We also need more funding diverted to research and other areas.

I was surprised to see in the report that one hospital could save up to £750,000 a year by improving the way it deals with staff rosters, annual leave, sickness and flexible working. That was just one example, which would regain the £10,000 a month the hospital was losing due to people claiming too much annual leave. That is an easy way of getting money back into hospitals. Ensuring every hospital pays the best price for medicines and supplies would save money that could be invested in front-line care. One hospital with 23 operating theatres improved the way it tracks the products used during surgery and saved £230,000 in the first year alone. I am not saying that every hospital could do that, but it is an example of what can be done, and it would be unwise to ignore it.

When the Hansard report of this debate becomes available, I will send a copy to my colleague, the Health Minister in Northern Ireland, Simon Hamilton, to make him aware of the Carter report and this debate. Helpful lessons may emerge that we could use. For example, a hospital was using the soluble version of a steroid for multiple illnesses and paying £1.50 a tablet when the solid version costs just 2p a tablet. Using the soluble version only for children and patients who have trouble swallowing saved £40,000 every year. Those may be small examples, but they collectively show how something could happen. I have some concerns. Cheap is not always best, and we have many examples of the copying of tablets in China and elsewhere. Those tablets are not as effective and may be harmful, so we have to monitor how we best ensure that cheaper drugs are effective and tackle the diseases they are designed to tackle.

We must take these issues in hand if we are to see the best possible use of funding. With the publication of the full report in the autumn, we will have a better idea of where we are. I hope that that report will be seen not as a stick to beat the NHS with—if it is, that will be for the wrong reasons—but as a ray of light that will help make things better. I very much look forward to seeing what it says about how we can improve things here in England, because we will then, I hope, be able to use that example to improve things across the water in Northern Ireland and perhaps in Scotland, for my colleague and friend, the hon. Member for Angus.