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Financing the future HSC –achieving sustainability?
Julie Thompson – Senior Director of Finance, DoH NI
Owen Harkin - Vice Chair of HFMA and Director of Finance, NHSCT
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The Story so FarDHSSPS
Policy & Strategy
£4.5+bn
HSCB & PHACommissioning,
performance and planning£4+bn
Other HSC Providersincluding:
HSCB, PHA, BSO &Voluntary Organisations
NI Trusts5 HSC Provider Trusts & NI
Ambulance ServiceDelivery of services
£3+bn
Family Health Services£1bn
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Progress to Date
£400m+
Total cash and productivity savings targets for HSC Trusts
From 2010/11 – 2014/15
£130m+
Efficiency savings targets for Pharmacy from 2010/11 – 2013/14 with the
implementation of the Pharmaceutical Clinical Effectiveness Programme strategy
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Evidenced by:
Hospital EfficienciesLength of Stay Savings Unit Cost Savings
General Medicine - 30% - 26%
General Surgery -11% - 1%
Trauma & Orthopaedics -9% - 9%
Savings in Average Length of Stay (inpatient days) and costs per Finished Consultant Episode (FCE) from 2009/10 to 2013/14
Community EfficienciesActivity Increases Unit Cost Savings
District Nursing +13% -15%
Health Visiting +8% -13%
Physiotherapy +49% -10%
Speech & Language +21% -10%Therapy
Activity (contacts) and unit cost savings (costs per contact) in 2013/14 compared to 2009/10
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Evidenced by:
Activity Based Funding
Hospital reference cost comparisons v England
still show scope for improvement, but do
demonstrate a significant improvement to
2013/14
19%
11%
The cost variation of NI reference costs
compared to England has reduced from circa 19% in 2009/10 to 11%
in 2013/14 – an improvement of over £50m in cash terms
Hospital Improvements
Day Case Rates Increased from 74.2% (2010/11) to 77.8% (2013/14)
Outpatient DNA (Did Not Attend) RatesReduced from 10.4% (2010/11) to 9.1% (2013/14)
Source: NISRA Annual HSC Statistics
Other Improvements
Domiciliary Care lower cost provision
(Expenditure increases have been managed to 3% in real
terms compared to an increase of 8% in activity (domiciliary hours of care) from 2009/10 to 2013/14)
Management of corporate spend
(Real terms reduction in Hospitals overhead spend from
2009/10 to 2013/14)
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Trends
HSC Services - shift in expenditure:
Hospital Services -4%
Community & Personal Social Services +4%Expenditure as % of total Trusts’ spend in 2013/14 compared to 2009/10
Hospital Services transition:
Inpatients -2%Outpatients +6%Day Cases +7%
Movement in real terms expenditureby Patient Class from 2009/10 to
2013/14
Community & PersonalSocial Services
Movement in real terms expenditure from 2009/10 to 2013/14 reflecting the
transition to community / home settings
GP Direct Access Services +87%Supported Living +56%Direct Payments +50%
Personal Social Services
Movement in activity delivered from 2009/10 to 2013/14:
Residential Care -6%Nursing Home Care +7%Domiciliary Care +8%
18% increaseIn real terms expenditure for A&E services
from 2009/10 to 2013/14
44% increase(additional £53m)
In real terms Drugs expenditure from 2009/10 to 2013/14
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The Financial ChallengeGoing Forward
3.8
4
4.2
4.4
4.6
4.8
5
5.2
5.4
2015/16 2018/19 2021/22 2014/25
£bn
Financial Year
Funding (Flat in Real Terms) Funding (Flat in Cash Terms) Projected Spend (in Real Terms)
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NICON Priorities
• Ring Fenced Transformation Budget with stable 4-Year Funding agreement;
• Public Debate on Public Funding models;
• Commitment that HSC retains any additional funding made available to NI via NHS uplifts;
• Continue to improve and innovate to drive efficiency, via new ways of working, making best use of resources, workforce & technology, making tough choices to invest differently
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Financing the Future HSC –Achieving Sustainability?
Julie Thompson
Senior Finance DirectorDepartment of Health
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Financial Context
• NI continues to receive more in Budgets thanit pays for in taxation.
• The economy is more reliant on the publicsector than other areas of the UK.
• The DOH budget approximates to £5 billion per year on services – almost half of the public sector budget.
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DOH Budget Settlement Profile
BudgetSettlement
2012/13
£m
2013/14
£m
2014/15
£m
2015/16
£m
2016/17
£m
Current Expenditure 4,447.6 4,569.2 4,659.4 4,751.4 4,880.1
% Uplift 1.5% 2.7% 2.0% 1.9% 2.7%
Capital Expenditure 325.4 224.8 200.5 213.4 232.6
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DoH Budget as % of NI DEL
40%
41%
42%
43%
44%
45%
46%
47%
48%
49%
50%
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
DoH Budget as % of NI DEL
Linear Trend
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DOH Budget vs Other Departments
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Other Depts
DOH Budget
Linear (Other Depts )
Linear (DOH Budget)
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However we face demographic pressures which will place further strain on key services, especially health....
1700
1750
1800
1850
1900
1950
2000
2050
NI Population
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Budget 2016/17
• Protection for health and social care
• Degree of protection for policing budget
• Unprotected baselines faced 5.7%
reduction
• Departmental outcomes ranged from
-5.7% for DAERA to +2.7% for DoH
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Post June Monitoring
We will have to identify substantial savings in order to supplement the additional budget
allocation
The budget for 2016/17 is still exceptionally
challenging for DOH
IF DOH and its ALBs are to
deliver services within the available budget....
Reform Agendais
critical
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Capital Programme
SIGNIFICANT DEMANDS
ON CAPITAL BUDGET
ICT investment needed to
support reform
Mental health
reform –Bamford progress
Acute Site investment for service
delivery targets
PCC centres–SIP identifies
26 Hubs costing £350m
– £400m
£240m investment pa
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Budget 2016
Multi-year Budget, which
will link directly to the
PFG
Resource DEL 2017-20
Capital DEL 2017-21
Draft budget by Autumn
2016
Will support more medium term
financial planning and enable more effective planning by the Trusts and
other bodies
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Ministerial Priorities
To radically reform health care services to
ensure it delivers affective outcomes for people with a focus on early intervention and
prevention
To continue to deliver services to the most
vulnerable
To address the immediate challenges affecting patients and
staff in our acute services
To champion mental health
To reduce health inequalities to enable everyone to have the
same chance of living a long and healthy life no matter where they live
To develop all-island networks to tap into the benefits that All Ireland health and social care
approaches bring
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These priorities are set within the context of the outcomes focussed draft Programme for Government Framework 2016-21, including:
HEALTH PFG OUTCOMES
We care for others and we help those in
need
We have high quality public
services
We enjoy long, healthy active
livesWe give our children and
young people the best start in life
We have a more equal society
We have more people working
in better jobs
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Key issues moving forward
THE FINANCIAL CHALLENGE
Capital
Transformation Restructuring
Bengoa
Savings
Service Developments
Elective Care
Inescapable Pressures
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Early thoughts on potential implications of Brexit
• Mobility
• Recruitment
• Professional regulation
Workforce Issues
• Exchange Rate
• Procurement
• Impact on European funding currently received
Funding
• Quality and Safety
• Medicines Safety
• Public Health
• Children’s Issues
Regulation
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Closing Thoughts
• Delivery of substantial reform to the health service is key
• Short term action to be balanced with longer term change
• All to contribute – a task for the Executive as a whole
• Sustainability is key
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Owen Harkin
Vice Chair, HfMA NI
Director of Finance, NHSCT
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Demographics- 5% increase in Population
- 21% Increase in > 65s
Pay & Inflation- Pay & Price Inflation- National Living Wage- Nat Ins / Pensions
Service Pressures / Developments
Specialist HospitalDevelopments- Children with disabilities- Looked after children- Adult safeguarding- Resettlements- Health Promotion- Out of hours
HSC PRESSURES /INVESTMENTS REQUIRED
Long term conditions
DiabetesCOPDAsthmaStrokePalliative Care
New technologies
Electronic Care RecordTheatre & bed management
systemsCancer patient pathwaysElectronic PrescribingTelecare, telemonitoring
Increasing Complexity
- Co-morbidities- Dementia- Later in life pregnancies
New NICE approved drugs & growth in
existingIncluding:Cancer, HIV, MS & Biologic therapies
Pressures Facing HSC TrustsWorkforce
- Medical StaffingShortages
- Nurse Recruitment &Retention
- Social Care / AHP Staff
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The Financial Challenge .....
• Reducing Costs in the system
Creating High Performing Organisations, Improving Efficiency and Productivity
• Taking Costs out of the system
New Service Models, Focus on Outcomes
and Safety, Disinvestment linked to Effectiveness
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Michael Porter –Value • Use of expensive physicians and skilled staff for less skilled activities • Delivering care in over-resourced facilities • −E.g. routine care delivered in expensive hospital settings • Over-provision of low- or non-value adding services or tests • −Sometimes to follow rigid protocols or justify billing• Low utilization of expensive physicians, staff, clinical space and
equipment, partly due to duplication and service fragmentation • Process variation that reduces efficiency without improving
outcomes• Focus on minimizing the costs of discrete services rather than
optimizing the total cost of the care cycle• Lack of cost awareness in clinical teams
There are numerous cost reduction opportunities that do not require outcome trade-offs, but will actually improve outcomes
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INPUTS TO CORE PROCESSES
STAFFSUPPLIES
EQUIPMENT
CORE PROCESSES AND OUTPUTS
TO
IMPROVE QUALITY AND
OUTCOMES
WHERE HEALTHCARE DOF’S GO TO REDUCE COSTS
WHERE OTHER INDUSTRY DOF’S GO TO REDUCE COSTS
Value- Different Approach Required
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Patient
Consultants Cost
Junior Doctors Cost
Nursing Cost
Therapist Cost
Health Care support Worker
Significant Variation in Input Cost Output / Outcome
The Relationship of Cost to Outcome in Health
This wide variation in input costs to outputs is not seen in any other industry or sector anywhere in the world which is why its easy to destroy value in Health by reducing input costs in isolation …….
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Questions&
Open Discussion