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Paybills targeted in fresh drive on health service savings


Trusts with large or growing staff paybills, which are deemed unusual, are to be targeted in a fresh effort by regulators to get a grip on the health service’s struggling finances.

They have also been told to produce plans by the end of July for merging back-office and pathology services with neighbouring trusts, as part of a three-pronged plan to reduce this year’s NHS deficit.

“Many planned care acute services are reliant on a fragile and temporary workforce”

NHS Improvement

In addition, regional managers have been asked to identify any planned care services that are heavily dependent on locum staff and could be merged or transferred to other providers.

The move was outlined in a letter from the new regulator NHS Improvement that was sent to every trust chief executive in England on Tuesday.

The letter, from NHS Improvement chief executive Jim Mackey and chair Ed Smith, confirms that NHS providers are on course for an overall deficit of £550m this year. It warns that this level of deficit makes “management of the overall NHS financial position very risky”.

Jim Mackey

Jim Mackey

Source: Neil O’Connor

Jim Mackey

It states that NHS Improvement is aiming to get the provider sector deficit down to £250m this year through a combination of three measures.

On paybills, it said NHS Improvement would work with providers planning unusually high levels of pay cost growth this year, and with those whose paybill growth in 2015-16 was “out of step with activity growth across the sector”.

It said: “We will therefore work through this growth with each of these providers over the coming weeks to determine how much of the planned growth can be eliminated, and the extent to which we can reverse the growth that was experienced in 2015-16.”

The regulator said the work would be done in close collaboration with the Care Quality Commission, to ensure changes do not threaten patient safety, and will aim to secure agreement with the providers involved by the end of July.

In addition, the letter highlighted that a recent efficiency review of the NHS had demonstrated there was “still a significant potential saving” if back office services and pathology services were consolidated on a regional basis.

On service consolidation, the letter said it was clear there were “many planned care acute services that are reliant on a fragile and temporary workforce, with resultant financial, operational and continuity problems”.

Agency staff spending

Meanwhile, in a separate move by NHS Improvement, trusts could be graded on their agency spend in a new performance framework.

The purpose of the framework is to identify where providers may benefit from improvement support across five areas – quality of care, finance and use of resources, operational performance, strategic change, and leadership and improvement capability.

Level of agency spending is among the new framework’s proposed ways of measuring finance and governance performance. As well as agency spend, the proposed finance measures include cost per weighted activity unit – an efficiency metric developed by the Carter review team.

Agency spending will also count towards the regulator’s assessment of a trust’s governance, alongside staff and patient surveys, and the Care Quality Commission’s “well led” assessments.

Overall, trusts would be banded into four grades: no concerns, emerging concerns/minor issues, serious issues or critical issues.

A lighter regulatory burden has been proposed for trusts in the best category, while those with serious or critical issues will get “mandated support”.

NHS Improvement – formed in April from Monitor and the NHS Trust Development Authority – released a consultation paper on the framework on Tuesday. The consultation closes on 4 August.


Readers' comments (4)

  • Jim Mackey, eh?

    Is that the same Jim Mackey, who in his guise as a trust chief exec, has tried to worsen the terms and conditions of his staff, such as by breaching A4C and making ALL increments dependent on targets in annual appraisals?

    Whose trust operates a culture of bullying and nepotism, in which relatives of managers are frequently appointed over better qualified and experienced candidates?

    Whose trust has an "acceptable appearance" policy which forbids visible tattoos, while having visible tattoos himself?

    Who once said of the payroll department his trust runs, which provides payroll services to many, many trusts up and down the country, something along the lines of "I don't like payroll, they spend millions of pounds!"?

    That Jim Mackey? Or is it another one? I hope it is the latter, as taking advice from the other one looks daft to me.

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  • I would like to see grading of trusts on their agency spends- could have very helpful ramifications,

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  • It's naive to think that by applying a new framework and discussions with each provider will deter agency expenditure. Until the real issue - a lack of workforce supply v demand is addressed agency expenditure will continue as staff morale plummets and risks to patient safety increase. What the profession requires is a clear robust strategy not a half hearted attempt to stick a plaster over the cracks. Look what happened when NICE got too close to making further recommendations. Honest and transparent, now wouldn't that be refreshing!

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  • Interesting comments & article. I do hope that letters have gone to CCG's......nhs improvement (ex TDA yet another waste of money) NHSE etc etc. We all know the nhs needs to save money or get more 'lean' so please have a look at CCG's first who do not provide front line patient care, appear to have a lot of overpaid people pushing pens, emails & spreadsheets.
    Acute trusts need to pay attention to operational rosters, skill mix & competency review, maintain & use patient dependency tools together with professional judgement to get the best from staff they have got whilst keeping patients & staff safe. I do hope that these things are considered as part of the 'naughty trust step' managing agency/staff costs framework

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