Reconfiguration of hospital services is necessary but difficult

The NHS is entering a period of unprecedented financial challenges that will result in major changes to the provision of health services. While all areas of health care will be affected, acute hospitals face particular challenges because of the high proportion of the NHS budget spent in hospitals.

Add in the need to reconfigure specialist services in many parts of the country to deliver improvements in outcomes and the requirement that all NHS trusts should become foundation trusts by 2014, and a period of fundamental service and organisational change is in prospect.

An analysis of the reconfiguration of acute hospital services in south-east London by Keith Palmer, former chair of Barts and the London NHS Trust, offers a timely and sobering contribution to the emerging debate on how service and organisational change should be taken forward across the NHS in England.

His painstaking account of the trials and tribulations of bringing together four acute hospital trusts with a history of financial problems, the challenge of funding large and long-term PFI commitments and difficulties in sustaining high-quality specialist care in hospitals in close proximity to each other offers important learning for the future.

South East London incorporates two large teaching and research hospitals (Guy’s and St Thomas’ and King’s) and four district general hospitals (Queen Elizabeth, Woolwich; University Hospital, Lewisham; Queen Mary’s, Sidcup; and Bromley Hospitals NHS Trust). The latter four hospitals have faced chronic financial and quality issues for a number of years. The reconfiguration process began in 2005. In December 2010, NHS London announced that the proposed reconfiguration met the four tests set by the government.

Here’s a summary of the report’s findings:

1. Reconfiguration of services across hospitals sites is likely to be the only way that some trusts can achieve financial balance while avoiding an unacceptable deterioration in the quality of care, given the cold financial climate, which is here for at least the next five years.

The necessary rapid growth of productivity and slower growth of hospital activity will result in excess capacity and stranded costs. Without reconfiguration, some financially challenged trusts will suffer a downward spiral of increasing deficits, declining quality of care and a further widening of the existing quality gap between the best and worst performers.

2. The large deficits and high legacy debts of financially challenged trusts with whole-hospital PFI schemes are caused in part by underfunding of fixed capital charges in Payment by Results (PbR) tariffs.

Making funding of capital charges more cost reflective would reduce the deficits of those trusts at no net cost to the NHS. It would make funding of patient care more equitable; reduce the pressures for reconfiguration across hospitals sites; reduce the current large financial leakage from the NHS; and enable more trusts to become foundation trusts sooner.

3. Reconfiguration should focus on achieving the best patient outcomes and patient experience for all NHS patients, and on narrowing the quality gap between the best and worst performers.

This is best achieved by designing reconfiguration to drive accelerated adoption of best practice models of care in as many services as possible. This in turn is best achieved by designing reconfiguration along patient pathways involving specialist/tertiary hospitals, DGHs and primary care providers.

It requires a significant change in the way emergency and network services are currently provided.

4. Competition and choice in contestable services may inadvertently cause deterioration in the quality of essential services provided by financially challenged trusts.

Market forces alone will rarely drive trusts into voluntary agreement to reconfigure services in ways that will improve the quality of patient care as well as drive down costs.

In many cases the most likely outcome will be continued deterioration in both the quality of care and the financial position. The NHS will have no alternative but to continue to fund their deficits or allow them to fail.

5. Strong commissioning of emergency and network services across a large catchment area is necessary to bring about major improvements in patient outcomes for all patients.

Individual PCTs in London are too small to drive major service change even when they join forces to form larger joint commissioning groups. The transfer of commissioning responsibility to even smaller GP consortia will further weaken commissioning levers to bring about service improvement across trust boundaries in major network services, such as cancer, cardiac, stroke and renal services.

Recent successes by the PCTs in reconfiguring stroke and trauma services highlight the potential of strong commissioning to bring about markedly improved patient outcomes in other network services. If this potential is to be exploited, the new NHS Commissioning Board will need to be given the statutory powers and the capability to perform the role effectively.

6. The best available means of bringing about reconfiguration along patient pathways will often be to support acquisitions of financially challenged trusts by high-performing foundation trusts.

Acquisitions of failing trusts are the logical outcome of competition and choice in healthcare services. Acquisitions by foundation trusts which have existing networks of care and high performance ratings will often be the best way to drive accelerated adoption of best practice for the benefit of all patients served by the enlarged trust.

They are also the most practicable means by which the NHS Commissioning Board can use strong commissioning powers to bring about desirable service reconfiguration locally. Concerns about adverse impacts on quality of contestable services arising from reduced competition if acquisitions do go ahead should be weighed against the deterioration in quality and loss of opportunities to improve quality if they do not.

In any event, acquisitions of financially challenged trusts (by foundation trusts or anyone else) will remain a purely theoretical option unless the Department of Health/NHS provides funding to defray the large one-off restructuring costs and agrees to refinance legacy debt.

Commenting on the report, Chris Ham, chief executive of The King’s Fund, said: “The lessons from this paper need to be acted on in a context in which ministers have emphasised that service reconfigurations should be based on support from general practice commissioners and public and patient involvement.

“They have also argued that service changes should be consistent with clinical evidence and help to facilitate patient choice. The government’s decision to bring a halt to the work being undertaken by Healthcare for London to concentrate some specialist services to improve outcomes underlines the challenges in acting on the evidence presented in this paper.

“In reality, the requirement to find up to £20 billion of efficiency savings by 2015 and to establish all NHS trusts as foundation trusts by 2014 will necessitate a stronger approach to commissioning than currently envisaged to ensure that quality is improved at the same time as costs are brought under control. The expertise of general practice commissioners needs to be married with the ability to lead complex service reconfigurations across large populations if the lessons from south-east London are to have lasting impact.”

Read the full report.

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