CEO Diary W/C 9th September 2013

A CCG Accountable Officer has a range of statutory duties, which - if he/she fails to perform - can lead to loss of office and potentially prosecution. Of this long and intimidating list, there are two that are key - which the NHS system rightly expects to be consistently and competently performed:

1. Make sure that the services you commission are high quality and safe.

2. Don't overspend your budget.

WEDNESDAY: QUALITY & SAFETY


The NHS England Area Team chair a monthly quality surveillance group (QSG), which feeds into a Midlands and East Regional group every quarter. I attend personally whenever I can -  it has the potential to add great value to the mission to improve patient safety across local systems. It brings together CCGs, NHSE, CQC, Monitor, TDA, Healthwatch, County Councils, and the Deanery to share information about the provision of care, and - where patterns emerge - consider how best to respond to concerns. Its work is vital to manage the very complex regulatory environment, and - if properly developed - could go a long way to ensure that those recent high profile failures in NHS care are not repeated.

I am very much in the reform camp of the QSG - it needs to develop as a system, and to develop its ambition further. I used the publication of the Berwick Report to set out my thoughts at the meeting this week.

1. It needs to have an explicit and clearly stated purpose - more than any other body of which I am a member, these groups can deliver and should adopt the Berwick Challenge.

'The goal is the continual reduction in harm'
2. It must be more transparent. The QSGs are currently FOI exempt, private, and confidential. I know the reasons for this will have been advanced in good faith (people must be able to speak candidly without fear of sensational coverage or complaints of libel), but in the context of the Berwick Report it seems outdated and ill-judged. It engenders fear by excluding providers from the discussion or the outputs, removes accountability from those raising concerns, damages our credibility when we ask providers to be completely open with us, and limits our ability to engage with providers about early indications of problems.

'transparency is essential - expect and insist on it at all levels'

3. It must empower itself to act. We need a range of measured and proportionate responses to safety concerns, where it escalates beyond the powers of the individual commissioning CCG. Berwick is right that responsibilities for these safety and improvement functions need to be more clearly vested, but we have all the players round the table, and the opportunity to act collectively and with impact.

'All NHS Leaders should place patient safety at the top of their priorities'


The discussion was productive and real progress was made - both in terms of proposals for informing each provider of any discussions or concerns raised, and for providing local supportive intervention before we trigger a Risk Summit from the Region. I hope we are able to implement these for the next meeting, and use them as a starting point to drive forward the patient safety agenda.
FRIDAY: MONEY


The advantages of having a Finance Director with 'system memory' (knowledge of the how the Norfolk PCT managed its books) coupled with real technical competence (detailed understanding of the intricacies of hospital tariffs and contract finance schedules) cannot be overestimated. As we prepare for the next meeting of our Governing Body I am struck by how little time we have had to spend discussing finance, and how much it has enabled us to focus on the interests of patients, the care they receive, and our work to improve the health of the population. To steal a line from McCoy to Spock (and thus reveal myself as an occasional trekker) I have come to trust her guesses more than most people's facts.

She has been away from the office for a few weeks - conducting a detailed exercise on budget adequacy - and we met to discuss the results and her forecasts for the rest of the financial year. I tried to stay with her as we sank into the detail, but the complexity is all but overwhelming. More on this in a moment, but first a little context...

The NHS reforms have generated huge amounts of work for finance teams, particularly where CCGs have different geographies than their predecessor PCTs. In Norfolk the ledger had to split vertically to four CCGs, and every budget line potentially required different methodologies - some generated by actual patient activity, some by weighted population, some by geographical responsibilities, and some by service usage. This is in addition to the horizontal splits that all systems have to complete, to separate the PCT ledger into CCG responsibilities, Public Health, Primary Care, and Specialised Commissioning. And all must be done in an environment where money is tight, everyone has some degree of efficiency challenge, and no part of the system can afford to be out of pocket on the splits. What surprises me is not that our budget is wrong, but that it is not far from being right. (I will leave funding formulas for another time...)

Regular readers of the HSJ and other journals will be aware of two current financial headaches for CCGs - legacy debt and the size of the specialised deduction. The legacy debt derives from legal restitution claims - patients who believe they were wrongly denied Continuing Healthcare Funding during a ten year period up to 2008. If the PCT couldn't fully assess the size of these liabilities it could not make provision for them in its accounts and these debts fall on CCGs. Cases are still being processed (at CCG expense) and we expect the final bill for Norwich to be in the region of £3 million. 

The specialised deduction is more complex. PCTs commissioned some specialised services  which are now commissioned by NHS England. CCGs no longer get the bills for these services, and so the corresponding budget has been deducted and transferred to NHS England. It was a very difficult set of calculations without a great deal of time to put into effect, and it is of little surprise that it is not completely right. We think we have been overcharged by approximately 6.5million - approximately 3% of our budget. NHS England are aware and are conducting their own analysis. I am optimistic that we will get most if not all of this returned, but at the same time we have to make plans to cover this potential shortfall. Although there are going to be difficult conversations behind closed doors there are no villains here - just a lot of people trying to cope with a great deal of complex system change while making sure the right amount of budget ends up in each part of the system.

So Norwich CCG has a potential shortfall (in addition to our 6.5million QIPP plan for this year) of £9.5 million from a budget of 215 million - a little under 5%. Savings of this scale were routine during my time in the private sector, but create a real headache for NHS Commissioners. Simply put, none of the options available to me in previous roles offer much of a solution:

1. I can't change input prices because most are set nationally through the National Tariff
2. I can't generate cost efficiencies in service delivery because I'm the purchaser rather than the producer.
3. I can't cut overheads to a meaningful degree because commissioning is not a particularly expensive activity - the total spend on Governing Body, Management, Staff,  premises, auditors etc. is just over 2% of the budget.
4. I can't reduce programme expenditure - even if I wanted to, I can't stop people visiting their GP, hospital, mental health Trust etc. (and I don't want to - I have no interest in leading an organisation that denies care to those that need it)

The answer is of course to modernise, to transform, to change the pathways of care so that patients get the care they need first time, and in an efficient coordinated way. My team and Governing Body clinicians have no shortage of ideas. The constraining factor is that transformation costs money, and the clinical and financial benefits rarely accrue in the same year as the money was spent. The NHS know this and sensibly ring-fenced 2% of the budget to fund transformation activities. But of course this transformation fund becomes a contingency fund when holes begin to appear in the budget. The majority of this year's transformation fund (£3million of it) has been held back to cover the CHC restitution claims.

CCGs have a real appetite for improving local health services, and for investing for the long term to improve health and wellbeing. We will find ways of doing this while balancing the books. But the next time you read a commentator call for scale and pace it is worth reflecting that the financial reality is that unless there is a good evidence base, we must test innovation smaller and slower than we would wish.


I have been invited to speak at the Commissioning Summit next week in Nottingham - a panel discussion on the £20billion challenge facing the NHS. The numbers are bigger but the principles will be the same - I will share our solutions on Thursday, and hope to bring back with me the solutions of others.