Description
In this description report to west middlesex hospital nhs trust board turnaround programme.
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Report to West Middlesex Hospital NHS Trust Board
TURNAROUND PROGRAMME
‘Securing Our Future’
22nd March 2011
Agenda Item
Subject: Turnaround Programme 2011?13
Report by: Rakesh Patel
Author Glenn Anley / Andrew Murphy/Rakesh Patel
PURPOSE OF THE REPORT:
To outline the Trust programme to achieve the requisite cost improvement over the two years from April
2011.
KEY POINTS:
? In line with the rest of the public sector the West Middlesex University Hospital NHS Trust (WMUH)
and the local health economy face a considerable financial challenge over the next spending review
period to 2014/15.
? Cost reduction measures of around £22 million will be required over the next four years. This paper
outlines the savings identified for the two years from April 2011.
? Cost improvements have been identified in line with the national ‘Quality, Innovation, Productivity and
Prevention’ (QIPP) agenda.
? Cost savings of £19.7m are required over the two years from April 2011, of which £12.2m must be
delivered in year one
? Advanced plans are in place to deliver a total of £15.3m, of which £11.9m will be delivered in year one.
? Further opportunities of £3m cost reduction have been identified and a further £2.7m of contribution
from NHS income.
? The Board can be assured that:
? Robust performance management and governance arrangement are in place to ensure
delivery
? The plans have been rigorously tested both in terms of deliverability and any potential
adverse consequences
? There are appropriately detailed plans in place for all initiatives
? There is complete synchronicity with budget setting
? The Trust is on course to deliver break even in 2010/11
RECOMMENDATIONS:
Approve the Turnaround Programme plan and note the risks, particularly around income in year two
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Implications:
Contents:
1. Background and National Context
1.1. Overview
1.2. Structural Reform across the NHS
1.3. NHS Efficiency
1.4. NHS Funding Gap
2. NHS Operating Framework 2011?12
2.1. Summary of Operating Framework for the NHS in England 2011?12
2.2. Key announcements
2.3. Long Term Financial Model
3. Developing the Turnaround Programme
3.1. Turnaround Review Process and Risk Reduction
3.2. Turnaround Process Matrix
4. Trust Wide Overview
5. Business Unit Highlights
5.1. Medical Division
5.2. Surgical Division
5.3. Women’s and Children’s Division
5.4. Clinical Support Services Division
5.5. Corporate Directorates
6. Projects Overview
6.1. Clinical Administration
6.2. Beds
6.3. Procurement and Materials Management
6.4. Nurse skill mix and staff review
7. Managing the Change
7.1. Workforce Change
7.2. Governance
Link to Strategic
Objectives
Low overheads
Efficiency and productivity
Generating surpluses to invest in services
Financial £19.7 million over 2 years
HR Significant workforce change
Policy QIPP,
NHS White Paper ‘Liberating Ideas’,
NHS Operating Framework 2010/2011
Staff Involvement Matrix working across the organisation
Staff consultation on changes
Celebrating Success
Risk Register Corporate Risk Register
Business Unit / Departmental Risk Registers
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1. Background and National Context
1.1. Overview
Record levels of investment in the NHS are coming to an end whilst demand
continues to rise. Nationally the NHS has been tasked with identifying £15
to £20 billion (up to 20% of current expenditure) in efficiency savings by the
end of 2014/15. These savings must be realised if the NHS is to meet the
challenges presented by an aging population, and the continued increased
costs of health innovations. This efficiency challenge also comes at a time of
radical structural change across the NHS in England. The government’s
healthcare reforms will see 152 primary care trusts and 10 strategic health
authorities abolished, with GP consortiums responsible for commissioning in
future. In addition, from April 2011 commissioners will be able to purchase
treatment from any willing provider whether this is in the NHS, private
healthcare or charity.
Changes to NHS prices combined with the rapid slow?down in the growth in
NHS funding will create a growing financial pressure on all acute healthcare
providers.
The WMUH will need to identify and deliver improvements in productivity
and efficiency in order to realise ongoing savings without sacrificing clinical
or service quality.
The Trust has identified a requirement to deliver 15% savings over 4 years.
This equates to around £22 million.
As a result of the wider challenges facing the organisation the Trust has
committed to delivering the majority of this savings requirement over the
next two financial years.
1.2. Structural Reform across the NHS
Dec 2010 NHS Outcomes Framework published provisions in Health
Bill to strengthen local democratic legitimacy
Jan 2011 Plans to increase the number of co?operatives and
mutual’s in the NHS, details to be published in the Public
Service Reform White Paper
Apr 2011 Separate PCT commissioning from service provision &
divest community services
Apr 2012 Strategic Health Authorities abolished
NHS Commissioning Board established
Enhanced role for local authorities in integration of health
and care and influencing NHS commissioning
1.3. NHS Efficiency
Dec 2010 Quality, Innovation, Productivity and Prevention (QIPP)
national update
Apr 2012 Monitor launched as NHS economic regulator
Nov 2012 NHS Commissioning Board makes allocations to GP consortia
for 2013/14
Apr 2013 Full responsibility for commissioning given to GP consortia
Monitor responsible for setting efficient prices
Primary Care Trusts abolished
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1.4. NHS Funding Gap
The October 2010 Spending Review settlement means the NHS will receive a
1% real term increase in funding each year for the four years to 2014/15. An
aging population, increasing demands for care, health technology
developments, inflationary pressures and the costs of implementing
government policy will create a shortfall in funding between the required
and actual funding allocation. This will create a projected £10 to 15 billion
funding gap across the NHS by 2014.
J Appleby, C Ham, C, Imison, M Jennings et al (2010) Improving NHS productivity: More with the
same not more of the same
2. NHS Operating Framework 2011?12
2.1. Summary of Operating Framework for the NHS in England 2011?12
The Operating Framework sets out a framework for the NHS during the
2011/12 financial period. This will be a year of significant transition for the
NHS and outlines the scale of the challenge faced by the national health
economy.
2.2. Key announcements:
Reductions to running costs: The Operating Framework refers to reductions
in the “overall running costs of the new NHS superstructure,” which will
decrease by one third by 2014/15. This means the scale of cuts required is
equal to £1.7bn worth of “running costs” across the NHS.
Primary Care Trust funds: PCT’s will withhold 2% of their annual allocation
to “create financial flexibility and headroom to support change.”
Productivity challenge: The NHS faces an emerging spending gap projected
to reach £15?20 billion by the end of 2014/15. NHS Trusts must meet this by
delivering significant improvements in productivity.
NHS Tariff Reduction: National tariffs will be reduced by 1.5% overall
between 2010/11 and 2011/12.This figure is achieved through the reduction
of all tariffs by 1%, setting tariffs below the national average level and off
setting pay and price uplifts by approximately 2%.
Competition: From April 2011 the national tariff will become a maximum
reimbursement rate for treatment rather that a fixed price allowing for price
competition among NHS providers.
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2.3. Long Term Financial Model
Long term financial modeling enables the organisation to focus strategic
decisions in line with the financial outlook.
The Turnaround programme forms an integral part of the Trust’s medium
term financial plan.
In developing the plan, the Trust has made a number of assumptions based
on national guidance on items such as tariff deflator, pay and non?pay
inflation and contingency. Local cost pressures have also been included.
Income assumptions are based some of the following:
? North West London Sector QIPP plans
? Discussions with commissioners
? Local knowledge based on historic trends
? National and local KPIs
As shown in the table (Right), the Trust is planning to deliver a surplus of
£1.3m in 2011/12 and £0.3m in 2012/13. In order to achieve this, Cost
Improvement Plans of £12.2m and £7.5m are required in 2011/12 and
2012/13 respectively.
The required cost improvement plans will be made through a combination
of savings delivered through the Turnaround programme and cost reduction
following the decommissioning of services. The Trust is able to reduce costs
by £1.0m and £0.5m in 2011/12 and 2012/13 respectively following the
decommissioning of services.
Income and Expenditure Plan
2011/12
£m
2012/13
£m
Income
Clinical income 130.4 130.4
Other income 12.3 9.9
Total Income 142.7 140.3
Expenditure
Operating Expenses (129.9) (128.3)
Non?Operating Expenses (11.5) (11.7)
Total Expenditure (141.4) (140.0)
Surplus 1.3 0.3
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3. Developing the Turnaround Programme
As it became clear that the Trust, in line with other providers, would need to
save in the region of 15% over 4 years, the Trust Board agreed that the
approach needed to take account of a number of factors:
? It is unlikely that a traditional ‘salami slicing’ savings programme
would be successful
? Clinical frontline services must be prioritised over non?clinical
support expenditure
? Emphasis should be placed upon making savings by reducing waste,
improving productivity and enhancing value for money
To ensure adequate focus on developing the programme and preparing the
organisation for significant change, and in recognition of the scale of the
challenge, the Board appointed a Turnaround Director, (Andrew Murphy of
Kingsgate Interim, Advisory and Investment), in September 2010.
The Turnaround programme was launched by the Chief Executive in
September 2010 with a series of staff meetings emphasising the key
principle underpinning the programme: “better for patients, better for
costs”.
It was recognised that the necessary change could not be achieved without
the active involvement of staff at all levels. A key part of this has become
the “celebrating success” scheme. A matrix approach to developing
initiatives was adopted, where corporate areas and clinical business units
were asked to generate ideas around the following challenges:
Clinical
Services Value
for Money
Clinical
Services
Productivity
Non Clinical
Staff
Productivity
and VFM
Workforce
Development
Cost Control
Avoidance
Ward
Development
Theatres
Medical Staffing
AHP / Pharmacy /
Radiographer
• Standardised better planning of leave
• Improved rosta management
• Reduction in agency usage
• Increased use of specialist nursing
• Enhanced role for support workers.
• Review of medical staffing numbers and grades based upon an assessment
of service, teaching and other requirements, roster changes, moving to team
based job plans etc
• Best practice review
• Bed management review
• Visual management on wards
• Productive model ward project
• IP pathway & DC improvement (protocol based)
• Emergency surgical review
• Enhanced recovery after surgery
• Reduction in delayed discharges
• Increasing proportion of surgical time
• Ensuring all lists run to time
• Ensure all theatre lists are optimally booked
• Better pre?operative assessment to reduce cancellations on day of operation
• Reducing DNAs
• Rationalising staffing patterns to match demand
• Review of utilisation of outpatient services, reducing DNAs
• Pathway based reviews of outpatients and diagnostics applying lean methodology.
Inpatient stay
Theatres
Outpatients
Radiology
Process Review of non clinical areas
Management cost reduction
• All non?clinical staff
Performance
management
• Rigorous performance management
Procurement &
Materials
Management
Blood Products
Medicines
Management
Pathology
Ongoing programme achieve reductions in waste, unit cost and volume used
Reduce demand for blood products by speeding up physical access
Ongoing programme based upon reducing waste, unit cost and volume used
Reduction in demand based upon protocols and regular clinical audit
7
The Board’s early commitment to make greater savings in non clinical areas
(thereby reducing the pressure upon clinical areas) has led to the
development of plans to reduce staff costs in corporate directorates by 30%.
In addition plans are being finalised to save 38% in other administrative
areas across the Trust.
An ‘Away Day’ was held in November 2010 to work through each ‘initial
challenge’ in more detail. Following this, each clinical area produced a draft
cost improvement programme in December 2010. These plans were
thoroughly scrutinised and the financial gap closed by means of priority
budget setting sessions in late December and early January. Project plans
were worked up for these initiatives in January 2011 and again scrutinised in
detail by the Director of Finance and Turnaround Director in February 2011
prior to being included in the final cost improvement plan. The
implementation timeline and financial value of each plan has accordingly
been rigorously scrutinised and can therefore be seen as risk adjusted.
These final plans are being incorporated into the budget setting process so
that there is a complete correlation between agreed budgets and the cost
improvement plan.
The overall programme will be performance managed and reported by:
? Corporate area
? Division
? Theme
? Clinical administration
? Beds
? Back office
? Procurement and materials management
? Clinical productivity and value for money
3.1. Turnaround Review Process and Risk Reduction
September
October
November
December
January February
Initial Challenge
and
Communication
Challenge
Themes
Away Day
Draft –?Divisional Projects
Directorate Budget Setting
Development
of Plans
Finalised Risk Reduced Board Approve
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3.2. Turnaround Process Matrix
Board Themes:
? Clinical Administration
? Beds
? Back Office
? Procurement &Materials Management
? Clinical Productivity and Value for
Money
Examples:
? Clinical Services Productivity
? Clinical Services VFM
? Cost Control / Avoidance
? Non?Clinical Staff Productivity and VFM
Categories Examples:
? Management cost reduction
? Ward Development
? Medicines Management
? Clinical Administration
? Medical Staffing
QIPP Examples:
? Back Office
? Clinical Support Rationalisation
? Pathology
? Planned Care
Department Examples:
? Radiology ? IT
? Outpatients ? Theatres
? Pharmacy ? Histopathology
Service level Division level Strategic level
Initial Challenge
Categories
QIPP
Divisions
Cost Improvement
Projects
(CIP’s)
9
4. Trust Wide Overview
The Trust has identified a total of £15.4m of cost improvements for the two
years from April 2011. This is against a requirement of £19.7m, based upon
the activity contracts with PCTs. Given the process that the organisation has
been through to identify, test and hone the improvement plans, the Trust
Board can be assured that with appropriate management action, the full
£15.4m will be delivered.
The assumed income position for 2011?12 has worsened by around £1.5m
as contracts have been finalised in the second week of March 2011. This
mainly results from differing assumptions around the impact of seasonality,
the likely level of income growth, and the reductions in the number of
procedures carried out because of changes in guidelines. It is recommended
that the Trust sets an income plan at the revised contract level, and
therefore adjusts the cost reduction requirement by £1.5m to £19.7m. Of
this, £12.2m is required to be delivered in year one.
The Board will recall that there are advanced plans in place to deliver
£10.6m in year one. This has been supplemented by advancing the
implementation of a number of schemes to increase savings in year one.
This includes full implementation of the Clinical Administration Project and,
most notably, advancing the closure of a ward from April 2012 to June 2011.
These measures combined will deliver a total of £11.9m in year one.
The overall two year gap increases from £2.9m to £4.3m.
It is important to highlight the relative savings made across different work
groups in the trust, as this reinforces the Trust Board commitment to
minimise the impact of savings on front line clinical services. For instance,
the 7% reduction in nurse costs in the wards is enabled by a planned overall
reduction in Administrative and Management posts of 35%.
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Clinical Services Productivity
& Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Decommissioning
Other
Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.0
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
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0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
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Saving Profile:
Theme
Year 1
Savings
Year 2
Savings Total
Clinical Services Productivity & Value for Money 5,212 997 6,209
Back?office 1,553 800 2,353
Clinical Administration 1,491 745 2,236
Procurement & Materials Management 789 38 826
Beds 1,263 224 1,487
Decommissioning 1,000 500 1,500
Other 650 150 800
Total 11,958 3,454 15,411
CIP Requirement 12,200 7,500 19,700
Variance (242) (4,046) (4,289)
Closing the gap
Bridging the gap Year 1 Year 2 Total
Gap ?242 ?4,046 ?4,288
New cost reduction initiatives
Back office (further 15% reduction in corporate areas) 50 600 650
Procurement & Materials Management 200 600 800
Medical Staff Review 150 300 450
Specialist Teams review 100 100 200
Additional Departmental initiatives 250 250 500
Income initiatives
NHS income contribution @18% (having increased surplus) 1,400 1,400
Higher trustwide margins (1%) ? service line improvement 1,300 1,300
Total initiatives 750 4,550 5,300
Contingency ?500 ?500 ?1,000
Variance 8 4 12
Having brought forward £1.3m of plans from year two, the year two gap has
increased to £4m, giving an overall gap of £4.3m. In order to close this gap there
are a number of areas being investigated:
Back office
This would involve targeting a further 15% saving in corporate back office
functions. A full review will be undertaken in April 2011 to ascertain the most
effective way of making such a reduction. This will not delay implementation of
established plans in this area.
Procurement and Materials Management
The original two year target for this area was £2m set against total non?pay
expenditure of £44m. The procurement department are initially targeting a
reduction in the £12m consumable spend. There will be a Chairman and Non?
executive review of the procurement plans in March/April 2011. Following this the
target will be reassessed.
Medical staff review
The secured savings plan involves reducing non?clinical staffing levels by about 30%
and most clinical areas by 7%. However the established plan only reduces medical
staff expenditure by about 2%. A further £450k reduction would increase the
overall percentage to 3.5%. This will be achieved by a trust wide review of medical
staff cover arrangements and more closely matching job plans and operational
arrangements to contract.
Specialist Team review
A team based multi?disciplinary review will take place across April and May 2011 to
establish the most effective way to maintain quality whilst reducing costs by
changing skill mix between and within professions.
Additional Departmental initiatives
Each Division and department will be allocated a further modest savings target
based upon relative budget.
Income contribution
It is difficult to envisage cash releasing cost reduction over the first two years of
more than about £17m (just under 12% of turnover). Any greater reduction would
adversely impact the balance between fixed and variable costs. It is therefore the
case (in line with the Commissioners strategy) that about £2.7m will be required as
a contribution from additional income. This will require explicit commissioner sign?
off.
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5. Business Unit Highlights
5.1. Medical Division
2?Year Savings Identified ? £4.1m
0 1,000 2,000 3,000
Clinical Services Productivity &
Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Other Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
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0.00 10.00 20.00 30.00 40.00 50.00 60.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
Saving profile:
? Year 1 = £3.3m
? Year 2 = £0.8m
? Staffing Reduction = 62.52 wte
£482k ? Medical Staffing: This will be achieved by a combination of:
? Tight control of locum and agency medical staffing costs at a
Divisional level
? Permanent disestablishment of a number of posts across the
Division enabled by changes in practice
? Taking full advantage of opportunities to affect skill?mix changes
£806k ? Nurse Staffing: A skill mix review across the medical areas will
deliver significant savings by aligning staffing levels and competencies to
closely match the needs of our patients. Changes to the nursing rotas
have been agreed by the ward sisters, matrons and director of nursing
and will begin in April 2011.
£350k ? Site Management and Discharge Team: These services are being
reorganised in order to place resources and decision making as close to
the patient as possible. The change enables investment in frontline staff,
the extension of the critical care outreach team to 24hr per day, whilst
maintaining a lean central bed management team.
£483k ? Trust Wide: Drugs and Pathology: demand management
strategies will support a 10% reduction in pathology requesting and 5%
reduction in blood product testing.
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5.2. Surgical Division
2 Year Savings Identified £2.4m
0 500 1,000 1,500 2,000
Clinical Services Productivity &
Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Other Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
0.0
50.0
100.0
150.0
200.0
250.0
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0.00 10.00 20.00 30.00 40.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
Saving profile:
? Year 1 = £2.2m
? Year 2 = £0.2m
? Staffing Reduction = 37.8 wte
£287k ? Beds: A five day short stay surgical ward will be created on
Richmond ward. The ward will open Monday 07:30 and close Friday 21:00.
This will reduce existing pay and non pay costs. Associated processes will
be revised to support this model of care.
£687k ? Theatres & Outpatients: Improvements in productivity and
output in surgical theatres and outpatients clinics will support overall
reductions in both theatre sessions and outpatient clinics. This will reduce
existing pay and non pay costs
£130k ? Out of Hours Arrangements: Creating a single ‘on call’ rota for
Senior House Officers in surgical specialties from the currently separate,
General Surgery and Orthopaedics rotas.
£565k ? Staffing Review: A skill mix review across all wards in the divisions
will deliver significant savings by standardising shift patterns and changing
skill mix.
£280k ? Non Pay: A multitude of smaller non pay projects will deliver
savings through innovative process improvements. In Cancer Services a
secure Imaging Exchange Portal has been created to enable images to be
shared between organisations reducing the need for courier services.
13
5.3. Women and Children Division
0 500 1,000 1,500
Clinical Services Productivity &
Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Other Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
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1
2
J
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1
3
F
e
b
?
1
3
M
a
r
?
1
3
0.00 0.50 1.00 1.50 2.00 2.50 3.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
2 Year Savings Identified £1.1m
Saving profile:
? Year 1 = £1.0m
? Year 2 = £0.1m
? Staffing Reduction = 6.8 wte
£426k ? Skill Mix Review:
Significant savings are being delivered in maternity services by
changing midwifery skill?mix, standardising shift patterns, and
changing from Registrar to Consultant on?site cover.
A skill mix review of the Queen Marys Maternity Unit, Starlight
Paediatric ward and Sunshine Day Unit, Special Care Baby Unit
(SCBU) and Genito?Urinary Medicine (GUM) service will deliver
significant savings by a combination of changed skill mix and
standardised shift patterns.
£365k ? Non Pay: A number of smaller non pay projects will deliver
savings through innovative process improvements. Improvements in
medicines management, procurement and pathology will all support
reductions in expenditure. Examples include the negotiation of
cheaper combined tests in sexual health and the removal of the
antenatal PET panel to encourage appropriate requesting of
imaging.
14
5.4. Clinical Support Services Division
0 500 1,000 1,500 2,000 2,500
Clinical Services Productivity &
Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Other Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
A
p
r
?
1
1
M
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y
?
1
1
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A
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1
2
S
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p
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1
2
O
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t
?
1
2
N
o
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?
1
2
D
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2
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1
3
F
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b
?
1
3
M
a
r
?
1
3
?20.00 0.00 20.00 40.00 60.00 80.00 100.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
2 Year Savings Identified £3.4m
Saving profile:
? Year 1 = £2.4m
? Year 2 = £1.0m
? Staffing Reduction = 104 wte
£120k ? Out of Hours Arrangements: Converting the current on?
call system to a five day shift system in line with nursing staff. The
current system of Radiographer cover out of hours has been in
place for over 20 years. Rationalising the clinical support required
will deliver savings and reduce the need to provide on?call
payments.
£221k ? Medical Staffing: The demand management strategy will
see the pathology and radiology test budgets devolved to the
clinical directorates. Successful reductions in clinical demand
across the organization will facilitate a corresponding reduction in
Imaging Programmed Activities (PA’s). These are planned for year
two, following changes in demand.
£40k ? Phlebotomy Service: Incorporating the phlebotomy activity
into the wards existing workforce capacity through workforce
redesign.
15
5.5. Corporate Directorates
0 200 400 600 800 1,000 1,200
Finance, IM&T,
Procurement,
Facilities & Estates
Workforce &
Development
Department of
Nursing & Midwifery
Corporate Services
Year 1 Savings
Year 2 Savings
0.00 10.00 20.00 30.00 40.00 50.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
A
p
r
?
1
1
M
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?
1
1
J
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2
F
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1
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M
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?
1
2
A
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r
?
1
2
M
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?
1
2
J
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?
1
2
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1
2
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2
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2
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1
3
F
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b
?
1
3
M
a
r
?
1
3
2 Year Savings Identified £2.1m
Saving profile:
? Year 1 = £1.4m
? Year 2 = £0.7m
? Staffing Reduction = 50 wte
£2.1m ? Workforce Review: Each Corporate area has carried out a
review of future structure, staff numbers and skill mix required for
the future. As a whole this delivers a reduction in cost of 30% over
two years.
Many of the changes will be enabled by strengthening the ability of
clinical front?line areas to manage their own affairs, by devolving
responsibility and authority.
In addition savings will be made by improving systems and
processes, and by ensuring that non?value added activities are
minimised.
Careful planning, communication, implementation and evaluation
will ensure that all core back office functions are maintained with
continuity of service assured.
16
6. Projects Overview
6.1. Clinical Administration
2 Year Savings Identified £2.2m
Saving profile:
? Year 1 = £1.5m
? Year 2 = £0.7m
? Staffing Reduction = 83.6 wte
In 2010/11 the West Middlesex Hospital will spend £6.14 million in pay for
Administrative & Clerical (A&C) staff in clinical divisions, employing around
240 wte staff. There are real opportunities to improve value for money
within this support function, whilst at the same time addressing the quality
issues that the current inefficient and duplicative processes have for both
our patients and the Trust itself.
Staffing levels will reduce over time, with the £2.24 million saving equating
to around 84 wte band 4 staff. However, taking into account the staff who
will have left for various reasons by April 2011, the vacancy freeze which has
been in place since October 2010 and the contribution of non pay savings,
the actual reduction is likely to be in the region of 60 wte staff.
The project is split into 5 main sub areas, each of which is described below.
An informal month long consultation at the start of the project enabled
consultants and other key stakeholders to highlight the inefficiencies,
inequalities and frustrations apparent in the current systems. Away days for
detailed processes mapping have been held with key representatives.
These have been supplemented with scoping meetings with potential
technology suppliers and Trusts that have already implemented new
processes, in order to validate assumptions. The design phase is due to
complete by April 2011 with the publication of the consultation paper, and
detailed implementation plans for each main work stream will follow.
Central Administration
Covering the current booking and reception roles, this work stream aims to
reduce the inefficiencies related to, amongst others, multiple bookings
(currently a quarter of all appointments are re?arranged), a slow referral
grading / acceptance process and individual reception desks. Bookings for
all elective outpatient areas (with the exception of maternity and sexual
health) will be made centrally, working to one streamlined process. A
centralised reception desk, supplemented with self check?in technology
allowing for sub 10 second check in, will assist the fast, efficient flow of
elective and outpatients into and out of the hospital, and the convenient
centralisation of all administrative processes for the patient.
This work stream also covers the ward administration function.
Letter Management
Covering the current medical secretarial role, the letter production aspects
of the function will be supplied via a digital dictation system that is
integrated with the Trust PAS systems. This will eliminate the intensive
manual merge process that is required with the current dictation service
used in some specialties. The PA?type role, which was clearly the most
valued aspect relayed during the initial interviews, will be extended with
band 5 and 4 staff linked to specialties (or specialty clusters depending on
activity demand) to provide a service both to the consultant team and
patients who require assistance moving through the system. A managed
17
mail service will be implemented to further reduce the manual burden on
our secretarial staff, enabling letters to be printed, stuffed and posted for
less than the current cost of postage.
Medical Records
Over 30 wte staff currently work within the medical records function, with a
significant element of other A&C staff time taken up with managing physical
records. Whilst the library function will remain separate, central bookings
will take over prepping clinics. This increases their responsibility and
accountability for ensuring clinics are appropriately prepared. The
beginnings of a document management system, linked to the data output
from the new digital dictation system is achievable within 2 years, at which
point it may be possible to reduce the requirement for paper records in
outpatients. Over a longer timescale there is the potential for the
document management system to evolve into a Trust EPR, which will bring
with it further substantial savings.
Central Telephony
The implementation of a centralised switchboard will improve the service
we currently offer callers, with the resolution of enquiry at the earliest
possible point. We will work with Ecovert, the provider of our switchboard
services to find the best way to both improve customer service and cost.
A number of capital and IT?related projects will need to be implemented
before the full savings can be realised and the transition process from the
current systems to the new way of working will need to be closely
monitored and managed. The biggest challenge is likely to be the continued
engagement, acceptance and buy in of employees, particularly the
consultant body who will need to be reassured that the project can deliver
an improved service whilst at the same time releasing savings.
6.2. Beds
2 Year Savings Identified £1.5m
Saving profile:
? Year 1 = £1.3m
? Year 2 = £0.2m
The Trust has reduced the number of beds by 45 over the last 18 months,
and reduced length of stay overall by around 8%. In addition the day case
rate has improved during 2010/11 from 77% to 85%.
Internal analysis suggests that if we achieve upper quartile performance for
length of stay we can reduce the bed base by a further 50 beds. This is
supported by NHS Innovation and Improvement metrics. The Trust has also
been successful in minimising the need for escalation beds over the winter
of 2010/11.
The potential improvement identified will need to be realised as soon as
possible within the plan. The Trust is therefore planning to close a medical
ward by the end of May 2011 to coincide with the usual seasonal reduction
in demand. In addition plans are in place to will reduce a surgical ward from
7 to 5 days, concentrating on pathway specific service developments to
improve length of stay. To support this, each Division will be required to
develop a length of stay reduction plan concentrating upon national best
practice in areas such as Enhanced Recovery after surgery, Fracture Neck of
Femur and long term conditions.
This is in line with our plans with our commissioners to review and reform
patient pathways reducing the need for admission as well as supporting
early discharge. The development of these plans will be clinically led within
the strengthened Clinical Divisions.
18
6.3. Procurement and Materials Management
2 Year Savings Identified £0.65m
Saving profile:
? Year 1 = £0.6m
? Year 2 = £0.05m
This is against a savings requirement of £1.8million over two years. The
procurement project will deliver improvements in productivity through
through:
Rationalisation, Standardisation and Control:
The rationalisation of service lines on the trust electronic ordering system is
central to delivering savings in non pay. To date over 45,000 lines have been
deactivated and restrictions have been placed on orders. A number of
process controls have been implemented limiting product variation and user
choice. This will ensure standard product usage facilitating average unit cost
reductions through economies of scale. A simple process and procedure will
be developed as part of this project to introduce new and alternative
products into the organisation to meet the changing clinical requirements.
Procurement continue to work with clinical staff to identify alternative cost
effective products.
Contracts and Materials Management:
Savings will be delivered across the three main areas of contracting through
a revised pricing strategy and ongoing supplier negotiations around
maintenance, ICT, Clinical imaging and EBME contracts.
Historically the hospital has typically maintained fully comprehensive service
support coverage on every maintenance contract. Cost benefit analysis will
be applied to all new or expired service contracts to ensure maximum value
for money is achieved. This will involve reviewing support requirements
with end users and renegotiating better terms with suppliers at every
opportunity. Procurement will actively seek to identify alternative suppliers
and opportunities for equipment standardisation where possible.
Closing the Gap:
There is a gap of £1.1 million remaining against the procurement savings
target. Procurement have reviewed seven million pounds of the twelve
million pounds ‘inlfuencable spend’ and have achieved savings of around
nine percent. However, given that the review targeted the areas with
greater potential for savings, there are likely to be diminishing returns as
this review progresses; a reasonable estimate would be around £250k. In
addition there are further opportunities in relation to maintenance and
other technical issues of around £40?100k.
It is evident that the savings gap is unlikely to be closed fully with these
initiatives, and a gap of £500?900k will remain.
The Trust will therefore will need to make savings from a more radical
review of the costs of large private and NHS contracts.
19
6.4 Nurse skill mix and staffing review
2 Year Savings Identified £1.7m
Saving profile:
? Year 1 = £1.66m
? Year 2 = £0.04m
The Trust has been able to reduce the savings requirement for nurse staffing
from the global 15% to 7%, by targeting greater reductions in back?office
functions. Therefore the Ward and Department Sisters and Matrons were
asked to identify the best way to reduce nurse staff costs by 7% and:
? Provide a quality service
? Ensure that ward Sisters were supernumerary (to support quality)
? Where possible protect staff with a permanent contract
A core team was established in October 2011 from finance, nursing and
human resources to support the Sisters and Matrons. The Matrons agreed a
formula and methodology to apply to each ward and department review:
• Right skill mix for the ward
• Right numbers of nurses at any one time
• Most cost efficient shift pattern: long days, 1.5 hour breaks per long
shift
• Standard “leave” budget uplift of 17%
• Average of 38 days leave
• 3 days study leave
• 3 days short?term sick leave or other leave
• Sisters responsible for managing short term sickness, corporate
“pot” for chronic sickness
This ensures that the Sister has sufficient budget to manage that which they
have influence over, whilst a separate corporate budget is maintained to
support unusual circumstances. Each Sister then reviewed their individual
establishment in terms of skill mix and numbers and, once costed,
presented it, with the support of their Matron, to a panel for approval. This
panel consisted of the Director of Nursing, the Turnaround Director, and
representatives of both Finance and Human Resources. Once approved in
terms of both quality and cost, the budget was signed by all parties. This
gives the Sisters and Matrons an assured budget for 2011?12, which they
are able to manage. All areas are implementing the agreed changes from
the first week of April 2011 at the latest.
The total WTE figures around the change are shown below.
WTE changes
Currently used (including bank) 710
Agreed Establishments (includes surgery 5 day ward) 642
Permanent staff employed 629
Overall reduction 68
Change made by reducing bank use
This demonstrates that in broad terms the change can be managed by a
reduction in bank staff use. There are, however, some areas where there
are changes in skill mix which will take some time to fully implement.
Matrons are able to bid for short term support from a transitional fund held
corporately.
The Director of Nursing will work with the Matrons and Sisters across the
coming year to ensure that, through initiatives such as the Productive
Series, opportunities to “Release time to care” are materialised; further
enhancing the quality of care.
20
7. Managing the Change
7.1. Workforce change
The majority of staff cost savings are produced from three key workforce
plans:
Nurse skill mix and rosta review: Each clinical area has reviewed its skill mix
and rosta arrangements against the workload of the department. This
bottom up recosting of ward, theatres outpatients and midwifery staffing
has produced a saving of 7% across the Trust.
Although there is a total reduction from forecast outturn expenditure to the
new establishment of 80 wte, the new establishment is still greater than the
number of staff in post across the organization. The change will therefore be
largely achieved by reducing the use of ‘bank’ staff in the first instance and
by a gradual change in skill mix as vacancies and staff turnover allow. The
cost of this change has been fully accounted for.
Corporate Directorate Review: There are a large number of relatively small
organisational changes involving a total reduction of 50 wte staff across the
next two financial years. Almost half of these changes have been affected
through the use of the NHS MARS scheme or non replacement of vacant
posts. The further changes are planned across the next two financial years.
Clinical Administration Review: This is the most significant single change to
the workforce across the organization involving a reduction of 80 of the 240
established posts. The details of the change are still in development and will
be announced in a formal consultation document at the beginning of April
2011. In preparation for managing this change the Trust has not recruited to
administrative and clerical posts since October 2010. This will create greater
flexibility in making the workforce changes
.
7.2. Governance
Standardised project documentation has been used throughout the
turnaround programme to ensure a consistent and thorough approach.
Each (excel) Project Workbook includes:
? Summary sheet with basic project information
? Quality and Safety Assessment
? Gantt chart
? Workforce plan (where required)
? Financial plan
Each project has a lead manager, with an individual named senior manager
or corporate director accountable for each project.
Each of the divisions and project leads has been tasked with developing a
robust governance structure involving regular structured meetings to
ensure the delivery of the agreed cost improvement projects. This will be
supported by wider corporate level governance arrangements that will
maintain external scrutiny to ensure projects remains on target to deliver
identified savings. Regular formal reviews are scheduled with the
Turnaround Director. Assuming satisfactory progress against cost
improvement plans these formal reviews will gradually reduce in regularity
during 2011/12.
A monthly report will be provided to the Executive Board and the Finance
and Performance Committee as part of the Integrated Performance Report.
doc_864602600.pdf
In this description report to west middlesex hospital nhs trust board turnaround programme.
1
Report to West Middlesex Hospital NHS Trust Board
TURNAROUND PROGRAMME
‘Securing Our Future’
22nd March 2011
Agenda Item
Subject: Turnaround Programme 2011?13
Report by: Rakesh Patel
Author Glenn Anley / Andrew Murphy/Rakesh Patel
PURPOSE OF THE REPORT:
To outline the Trust programme to achieve the requisite cost improvement over the two years from April
2011.
KEY POINTS:
? In line with the rest of the public sector the West Middlesex University Hospital NHS Trust (WMUH)
and the local health economy face a considerable financial challenge over the next spending review
period to 2014/15.
? Cost reduction measures of around £22 million will be required over the next four years. This paper
outlines the savings identified for the two years from April 2011.
? Cost improvements have been identified in line with the national ‘Quality, Innovation, Productivity and
Prevention’ (QIPP) agenda.
? Cost savings of £19.7m are required over the two years from April 2011, of which £12.2m must be
delivered in year one
? Advanced plans are in place to deliver a total of £15.3m, of which £11.9m will be delivered in year one.
? Further opportunities of £3m cost reduction have been identified and a further £2.7m of contribution
from NHS income.
? The Board can be assured that:
? Robust performance management and governance arrangement are in place to ensure
delivery
? The plans have been rigorously tested both in terms of deliverability and any potential
adverse consequences
? There are appropriately detailed plans in place for all initiatives
? There is complete synchronicity with budget setting
? The Trust is on course to deliver break even in 2010/11
RECOMMENDATIONS:
Approve the Turnaround Programme plan and note the risks, particularly around income in year two
2
Implications:
Contents:
1. Background and National Context
1.1. Overview
1.2. Structural Reform across the NHS
1.3. NHS Efficiency
1.4. NHS Funding Gap
2. NHS Operating Framework 2011?12
2.1. Summary of Operating Framework for the NHS in England 2011?12
2.2. Key announcements
2.3. Long Term Financial Model
3. Developing the Turnaround Programme
3.1. Turnaround Review Process and Risk Reduction
3.2. Turnaround Process Matrix
4. Trust Wide Overview
5. Business Unit Highlights
5.1. Medical Division
5.2. Surgical Division
5.3. Women’s and Children’s Division
5.4. Clinical Support Services Division
5.5. Corporate Directorates
6. Projects Overview
6.1. Clinical Administration
6.2. Beds
6.3. Procurement and Materials Management
6.4. Nurse skill mix and staff review
7. Managing the Change
7.1. Workforce Change
7.2. Governance
Link to Strategic
Objectives
Low overheads
Efficiency and productivity
Generating surpluses to invest in services
Financial £19.7 million over 2 years
HR Significant workforce change
Policy QIPP,
NHS White Paper ‘Liberating Ideas’,
NHS Operating Framework 2010/2011
Staff Involvement Matrix working across the organisation
Staff consultation on changes
Celebrating Success
Risk Register Corporate Risk Register
Business Unit / Departmental Risk Registers
3
1. Background and National Context
1.1. Overview
Record levels of investment in the NHS are coming to an end whilst demand
continues to rise. Nationally the NHS has been tasked with identifying £15
to £20 billion (up to 20% of current expenditure) in efficiency savings by the
end of 2014/15. These savings must be realised if the NHS is to meet the
challenges presented by an aging population, and the continued increased
costs of health innovations. This efficiency challenge also comes at a time of
radical structural change across the NHS in England. The government’s
healthcare reforms will see 152 primary care trusts and 10 strategic health
authorities abolished, with GP consortiums responsible for commissioning in
future. In addition, from April 2011 commissioners will be able to purchase
treatment from any willing provider whether this is in the NHS, private
healthcare or charity.
Changes to NHS prices combined with the rapid slow?down in the growth in
NHS funding will create a growing financial pressure on all acute healthcare
providers.
The WMUH will need to identify and deliver improvements in productivity
and efficiency in order to realise ongoing savings without sacrificing clinical
or service quality.
The Trust has identified a requirement to deliver 15% savings over 4 years.
This equates to around £22 million.
As a result of the wider challenges facing the organisation the Trust has
committed to delivering the majority of this savings requirement over the
next two financial years.
1.2. Structural Reform across the NHS
Dec 2010 NHS Outcomes Framework published provisions in Health
Bill to strengthen local democratic legitimacy
Jan 2011 Plans to increase the number of co?operatives and
mutual’s in the NHS, details to be published in the Public
Service Reform White Paper
Apr 2011 Separate PCT commissioning from service provision &
divest community services
Apr 2012 Strategic Health Authorities abolished
NHS Commissioning Board established
Enhanced role for local authorities in integration of health
and care and influencing NHS commissioning
1.3. NHS Efficiency
Dec 2010 Quality, Innovation, Productivity and Prevention (QIPP)
national update
Apr 2012 Monitor launched as NHS economic regulator
Nov 2012 NHS Commissioning Board makes allocations to GP consortia
for 2013/14
Apr 2013 Full responsibility for commissioning given to GP consortia
Monitor responsible for setting efficient prices
Primary Care Trusts abolished
4
1.4. NHS Funding Gap
The October 2010 Spending Review settlement means the NHS will receive a
1% real term increase in funding each year for the four years to 2014/15. An
aging population, increasing demands for care, health technology
developments, inflationary pressures and the costs of implementing
government policy will create a shortfall in funding between the required
and actual funding allocation. This will create a projected £10 to 15 billion
funding gap across the NHS by 2014.
J Appleby, C Ham, C, Imison, M Jennings et al (2010) Improving NHS productivity: More with the
same not more of the same
2. NHS Operating Framework 2011?12
2.1. Summary of Operating Framework for the NHS in England 2011?12
The Operating Framework sets out a framework for the NHS during the
2011/12 financial period. This will be a year of significant transition for the
NHS and outlines the scale of the challenge faced by the national health
economy.
2.2. Key announcements:
Reductions to running costs: The Operating Framework refers to reductions
in the “overall running costs of the new NHS superstructure,” which will
decrease by one third by 2014/15. This means the scale of cuts required is
equal to £1.7bn worth of “running costs” across the NHS.
Primary Care Trust funds: PCT’s will withhold 2% of their annual allocation
to “create financial flexibility and headroom to support change.”
Productivity challenge: The NHS faces an emerging spending gap projected
to reach £15?20 billion by the end of 2014/15. NHS Trusts must meet this by
delivering significant improvements in productivity.
NHS Tariff Reduction: National tariffs will be reduced by 1.5% overall
between 2010/11 and 2011/12.This figure is achieved through the reduction
of all tariffs by 1%, setting tariffs below the national average level and off
setting pay and price uplifts by approximately 2%.
Competition: From April 2011 the national tariff will become a maximum
reimbursement rate for treatment rather that a fixed price allowing for price
competition among NHS providers.
5
2.3. Long Term Financial Model
Long term financial modeling enables the organisation to focus strategic
decisions in line with the financial outlook.
The Turnaround programme forms an integral part of the Trust’s medium
term financial plan.
In developing the plan, the Trust has made a number of assumptions based
on national guidance on items such as tariff deflator, pay and non?pay
inflation and contingency. Local cost pressures have also been included.
Income assumptions are based some of the following:
? North West London Sector QIPP plans
? Discussions with commissioners
? Local knowledge based on historic trends
? National and local KPIs
As shown in the table (Right), the Trust is planning to deliver a surplus of
£1.3m in 2011/12 and £0.3m in 2012/13. In order to achieve this, Cost
Improvement Plans of £12.2m and £7.5m are required in 2011/12 and
2012/13 respectively.
The required cost improvement plans will be made through a combination
of savings delivered through the Turnaround programme and cost reduction
following the decommissioning of services. The Trust is able to reduce costs
by £1.0m and £0.5m in 2011/12 and 2012/13 respectively following the
decommissioning of services.
Income and Expenditure Plan
2011/12
£m
2012/13
£m
Income
Clinical income 130.4 130.4
Other income 12.3 9.9
Total Income 142.7 140.3
Expenditure
Operating Expenses (129.9) (128.3)
Non?Operating Expenses (11.5) (11.7)
Total Expenditure (141.4) (140.0)
Surplus 1.3 0.3
6
3. Developing the Turnaround Programme
As it became clear that the Trust, in line with other providers, would need to
save in the region of 15% over 4 years, the Trust Board agreed that the
approach needed to take account of a number of factors:
? It is unlikely that a traditional ‘salami slicing’ savings programme
would be successful
? Clinical frontline services must be prioritised over non?clinical
support expenditure
? Emphasis should be placed upon making savings by reducing waste,
improving productivity and enhancing value for money
To ensure adequate focus on developing the programme and preparing the
organisation for significant change, and in recognition of the scale of the
challenge, the Board appointed a Turnaround Director, (Andrew Murphy of
Kingsgate Interim, Advisory and Investment), in September 2010.
The Turnaround programme was launched by the Chief Executive in
September 2010 with a series of staff meetings emphasising the key
principle underpinning the programme: “better for patients, better for
costs”.
It was recognised that the necessary change could not be achieved without
the active involvement of staff at all levels. A key part of this has become
the “celebrating success” scheme. A matrix approach to developing
initiatives was adopted, where corporate areas and clinical business units
were asked to generate ideas around the following challenges:
Clinical
Services Value
for Money
Clinical
Services
Productivity
Non Clinical
Staff
Productivity
and VFM
Workforce
Development
Cost Control
Avoidance
Ward
Development
Theatres
Medical Staffing
AHP / Pharmacy /
Radiographer
• Standardised better planning of leave
• Improved rosta management
• Reduction in agency usage
• Increased use of specialist nursing
• Enhanced role for support workers.
• Review of medical staffing numbers and grades based upon an assessment
of service, teaching and other requirements, roster changes, moving to team
based job plans etc
• Best practice review
• Bed management review
• Visual management on wards
• Productive model ward project
• IP pathway & DC improvement (protocol based)
• Emergency surgical review
• Enhanced recovery after surgery
• Reduction in delayed discharges
• Increasing proportion of surgical time
• Ensuring all lists run to time
• Ensure all theatre lists are optimally booked
• Better pre?operative assessment to reduce cancellations on day of operation
• Reducing DNAs
• Rationalising staffing patterns to match demand
• Review of utilisation of outpatient services, reducing DNAs
• Pathway based reviews of outpatients and diagnostics applying lean methodology.
Inpatient stay
Theatres
Outpatients
Radiology
Process Review of non clinical areas
Management cost reduction
• All non?clinical staff
Performance
management
• Rigorous performance management
Procurement &
Materials
Management
Blood Products
Medicines
Management
Pathology
Ongoing programme achieve reductions in waste, unit cost and volume used
Reduce demand for blood products by speeding up physical access
Ongoing programme based upon reducing waste, unit cost and volume used
Reduction in demand based upon protocols and regular clinical audit
7
The Board’s early commitment to make greater savings in non clinical areas
(thereby reducing the pressure upon clinical areas) has led to the
development of plans to reduce staff costs in corporate directorates by 30%.
In addition plans are being finalised to save 38% in other administrative
areas across the Trust.
An ‘Away Day’ was held in November 2010 to work through each ‘initial
challenge’ in more detail. Following this, each clinical area produced a draft
cost improvement programme in December 2010. These plans were
thoroughly scrutinised and the financial gap closed by means of priority
budget setting sessions in late December and early January. Project plans
were worked up for these initiatives in January 2011 and again scrutinised in
detail by the Director of Finance and Turnaround Director in February 2011
prior to being included in the final cost improvement plan. The
implementation timeline and financial value of each plan has accordingly
been rigorously scrutinised and can therefore be seen as risk adjusted.
These final plans are being incorporated into the budget setting process so
that there is a complete correlation between agreed budgets and the cost
improvement plan.
The overall programme will be performance managed and reported by:
? Corporate area
? Division
? Theme
? Clinical administration
? Beds
? Back office
? Procurement and materials management
? Clinical productivity and value for money
3.1. Turnaround Review Process and Risk Reduction
September
October
November
December
January February
Initial Challenge
and
Communication
Challenge
Themes
Away Day
Draft –?Divisional Projects
Directorate Budget Setting
Development
of Plans
Finalised Risk Reduced Board Approve
8
3.2. Turnaround Process Matrix
Board Themes:
? Clinical Administration
? Beds
? Back Office
? Procurement &Materials Management
? Clinical Productivity and Value for
Money
Examples:
? Clinical Services Productivity
? Clinical Services VFM
? Cost Control / Avoidance
? Non?Clinical Staff Productivity and VFM
Categories Examples:
? Management cost reduction
? Ward Development
? Medicines Management
? Clinical Administration
? Medical Staffing
QIPP Examples:
? Back Office
? Clinical Support Rationalisation
? Pathology
? Planned Care
Department Examples:
? Radiology ? IT
? Outpatients ? Theatres
? Pharmacy ? Histopathology
Service level Division level Strategic level
Initial Challenge
Categories
QIPP
Divisions
Cost Improvement
Projects
(CIP’s)
9
4. Trust Wide Overview
The Trust has identified a total of £15.4m of cost improvements for the two
years from April 2011. This is against a requirement of £19.7m, based upon
the activity contracts with PCTs. Given the process that the organisation has
been through to identify, test and hone the improvement plans, the Trust
Board can be assured that with appropriate management action, the full
£15.4m will be delivered.
The assumed income position for 2011?12 has worsened by around £1.5m
as contracts have been finalised in the second week of March 2011. This
mainly results from differing assumptions around the impact of seasonality,
the likely level of income growth, and the reductions in the number of
procedures carried out because of changes in guidelines. It is recommended
that the Trust sets an income plan at the revised contract level, and
therefore adjusts the cost reduction requirement by £1.5m to £19.7m. Of
this, £12.2m is required to be delivered in year one.
The Board will recall that there are advanced plans in place to deliver
£10.6m in year one. This has been supplemented by advancing the
implementation of a number of schemes to increase savings in year one.
This includes full implementation of the Clinical Administration Project and,
most notably, advancing the closure of a ward from April 2012 to June 2011.
These measures combined will deliver a total of £11.9m in year one.
The overall two year gap increases from £2.9m to £4.3m.
It is important to highlight the relative savings made across different work
groups in the trust, as this reinforces the Trust Board commitment to
minimise the impact of savings on front line clinical services. For instance,
the 7% reduction in nurse costs in the wards is enabled by a planned overall
reduction in Administrative and Management posts of 35%.
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Clinical Services Productivity
& Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Decommissioning
Other
Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.0
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
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0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
10
Saving Profile:
Theme
Year 1
Savings
Year 2
Savings Total
Clinical Services Productivity & Value for Money 5,212 997 6,209
Back?office 1,553 800 2,353
Clinical Administration 1,491 745 2,236
Procurement & Materials Management 789 38 826
Beds 1,263 224 1,487
Decommissioning 1,000 500 1,500
Other 650 150 800
Total 11,958 3,454 15,411
CIP Requirement 12,200 7,500 19,700
Variance (242) (4,046) (4,289)
Closing the gap
Bridging the gap Year 1 Year 2 Total
Gap ?242 ?4,046 ?4,288
New cost reduction initiatives
Back office (further 15% reduction in corporate areas) 50 600 650
Procurement & Materials Management 200 600 800
Medical Staff Review 150 300 450
Specialist Teams review 100 100 200
Additional Departmental initiatives 250 250 500
Income initiatives
NHS income contribution @18% (having increased surplus) 1,400 1,400
Higher trustwide margins (1%) ? service line improvement 1,300 1,300
Total initiatives 750 4,550 5,300
Contingency ?500 ?500 ?1,000
Variance 8 4 12
Having brought forward £1.3m of plans from year two, the year two gap has
increased to £4m, giving an overall gap of £4.3m. In order to close this gap there
are a number of areas being investigated:
Back office
This would involve targeting a further 15% saving in corporate back office
functions. A full review will be undertaken in April 2011 to ascertain the most
effective way of making such a reduction. This will not delay implementation of
established plans in this area.
Procurement and Materials Management
The original two year target for this area was £2m set against total non?pay
expenditure of £44m. The procurement department are initially targeting a
reduction in the £12m consumable spend. There will be a Chairman and Non?
executive review of the procurement plans in March/April 2011. Following this the
target will be reassessed.
Medical staff review
The secured savings plan involves reducing non?clinical staffing levels by about 30%
and most clinical areas by 7%. However the established plan only reduces medical
staff expenditure by about 2%. A further £450k reduction would increase the
overall percentage to 3.5%. This will be achieved by a trust wide review of medical
staff cover arrangements and more closely matching job plans and operational
arrangements to contract.
Specialist Team review
A team based multi?disciplinary review will take place across April and May 2011 to
establish the most effective way to maintain quality whilst reducing costs by
changing skill mix between and within professions.
Additional Departmental initiatives
Each Division and department will be allocated a further modest savings target
based upon relative budget.
Income contribution
It is difficult to envisage cash releasing cost reduction over the first two years of
more than about £17m (just under 12% of turnover). Any greater reduction would
adversely impact the balance between fixed and variable costs. It is therefore the
case (in line with the Commissioners strategy) that about £2.7m will be required as
a contribution from additional income. This will require explicit commissioner sign?
off.
11
5. Business Unit Highlights
5.1. Medical Division
2?Year Savings Identified ? £4.1m
0 1,000 2,000 3,000
Clinical Services Productivity &
Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Other Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
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0.00 10.00 20.00 30.00 40.00 50.00 60.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
Saving profile:
? Year 1 = £3.3m
? Year 2 = £0.8m
? Staffing Reduction = 62.52 wte
£482k ? Medical Staffing: This will be achieved by a combination of:
? Tight control of locum and agency medical staffing costs at a
Divisional level
? Permanent disestablishment of a number of posts across the
Division enabled by changes in practice
? Taking full advantage of opportunities to affect skill?mix changes
£806k ? Nurse Staffing: A skill mix review across the medical areas will
deliver significant savings by aligning staffing levels and competencies to
closely match the needs of our patients. Changes to the nursing rotas
have been agreed by the ward sisters, matrons and director of nursing
and will begin in April 2011.
£350k ? Site Management and Discharge Team: These services are being
reorganised in order to place resources and decision making as close to
the patient as possible. The change enables investment in frontline staff,
the extension of the critical care outreach team to 24hr per day, whilst
maintaining a lean central bed management team.
£483k ? Trust Wide: Drugs and Pathology: demand management
strategies will support a 10% reduction in pathology requesting and 5%
reduction in blood product testing.
12
5.2. Surgical Division
2 Year Savings Identified £2.4m
0 500 1,000 1,500 2,000
Clinical Services Productivity &
Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Other Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
0.0
50.0
100.0
150.0
200.0
250.0
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0.00 10.00 20.00 30.00 40.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
Saving profile:
? Year 1 = £2.2m
? Year 2 = £0.2m
? Staffing Reduction = 37.8 wte
£287k ? Beds: A five day short stay surgical ward will be created on
Richmond ward. The ward will open Monday 07:30 and close Friday 21:00.
This will reduce existing pay and non pay costs. Associated processes will
be revised to support this model of care.
£687k ? Theatres & Outpatients: Improvements in productivity and
output in surgical theatres and outpatients clinics will support overall
reductions in both theatre sessions and outpatient clinics. This will reduce
existing pay and non pay costs
£130k ? Out of Hours Arrangements: Creating a single ‘on call’ rota for
Senior House Officers in surgical specialties from the currently separate,
General Surgery and Orthopaedics rotas.
£565k ? Staffing Review: A skill mix review across all wards in the divisions
will deliver significant savings by standardising shift patterns and changing
skill mix.
£280k ? Non Pay: A multitude of smaller non pay projects will deliver
savings through innovative process improvements. In Cancer Services a
secure Imaging Exchange Portal has been created to enable images to be
shared between organisations reducing the need for courier services.
13
5.3. Women and Children Division
0 500 1,000 1,500
Clinical Services Productivity &
Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Other Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
A
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0.00 0.50 1.00 1.50 2.00 2.50 3.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
2 Year Savings Identified £1.1m
Saving profile:
? Year 1 = £1.0m
? Year 2 = £0.1m
? Staffing Reduction = 6.8 wte
£426k ? Skill Mix Review:
Significant savings are being delivered in maternity services by
changing midwifery skill?mix, standardising shift patterns, and
changing from Registrar to Consultant on?site cover.
A skill mix review of the Queen Marys Maternity Unit, Starlight
Paediatric ward and Sunshine Day Unit, Special Care Baby Unit
(SCBU) and Genito?Urinary Medicine (GUM) service will deliver
significant savings by a combination of changed skill mix and
standardised shift patterns.
£365k ? Non Pay: A number of smaller non pay projects will deliver
savings through innovative process improvements. Improvements in
medicines management, procurement and pathology will all support
reductions in expenditure. Examples include the negotiation of
cheaper combined tests in sexual health and the removal of the
antenatal PET panel to encourage appropriate requesting of
imaging.
14
5.4. Clinical Support Services Division
0 500 1,000 1,500 2,000 2,500
Clinical Services Productivity &
Value for Money
Back?office
Clinical Administration
Procurement & Materials
Management
Beds
Other Year 1 Savings (£'000)
Year 2 Savings (£'000)
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
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?20.00 0.00 20.00 40.00 60.00 80.00 100.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
2 Year Savings Identified £3.4m
Saving profile:
? Year 1 = £2.4m
? Year 2 = £1.0m
? Staffing Reduction = 104 wte
£120k ? Out of Hours Arrangements: Converting the current on?
call system to a five day shift system in line with nursing staff. The
current system of Radiographer cover out of hours has been in
place for over 20 years. Rationalising the clinical support required
will deliver savings and reduce the need to provide on?call
payments.
£221k ? Medical Staffing: The demand management strategy will
see the pathology and radiology test budgets devolved to the
clinical directorates. Successful reductions in clinical demand
across the organization will facilitate a corresponding reduction in
Imaging Programmed Activities (PA’s). These are planned for year
two, following changes in demand.
£40k ? Phlebotomy Service: Incorporating the phlebotomy activity
into the wards existing workforce capacity through workforce
redesign.
15
5.5. Corporate Directorates
0 200 400 600 800 1,000 1,200
Finance, IM&T,
Procurement,
Facilities & Estates
Workforce &
Development
Department of
Nursing & Midwifery
Corporate Services
Year 1 Savings
Year 2 Savings
0.00 10.00 20.00 30.00 40.00 50.00
A&C
AHP/PTB/Pharmacist
Management
Medical
Nursing
Other staff
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
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2 Year Savings Identified £2.1m
Saving profile:
? Year 1 = £1.4m
? Year 2 = £0.7m
? Staffing Reduction = 50 wte
£2.1m ? Workforce Review: Each Corporate area has carried out a
review of future structure, staff numbers and skill mix required for
the future. As a whole this delivers a reduction in cost of 30% over
two years.
Many of the changes will be enabled by strengthening the ability of
clinical front?line areas to manage their own affairs, by devolving
responsibility and authority.
In addition savings will be made by improving systems and
processes, and by ensuring that non?value added activities are
minimised.
Careful planning, communication, implementation and evaluation
will ensure that all core back office functions are maintained with
continuity of service assured.
16
6. Projects Overview
6.1. Clinical Administration
2 Year Savings Identified £2.2m
Saving profile:
? Year 1 = £1.5m
? Year 2 = £0.7m
? Staffing Reduction = 83.6 wte
In 2010/11 the West Middlesex Hospital will spend £6.14 million in pay for
Administrative & Clerical (A&C) staff in clinical divisions, employing around
240 wte staff. There are real opportunities to improve value for money
within this support function, whilst at the same time addressing the quality
issues that the current inefficient and duplicative processes have for both
our patients and the Trust itself.
Staffing levels will reduce over time, with the £2.24 million saving equating
to around 84 wte band 4 staff. However, taking into account the staff who
will have left for various reasons by April 2011, the vacancy freeze which has
been in place since October 2010 and the contribution of non pay savings,
the actual reduction is likely to be in the region of 60 wte staff.
The project is split into 5 main sub areas, each of which is described below.
An informal month long consultation at the start of the project enabled
consultants and other key stakeholders to highlight the inefficiencies,
inequalities and frustrations apparent in the current systems. Away days for
detailed processes mapping have been held with key representatives.
These have been supplemented with scoping meetings with potential
technology suppliers and Trusts that have already implemented new
processes, in order to validate assumptions. The design phase is due to
complete by April 2011 with the publication of the consultation paper, and
detailed implementation plans for each main work stream will follow.
Central Administration
Covering the current booking and reception roles, this work stream aims to
reduce the inefficiencies related to, amongst others, multiple bookings
(currently a quarter of all appointments are re?arranged), a slow referral
grading / acceptance process and individual reception desks. Bookings for
all elective outpatient areas (with the exception of maternity and sexual
health) will be made centrally, working to one streamlined process. A
centralised reception desk, supplemented with self check?in technology
allowing for sub 10 second check in, will assist the fast, efficient flow of
elective and outpatients into and out of the hospital, and the convenient
centralisation of all administrative processes for the patient.
This work stream also covers the ward administration function.
Letter Management
Covering the current medical secretarial role, the letter production aspects
of the function will be supplied via a digital dictation system that is
integrated with the Trust PAS systems. This will eliminate the intensive
manual merge process that is required with the current dictation service
used in some specialties. The PA?type role, which was clearly the most
valued aspect relayed during the initial interviews, will be extended with
band 5 and 4 staff linked to specialties (or specialty clusters depending on
activity demand) to provide a service both to the consultant team and
patients who require assistance moving through the system. A managed
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mail service will be implemented to further reduce the manual burden on
our secretarial staff, enabling letters to be printed, stuffed and posted for
less than the current cost of postage.
Medical Records
Over 30 wte staff currently work within the medical records function, with a
significant element of other A&C staff time taken up with managing physical
records. Whilst the library function will remain separate, central bookings
will take over prepping clinics. This increases their responsibility and
accountability for ensuring clinics are appropriately prepared. The
beginnings of a document management system, linked to the data output
from the new digital dictation system is achievable within 2 years, at which
point it may be possible to reduce the requirement for paper records in
outpatients. Over a longer timescale there is the potential for the
document management system to evolve into a Trust EPR, which will bring
with it further substantial savings.
Central Telephony
The implementation of a centralised switchboard will improve the service
we currently offer callers, with the resolution of enquiry at the earliest
possible point. We will work with Ecovert, the provider of our switchboard
services to find the best way to both improve customer service and cost.
A number of capital and IT?related projects will need to be implemented
before the full savings can be realised and the transition process from the
current systems to the new way of working will need to be closely
monitored and managed. The biggest challenge is likely to be the continued
engagement, acceptance and buy in of employees, particularly the
consultant body who will need to be reassured that the project can deliver
an improved service whilst at the same time releasing savings.
6.2. Beds
2 Year Savings Identified £1.5m
Saving profile:
? Year 1 = £1.3m
? Year 2 = £0.2m
The Trust has reduced the number of beds by 45 over the last 18 months,
and reduced length of stay overall by around 8%. In addition the day case
rate has improved during 2010/11 from 77% to 85%.
Internal analysis suggests that if we achieve upper quartile performance for
length of stay we can reduce the bed base by a further 50 beds. This is
supported by NHS Innovation and Improvement metrics. The Trust has also
been successful in minimising the need for escalation beds over the winter
of 2010/11.
The potential improvement identified will need to be realised as soon as
possible within the plan. The Trust is therefore planning to close a medical
ward by the end of May 2011 to coincide with the usual seasonal reduction
in demand. In addition plans are in place to will reduce a surgical ward from
7 to 5 days, concentrating on pathway specific service developments to
improve length of stay. To support this, each Division will be required to
develop a length of stay reduction plan concentrating upon national best
practice in areas such as Enhanced Recovery after surgery, Fracture Neck of
Femur and long term conditions.
This is in line with our plans with our commissioners to review and reform
patient pathways reducing the need for admission as well as supporting
early discharge. The development of these plans will be clinically led within
the strengthened Clinical Divisions.
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6.3. Procurement and Materials Management
2 Year Savings Identified £0.65m
Saving profile:
? Year 1 = £0.6m
? Year 2 = £0.05m
This is against a savings requirement of £1.8million over two years. The
procurement project will deliver improvements in productivity through
through:
Rationalisation, Standardisation and Control:
The rationalisation of service lines on the trust electronic ordering system is
central to delivering savings in non pay. To date over 45,000 lines have been
deactivated and restrictions have been placed on orders. A number of
process controls have been implemented limiting product variation and user
choice. This will ensure standard product usage facilitating average unit cost
reductions through economies of scale. A simple process and procedure will
be developed as part of this project to introduce new and alternative
products into the organisation to meet the changing clinical requirements.
Procurement continue to work with clinical staff to identify alternative cost
effective products.
Contracts and Materials Management:
Savings will be delivered across the three main areas of contracting through
a revised pricing strategy and ongoing supplier negotiations around
maintenance, ICT, Clinical imaging and EBME contracts.
Historically the hospital has typically maintained fully comprehensive service
support coverage on every maintenance contract. Cost benefit analysis will
be applied to all new or expired service contracts to ensure maximum value
for money is achieved. This will involve reviewing support requirements
with end users and renegotiating better terms with suppliers at every
opportunity. Procurement will actively seek to identify alternative suppliers
and opportunities for equipment standardisation where possible.
Closing the Gap:
There is a gap of £1.1 million remaining against the procurement savings
target. Procurement have reviewed seven million pounds of the twelve
million pounds ‘inlfuencable spend’ and have achieved savings of around
nine percent. However, given that the review targeted the areas with
greater potential for savings, there are likely to be diminishing returns as
this review progresses; a reasonable estimate would be around £250k. In
addition there are further opportunities in relation to maintenance and
other technical issues of around £40?100k.
It is evident that the savings gap is unlikely to be closed fully with these
initiatives, and a gap of £500?900k will remain.
The Trust will therefore will need to make savings from a more radical
review of the costs of large private and NHS contracts.
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6.4 Nurse skill mix and staffing review
2 Year Savings Identified £1.7m
Saving profile:
? Year 1 = £1.66m
? Year 2 = £0.04m
The Trust has been able to reduce the savings requirement for nurse staffing
from the global 15% to 7%, by targeting greater reductions in back?office
functions. Therefore the Ward and Department Sisters and Matrons were
asked to identify the best way to reduce nurse staff costs by 7% and:
? Provide a quality service
? Ensure that ward Sisters were supernumerary (to support quality)
? Where possible protect staff with a permanent contract
A core team was established in October 2011 from finance, nursing and
human resources to support the Sisters and Matrons. The Matrons agreed a
formula and methodology to apply to each ward and department review:
• Right skill mix for the ward
• Right numbers of nurses at any one time
• Most cost efficient shift pattern: long days, 1.5 hour breaks per long
shift
• Standard “leave” budget uplift of 17%
• Average of 38 days leave
• 3 days study leave
• 3 days short?term sick leave or other leave
• Sisters responsible for managing short term sickness, corporate
“pot” for chronic sickness
This ensures that the Sister has sufficient budget to manage that which they
have influence over, whilst a separate corporate budget is maintained to
support unusual circumstances. Each Sister then reviewed their individual
establishment in terms of skill mix and numbers and, once costed,
presented it, with the support of their Matron, to a panel for approval. This
panel consisted of the Director of Nursing, the Turnaround Director, and
representatives of both Finance and Human Resources. Once approved in
terms of both quality and cost, the budget was signed by all parties. This
gives the Sisters and Matrons an assured budget for 2011?12, which they
are able to manage. All areas are implementing the agreed changes from
the first week of April 2011 at the latest.
The total WTE figures around the change are shown below.
WTE changes
Currently used (including bank) 710
Agreed Establishments (includes surgery 5 day ward) 642
Permanent staff employed 629
Overall reduction 68
Change made by reducing bank use
This demonstrates that in broad terms the change can be managed by a
reduction in bank staff use. There are, however, some areas where there
are changes in skill mix which will take some time to fully implement.
Matrons are able to bid for short term support from a transitional fund held
corporately.
The Director of Nursing will work with the Matrons and Sisters across the
coming year to ensure that, through initiatives such as the Productive
Series, opportunities to “Release time to care” are materialised; further
enhancing the quality of care.
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7. Managing the Change
7.1. Workforce change
The majority of staff cost savings are produced from three key workforce
plans:
Nurse skill mix and rosta review: Each clinical area has reviewed its skill mix
and rosta arrangements against the workload of the department. This
bottom up recosting of ward, theatres outpatients and midwifery staffing
has produced a saving of 7% across the Trust.
Although there is a total reduction from forecast outturn expenditure to the
new establishment of 80 wte, the new establishment is still greater than the
number of staff in post across the organization. The change will therefore be
largely achieved by reducing the use of ‘bank’ staff in the first instance and
by a gradual change in skill mix as vacancies and staff turnover allow. The
cost of this change has been fully accounted for.
Corporate Directorate Review: There are a large number of relatively small
organisational changes involving a total reduction of 50 wte staff across the
next two financial years. Almost half of these changes have been affected
through the use of the NHS MARS scheme or non replacement of vacant
posts. The further changes are planned across the next two financial years.
Clinical Administration Review: This is the most significant single change to
the workforce across the organization involving a reduction of 80 of the 240
established posts. The details of the change are still in development and will
be announced in a formal consultation document at the beginning of April
2011. In preparation for managing this change the Trust has not recruited to
administrative and clerical posts since October 2010. This will create greater
flexibility in making the workforce changes
.
7.2. Governance
Standardised project documentation has been used throughout the
turnaround programme to ensure a consistent and thorough approach.
Each (excel) Project Workbook includes:
? Summary sheet with basic project information
? Quality and Safety Assessment
? Gantt chart
? Workforce plan (where required)
? Financial plan
Each project has a lead manager, with an individual named senior manager
or corporate director accountable for each project.
Each of the divisions and project leads has been tasked with developing a
robust governance structure involving regular structured meetings to
ensure the delivery of the agreed cost improvement projects. This will be
supported by wider corporate level governance arrangements that will
maintain external scrutiny to ensure projects remains on target to deliver
identified savings. Regular formal reviews are scheduled with the
Turnaround Director. Assuming satisfactory progress against cost
improvement plans these formal reviews will gradually reduce in regularity
during 2011/12.
A monthly report will be provided to the Executive Board and the Finance
and Performance Committee as part of the Integrated Performance Report.
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