Financing the future HSC achieving sustainability?

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1 Financing the future HSC achieving sustainability? Julie Thompson Senior Director of Finance, DoH NI Owen Harkin - Vice Chair of HFMA and Director of Finance, NHSCT

2 The Story so Far DHSSPS Policy & Strategy 4.5+bn HSCB & PHA Commissioning, performance and planning 4+bn Other HSC Providers including: HSCB, PHA, BSO & Voluntary Organisations NI Trusts 5 HSC Provider Trusts & NI Ambulance Service Delivery of services 3+bn Family Health Services 1bn

3 Progress to Date 400m+ Total cash and productivity savings targets for HSC Trusts From 2010/ /15 130m+ Efficiency savings targets for Pharmacy from 2010/ /14 with the implementation of the Pharmaceutical Clinical Effectiveness Programme strategy

4 Evidenced by: Hospital Efficiencies Length of Stay Savings Unit Cost Savings General Medicine - 30% - 26% General Surgery -11% - 1% Trauma & Orthopaedics -9% - 9% Savings in Average Length of Stay (inpatient days) and costs per Finished Consultant Episode (FCE) from 2009/10 to 2013/14 Community Efficiencies Activity Increases Unit Cost Savings District Nursing +13% -15% Health Visiting +8% -13% Physiotherapy +49% -10% Speech & Language +21% -10% Therapy Activity (contacts) and unit cost savings (costs per contact) in 2013/14 compared to 2009/10

5 Evidenced by: Hospital Improvements Activity Based Funding Hospital reference cost comparisons v England still show scope for improvement, but do demonstrate a significant improvement to 2013/14 19% 11% The cost variation of NI reference costs compared to England has reduced from circa 19% in 2009/10 to 11% in 2013/14 an improvement of over 50m in cash terms Day Case Rates Increased from 74.2% (2010/11) to 77.8% (2013/14) Outpatient DNA (Did Not Attend) Rates Reduced from 10.4% (2010/11) to 9.1% (2013/14) Source: NISRA Annual HSC Statistics Other Improvements Domiciliary Care lower cost provision (Expenditure increases have been managed to 3% in real terms compared to an increase of 8% in activity (domiciliary hours of care) from 2009/10 to 2013/14) Management of corporate spend (Real terms reduction in Hospitals overhead spend from 2009/10 to 2013/14)

6 Trends HSC Services - shift in expenditure: Hospital Services -4% Community & Personal Social Services +4% Expenditure as % of total Trusts spend in 2013/14 compared to 2009/10 18% increase In real terms expenditure for A&E services from 2009/10 to 2013/14 44% increase (additional 53m) In real terms Drugs expenditure from 2009/10 to 2013/14 Hospital Services transition: Inpatients -2% Outpatients +6% Day Cases +7% Movement in real terms expenditure by Patient Class from 2009/10 to 2013/14 Community & Personal Social Services Movement in real terms expenditure from 2009/10 to 2013/14 reflecting the transition to community / home settings GP Direct Access Services +87% Supported Living +56% Direct Payments +50% Personal Social Services Movement in activity delivered from 2009/10 to 2013/14: Residential Care -6% Nursing Home Care +7% Domiciliary Care +8%

7 bn The Financial Challenge Going Forward / / / /25 Financial Year Funding (Flat in Real Terms) Funding (Flat in Cash Terms) Projected Spend (in Real Terms)

8 NICON Priorities Ring Fenced Transformation Budget with stable 4-Year Funding agreement; Public Debate on Public Funding models; Commitment that HSC retains any additional funding made available to NI via NHS uplifts; Continue to improve and innovate to drive efficiency, via new ways of working, making best use of resources, workforce & technology, making tough choices to invest differently

9 Financing the Future HSC Achieving Sustainability? Julie Thompson Senior Finance Director Department of Health

10 Financial Context NI continues to receive more in Budgets than it pays for in taxation. The economy is more reliant on the public sector than other areas of the UK. The DOH budget approximates to 5 billion per year on services almost half of the public sector budget.

11 DOH Budget Settlement Profile 2012/ 13 m 2013/ 14 m 2014/ 15 m 2015/ 16 m 2016/ 17 m Budget Settlement Current Expenditure 4, , , , ,880.1 % Uplift 1.5% 2.7% 2.0% 1.9% 2.7% Capital Expenditure

12 DoH Budget as % of NI DEL 50% 49% 48% 47% 46% 45% 44% DoH Budget as % of NI DEL Linear Trend 43% 42% 41% 40%

13 DOH Budget vs Other Departments 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 Other Depts DOH Budget Linear (Other Depts ) Linear (DOH Budget) 2,000,000 1,000,

14 However we face demographic pressures which will place further strain on key services, especially health NI Population

15 Budget 2016/17 Protection for health and social care Degree of protection for policing budget Unprotected baselines faced 5.7% reduction Departmental outcomes ranged from -5.7% for DAERA to +2.7% for DoH

Post June Monitoring The budget for 2016/17 is

IF DOH and its ALBs are to deliver services

16 Post June Monitoring The budget for 2016/17 is still exceptionally challenging for DOH We will have to identify substantial savings in order to supplement the additional budget allocation IF DOH and its ALBs are to deliver services within the available budget... Reform Agenda is critical

17 Capital Programme Acute Site investment for service delivery targets PCC centres SIP identifies 26 Hubs costing 350m 400m SIGNIFICANT DEMANDS ON CAPITAL BUDGET 240m investment pa ICT investment needed to support reform Mental health reform Bamford progress

18 Budget 2016 Multi-year Budget, which will link directly to the PFG Resource DEL Capital DEL Draft budget by Autumn 2016 Will support more medium term financial planning and enable more effective planning by the Trusts and other bodies

19 Ministerial Priorities To radically reform health care services to ensure it delivers affective outcomes for people with a focus on early intervention and prevention To continue to deliver services to the most vulnerable To address the immediate challenges affecting patients and staff in our acute services To champion mental health To reduce health inequalities to enable everyone to have the same chance of living a long and healthy life no matter where they live To develop all-island networks to tap into the benefits that All Ireland health and social care approaches bring

20 These priorities are set within the context of the outcomes focussed draft Programme for Government Framework , including: We have more people working in better jobs We have a more equal society We have high quality public services HEALTH PFG OUTCOMES We give our children and young people the best start in life We care for others and we help those in need We enjoy long, healthy active lives

21 Key issues moving forward Inescapable Pressures Elective Care Transformation Restructuring Bengoa THE FINANCIAL CHALLENGE Service Developments Capital Savings

22 Early thoughts on potential implications of Brexit Workforce Issues Mobility Recruitment Professional regulation Funding Regulation Exchange Rate Procurement Impact on European funding currently received Quality and Safety Medicines Safety Public Health Children s Issues

23 Closing Thoughts Delivery of substantial reform to the health service is key Short term action to be balanced with longer term change All to contribute a task for the Executive as a whole Sustainability is key

24 Owen Harkin Vice Chair, HfMA NI Director of Finance, NHSCT

25 Pressures Facing HSC Trusts Pay & Inflation - Pay & Price Inflation - National Living Wage - Nat Ins / Pensions Service Pressures / Developments Specialist Hospital Developments - Children with disabilities - Looked after children - Adult safeguarding - Resettlements - Health Promotion - Out of hours Increasing Complexity - Co-morbidities - Dementia - Later in life pregnancies Demographics - 5% increase in Population - 21% Increase in > 65s HSC PRESSURES / INVESTMENTS REQUIRED New NICE approved drugs & growth in existing Including:Cancer, HIV, MS & Biologic therapies Workforce - Medical Staffing Shortages - Nurse Recruitment & Retention - Social Care / AHP Staff Long term conditions Diabetes COPD Asthma Stroke Palliative Care New technologies Electronic Care Record Theatre & bed management systems Cancer patient pathways Electronic Prescribing Telecare, telemonitoring

26 The Financial Challenge... Reducing Costs in the system Creating High Performing Organisations, Improving Efficiency and Productivity Taking Costs out of the system New Service Models, Focus on Outcomes and Safety, Disinvestment linked to Effectiveness

28 Michael Porter Value Use of expensive physicians and skilled staff for less skilled activities Delivering care in over-resourced facilities E.g. routine care delivered in expensive hospital settings Over-provision of low- or non-value adding services or tests Sometimes to follow rigid protocols or justify billing Low utilization of expensive physicians, staff, clinical space and equipment, partly due to duplication and service fragmentation Process variation that reduces efficiency without improving outcomes Focus on minimizing the costs of discrete services rather than optimizing the total cost of the care cycle Lack of cost awareness in clinical teams There are numerous cost reduction opportunities that do not require outcome trade-offs, but will actually improve outcomes

29 Value- Different Approach Required WHERE HEALTHCARE DOF S GO TO REDUCE COSTS WHERE OTHER INDUSTRY DOF S GO TO REDUCE COSTS INPUTS TO CORE PROCESSES STAFF SUPPLIES EQUIPMENT CORE PROCESSES AND OUTPUTS TO IMPROVE QUALITY AND OUTCOMES

30 The Relationship of Cost to Outcome in Health Significant Variation in Input Cost Output / Outcome Consultants Cost Junior Doctors Cost Nursing Cost Therapist Cost Patient Health Care support Worker This wide variation in input costs to outputs is not seen in any other industry or sector anywhere in the world which is why its easy to destroy value in Health by reducing input costs in isolation.

31 Questions & Open Discussion

Making this a better place (by tackling disadvantage and driving economic growth)

Making this a better place (by tackling disadvantage and driving economic growth) Doing things differently to have a real impact v12 1 Structure of Presentation Focusing on outcomes with the Programme