On Hidden Agenda & STP Reform


In the recent Sustainability & Transformation Plan (STP) ‘consultation’ (I use the word loosely) held in Falmouth on 16/01/2017 a point of order arose which may be of some interest for hose of us sceptical of the ability of the proposed STP changes to deliver the promised £264 million’s-worth of cuts without damaging overall health & social care provision throughout the county.

The backdrop to the point I am about to make is provided by a question raised by Keep Our NHS Public (KNOP) at a similar meeting previously held in Bude – namely

                                How will savings of £264 million be made?

the response elicited was

                           The biggest savings will come from system reform.

& indeed this chimes in with what is perhaps the general impression regarding the necessity for the proposed STP changes: in the various consultative STP documents to date, having repeatedly made the point that if we do nothing, the projected overspend for 2020-1 will be a whopping £264 million, it is only natural to assume that the numerous STP proposals subsequently outlined (again I use the word loosely) are designed precisely to rectify this situation.

However, upon closer inspection, this impression turns out to be several leagues wide of the mark.

One might be forgiven for having overlooked the point of detail which belies the claim that the biggest savings will be made through system-wide (i.e. STP) reform, for it is buried deep down on pages 79-80 of the Outline Business Case.  Here it is:

Over the five year period of the STP, we are projecting that the health & care system in Cornwall will reach financial balance by 2020/21.  This will be achieved through a combination of our transformational priority interventions set out in this Outline business Case, as well as ‘business as usual’ improvements improvement & efficiency savings including Quality, Improvement, Productivity & Prevention (QIPPs) & Cost Improvement Plans (CIP’s).  [These] refer to other initiatives which are distinct from the system transformation to be driven through the priority interventions.  The ‘business as usual’ savings typically relate to organisational efficiencies & do not involve strategic change […].  QIPPs & CIPs for NHS organisations are the main contributions to the total ‘business as usual’ savings of £147 million. (my emphasis)

Thus a full 55% of the proposed overall savings of £264 million by 2020/21 is to be achieved through efficiency savings entirely unrelated to the proposed STP changes per se [1].

This might come as something of a surprise, & is significant for the following reason.  In a previous blog [REF] I commented that there are, perhaps, indeed efficiency savings to be had from the type of organisational re-structuring which would come about through an STP-like amalgamation of health & social care services (this would be rather like introducing a different production technique using the same equipment) - but that, otherwise, there is little to be gained by way of so-called productivity increases of the normal capital-replacement variety operating in the predominantly labour intensive environment of the health & social care sector subject to an intrinsic Cost Disease.  The latter more often than not simply amount to cuts in health & social care provision.  To be therefore told that a full 55% of the total savings of £264 million by 2020/21 are to come through this non-STP channel amounts to an awful stretcher. 

A quick back of the envelope calculation shows that the proposed business-as-usual savings of £147 million over a five year period is about £29 million per year.  For a forecast total health & social care spend of £1.2 billion in 2016/16 (Outline Business Case p 14), this amounts to a sought-after productivity increase of about 2.5% per annum.  Given that the historical trend of productivity growth in the UK, arising principally through investment in capital-intensive manufacturing, is around 2% (& indeed has been running at much less than this figure in all sectors since the recession), to expect a 2.5% year-on-year increase in productivity in the labour intensive health & social care sector frankly beggars belief.

All of which brings us to appoint of tactics.  There is a fair amount of confusion surrounding the current STP proposals.  This is not to be wondered at.  Given that nothing has been finalised [2], despite the headline figure of £264 million, no precise value can be attached to proposed level of eventual financial savings to be realised by 2020/21 in the new model.  On top of this, no reliable information regarding prospective efficiency trade-offs in respect of such financial savings has been forthcoming & which would enable an objective appraisal of the current proposals for STP reform [3].  In short, we find ourselves operating in an data vacuum, with no determinate information as to the overall balance sought between financial targets & the type of efficiency gains to be expected from an implementation of an STP-like model. 

On the other hand, we are in a position to say something definite, based upon past experience, regarding the so-called ‘business as usual’ savings which are in any event set fair to embody the bulk of the efforts to achieve financial normalisation.  We need only examine the previous record.  Have we in the past achieved £29 millions-worth of efficiency savings on a year-on-year basis in our efforts to achieve what were then deemed to be the relevant financial targets? [4]  Have any such cuts as have been managed been met by a corresponding increase in productivity in such a way that public service provision has been unaffected, employment conditions for the workforce been maintained, & privatisation of public services avoided? 

The answer to all of the above questions is, of course, a resounding ‘no’.  There is therefore open to us the more-established accusation that the current proposals for financial reform, inclusive of the STP model, amount to very much of the same type of straightforward cuts to health & social care provision with which we have become despairingly familiar.  &, in the absence of convincing evidence to the contrary, there is little reason to expect that the additional STP reforms per se will be any different in their levels of obfuscation.




[1] & thus too the repeated claim that the projected overspend for 2020/21 will be £264 million if we do nothing is equally misleading.  For we were never about to do nothing.  Rather, we were to proceed with ‘business as usual’ savings to the tune of £147 million (if you believe that).  The corrected figure for overspend is a mere £117 million.

[2] There is talk of selling-off capital assets, but which ones & at what price?  Similarly, there is talk of hiring more staff, but how much labour is to simply redistributed across the new system & in what fashion in order to curb otherwise increasing costs?  The list is seemingly endless.

[3] As an aside, during the recent Falmouth consultation, I had a delightful chat with one of the consultants in question who, having had explained to him precisely what details were needed in order to be in a position to properly evaluate the current STP proposals along the financial savings-productivity frontier, promised to sent me the relevant calculations to this effect.  Sadly, I have to report that as of yet no such information has been received.

[4] At the Falmouth meeting, in response to the points made above, Jackie Pendleton of the CCG commented that we had gained £12 million in efficiency savings in the previous financial year.  If this figure is correct (perhaps I misheard), it is substantially less than the rough £29 million per annum savings over a five-year period projected in the Outline Business Case.  Perhaps it would be better the latter therefore as ‘business as unusual savings’.

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