By the end of 2005/06, the Trust had accumulated a deficit of £18 million over four years, which it had to recover without strategic health authority (SHA) support in one year to achieve its statutory breakeven duty. As an aspiring foundation trust, it has sought to demonstrate that this level of improvement is sustainable and that it can achieve further challenging cost improvements in 2007/08.
From 2005/06 the Trust started to put together a Cost Improvement Plan (CIP) which was mainly based around the fundamental review of the way in which clinical services were delivered, rather than the more traditional approach to cost improvements. This was identified by extensive involvement of clinicians in identifying areas to improve efficiency whilst maintaining, and, where possible, improving the standard of care for service users.
The redesign of clinical services has focussed on managing system entry, optimising care pathways, improving efficiency and benchmarking targets. The Trust was reorganised into seven clinical directorates, each with a clinical director, general manager, and nurses’ manager, each with clear responsibilities and accountabilities, including the requirement to meet their budgets. Examples of specific developments are:
- Increasing use of day case surgery to treat elective patients
- The opening of a medical admissions and assessment unit, which is used to assess how best to treat patients on arrival and therefore ensure a more joined-up approach with other providers
- Discharging patients more efficiently and effectively
- Closing wards when they are no longer required
These have resulted in permanent reductions to the Trust’s cost base. The trust has been able to achieve its aims by ensuring that all staff, and particularly clinicians, are involved in all stages of the process. Senior managers from both clinical and corporate directorates are extensively involved in agreeing the budget at the start of the year.
Clinicians are actively engaged in identifying areas where savings may be made without compromising patient care, and all managers are held to account for delivering them or finding alternatives. This has ensured that Trust staff ‘buy in’ to delivering the cost improvement programme.
The Trust places great emphasis on the management of the CIPs, and has designated a senior manager to oversee the programme and coordinate full monthly reporting to the Financial Monitoring Group (FMG) and to the monthly Finance and Performance Committee. Business unit managers attend the FMG, which meets monthly and is chaired by the Chief Executive.
They discuss progress on achieving the expected cost improvements, and, where plans are not being delivered, further areas for improvement are identified through discussion and agreement with clinicians. If actions are not delivered, the managers responsible are held to account, with delivery of budgets being a key performance measure for all managers.
The Trust also seeks to anticipate future developments that may affect its financial performance. For example, the Trust held a conference for all affected staff on the implications of reduced monies from SIFT (teaching monies) and how the Trust can deal with this.
The conference enabled the Trust to identify solutions for a problem which will impact in the future. It has also considered and measured the impact of the EU Working Time Directive on junior doctors’ working patterns and associated costs.
The Trust has supported this through introducing new performance improvement and planning processes, and providing improved management information. In 2006/07, for the first time, budgets included income, enabling combined income and expenditure reporting.
The Trust has also sought to directly incentivise business and service managers. For example, business units that generate a surplus can now receive an allocation equivalent to half of it in the next financial year, provided they can demonstrate that the investment will improve services to patients.
These funds can also be used to ‘invest to save’ and generate further savings in the future. This scheme has been a way to give staff ownership of the process whilst using surpluses to benefit the Trust by generating further savings.
The Trust has complemented the improvements in its financial position with a new performance improvement and planning process, using a balanced scorecard system. The process means that the Board can view the Trust’s performance against both financial and non-financial targets, and can drill down to more detailed information where the Trust is failing to achieve targets. This has ensured that the Trust maintains its focus on delivering all targets.
The results of this have been that the Trust has achieved a surplus of £18 million in 2006/07, and a surplus of £10.7 million in 2007/08. It has a comprehensive CIP of £14.7 million planned for 2008/09 which it anticipates will deliver a budgeted surplus of £14.3 million.
At the same time, the Trust has delivered on its non-financial targets. It has greatly reduced the incidence of MRSA rates, and has made considerable progress towards achieving the 18 week referral to treatment target, as well as continuing to meet other national targets. The Trust is applying to be authorised as a foundation trust much earlier than was envisaged at the end of the Foundation Trust Diagnostic Process carried out by the SHA in 2006/07.