Network-level strategies for tackling the deficit of NHS hospitals

The National Health Service (NHS) for England is the world’s largest public healthcare system. However, with approximately half of NHS hospitals projected to be in deficit in 2017/18, a new approach is seems needed to ensure financial stability of NHS hospitals.

Identifying talent

Running a successful hospital requires a clear governance structure. This requires top-down priority setting, performance monitoring to ensure objectives are met, and clear accountability for actions taken. Where NHS management has used a clear governance structure to provide financial stability for a hospital, these expertise should be drawn upon to help transform hospitals in deficit. This seems a better strategy for securing a hospital’s financial future than outsourcing responsibility to private-sector companies who do not have experience managing entire NHS hospitals. A clear example of this can be seen in the case of Hinchingbrooke Healthcare NHS Trust, located in Cambridgeshire. In 2012, the first ever private operational franchise of an NHS hospital was implemented to try to turn around the fortunes of this severely unprofitable hospital with Circle Health taking on operational control. However, the 10-year deal was terminated early by Circle Health in 2015 with them citing that the deal was no longer financially viable under current terms. This coincided with the Care Quality Commission (CQC) recommending that Hinchingbrooke hospital be placed in special measures.

Pooling resources

Instead of privatisation, a more productive approach could be for hospitals in the same region to pool their resources and work together to support one another. Hospital mergers may be a good way to ensure this, and indeed some CCGs and hospitals have merged in recent years to try to increase their financial sustainability. For example, Hinchingbrooke Healthcare NHS Trust has now merged with Peterborough and Stamford Hospitals NHS Foundation Trust to form the North West Anglia NHS Foundation Trust. Hospital mergers have the potential to provide improved efficiency and quality of care through the streamlining of services and stabilization of demand.

Expanding community care

The NHS should also look to further develop community care services to ease the demand pressures that regions such as Cambridgeshire are facing on low profit services. This may be achieved by following through with and further developing upon the recommendations of the NHS Five Year Forward view. This report recommends breaking down the traditional divides between hospital services, primary care and community services.

Considering a hub and spoke model

One model with potential to actualize a system of more integrated care is the hub and spoke model proposed by the Future Hospital Commission (FHC). In their 2013 report the FHC proposed: larger district general hospitals with A&E departments to act as emergency care hubs, local general hospitals to provide a point of step-down inpatient and outpatient care, and well-developed community diagnostic and care service facilities to ease pressure on the system.

I believe that this hub and spoke network model could be extended. The spokes (step-down inpatient and outpatient hospital care and community diagnostic and care services) could specialise in certain treatment and care services. Specialisation and streamlining of routine procedures and care services would allow the spokes to focus on financial and technical efficiency in their chosen area. Collectively the spokes would ease demand on the emergency care hubs. They would also provide the finance to support the entire system by helping to fund the less profitable, more complex procedures of the emergency care hubs. This model has potential but would require restructuring of the NHS network at regional and national levels.


Transforming the network

The financial sustainability of the NHS hospital network is not going to be achieved over night. The process of change should not be rushed, as time will be needed to engage with multiple organisations and plan and necessary changes according to a rigorous timetable. Detailed data analysis and modelling of options for potential restructuring of the hospital care system should be invested in. Opportunities for synergy between hospitals and the projected cost savings from a more collaborative network-based health system should be estimated. The design and implementation of hospital payment tariffs that incentivise improvements in productivity, for example through specialisation of routine care and pooled purchasing could also be explored. The impact on quality of care, in addition to cost savings, should be considered.

Re-structuring the network

With approximately half of NHS hospitals in deficit, there is a clear need for a new strategy to achieve the financial sustainability of NHS hospitals. A new model may take the restructuring of the NHS network at regional and national levels. Government investment and stakeholder (medical professionals, care professionals and the general public) support will be needed. Starting to discuss and model strategies to secure the financial viability of the public healthcare system will be important to prevent the NHS hospital system  from being in perpetual deficit.

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