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Free prescriptions, free car parking, the end of the internal market – it is not difficult to stumble upon big similarities in health policy (or policy aspirations) within the devolved nations. With the NHS in Wales moving towards a single system like Scotland’s and Northern Ireland adopting a mixed approach, it is logical they should face many similar issues. The HFMA gathered together finance leaders from the three devolved nations to share experiences and take a first step in learning from each other. 

While the conference, which took place in Edinburgh in June, was primarily about the devolved nations, it became clear that the NHS in England faced similar problems to that in the three other countries. All shared the uncertainty over funding and their ability to find efficiency savings over the next few years.

Each had its own cost pressures. Scottish HFMA chairman David Carson said NHS Scotland had a national efficiency target of 2% but there were also local efficiency targets and cost pressures. In Wales there was concern over the rising cost of continuing care, where spending had increased from £75m in 2003/04 to a forecast of just under £250m in the past financial year.

Northern Ireland branch chair Lesley Mitchell said her local NHS had several unique cost pressures, such as the impact of the Troubles on mental health, which led to high rates of prescriptions for antidepressants.

Other speakers said Northern Ireland had the largest and fastest rising birth rate in the UK and faced a demographic time bomb with a doubling of the over-85 population in the next few years. To bring Northern Ireland’s health and social services up to the same level as those in England would, they claimed, require an additional £600m a year and with little hope of that gap being bridged soon, the point was fast approaching when radical changes in provision would have to be made.

However, it was the impact of the economic slowdown and the demands for greater efficiency savings that dominated proceedings. In Wales,

where a restructure merging commissioners and providers will be completed in October, savings of more than 6% are required in 2009/10. Wales will have to make efficiencies across its public sector of about £216m (1.6%) in 2010/11 and ministers are working out how that should be shared out.

There was also the requirement for further efficiency savings on the horizon, which could equate to cash-releasing savings of between 5% and 7%. At the same time, NHS Wales did not have the capital to invest in strategic solutions.

The recent rationalisation of the Northern Irish health structure had led to a requirement for savings of £53m. This equated to 1,700 jobs lost or 25% savings in back office staff. Its comprehensive spending review efficiency target is 3% a year (£344m).

Northern Ireland, like the other nations, faced a Barnett squeeze, whereby even if overall public spending grew by 0.7% (as promised by the chancellor in the last Budget), Northern Ireland would receive growth of around 0.2%. Health’s share of this would not be straightforward. The set-up of the power-sharing executive means each minister would have to be able to claim victory when their department’s budgets were agreed.

HFMA chairman Bill Shields said that though the English NHS appeared to be in a stronger financial position than those in the devolved nations, it too was facing a squeeze after 2010/11.

The NHS in England is working on the worst-case scenario. There are two possible outcomes: either ‘flat real’. where growth would only cover the most basic inflationary pressures, or ‘flat cash’, where there would be no growth at all.

‘In the South West we are modelling using figures between 0% and 2%. That doesn’t seem like a huge problem but when you think that this year and next we will get 5.5% on average and most providers have seen income growth of between 7.5% to 10%, you can see we will have to deliver real cash-releasing efficiency savings.’

While the political realities in Wales and Scotland meant market mechanisms would not be considered, delegates heard they were not necessarily appropriate in countries with smaller populations.

Northern Ireland had looked at introducing a tariff system – even going so far as to run two quarters of data covering £700m of acute spending in shadow form. But the potential shifts of income had such great potential to financially destabilise some of the trusts that tariffs have been put on the back burner for the time being. It would cost £1.5m to introduce a system based on tariffs, but there was scepticism over whether it would improve healthcare.

The ‘closeness’ and additional scrutiny from local politicians was felt keenly in all the devolved nations and it was pointed out that devolved nations were never more than two years away from an election – whether to Westminster or their local assembly.

However, the finance managers at the meeting did more than vent frustrations. They also shared examples of best practice from their home patches.

With Northern Ireland having just completed restructuring and Wales in the process of doing so, Northern Ireland health and social care board finance director Paul Cummings – who has gone through three mergers – shed light on how to avoid mistakes when creating a new finance team.

Scottish government health directorates finance director John Matheson said Scotland was hoping to reduce its costs by improving quality (see above).

‘There is agreement that it is not quality that costs, it is lack of quality,’ he said. ‘There is a strong focus on Lean processes and getting ownership within organisations. There have been some positive outcomes – not coming from directors but from members of staff. Significant service redesign has come from porters and domestics.’

Steve Elliot, Welsh Assembly government NHS finance division head of finance (management accounts), said the finance function was responding to the efficiency challenge. NHS finance directors had recently launched a financial sustainability project, looking at four key targets set out in the NHS Wales annual operating framework, including length of stay and day case rates.

‘We are focusing on driving efficiency through the acute sector. We are looking at 25% of the spend – about £1.3bn – and we are also looking at procurement, continuing healthcare and primary care medicines management,’ he said. The potential contribution of shared services was also being examined.

The devolved nations have a lot to learn from each other and plans are already in train for a follow-up event to be held next year.