Joint working vital for sustainability

by Professor Sir Muir Gray CBE

18 January 2019

Finance professionals and clinicians must come together to deliver value and a sustainable NHS.

Value the opportunity
In 2016 the HFMA Healthcare Costing for Value Institute published Chief finance and value officers and directors of finance and value - we need you now. That paper was timely, but, as 2019 starts, it is now clear that we need both clinicians and finance professionals to work together to ensure the sustainability of the NHS. 

They need to establish a new environment where continuous value improvement becomes the norm, to increase not only efficiency, also called technical value, but the two other dimensions of triple value: 

  • personal value – improving the outcomes that matter to an individual for a given investment of resource. These resources might include the individual’s own time, their existing state of health, or resources committed by the health and social care system
  • population value – investing resources more wisely to optimise the outcomes for a given population. This could be a population within a geographical area such as an integrated care system in England or a subgroup of people with a common condition.

If we continue with our current approaches to healthcare, need and demand will increase by about 2% a year. This means that for a health system with a £1bn budget, financial pressure will increase £20m a year. There are three main causes. These include demographic changes, such as obesity and population ageing, and new technology, which is welcome, but requires funding. The third cause has been described as ‘the relentless increase in the volume and intensity of clinical practice’.

This has nothing to do with productivity, but is all about low population and personal value and accounts for around half of the 2% increase health systems have to cope with. For example, a recently published  analysis shows that lab testing has been increasing by about 8% a year since 2000. 

Some of this increase will be delivering value, but the shape of the growth curve is similar to the shape of the benefits curve first depicted by Avedis Donabedian in 1980, showing how value changes as investment increases.  

The question that must be asked is whether we have gone beyond what he calls the ‘point of optimality’ – the point delivering the best balance of benefit to harm to a population.

In addition to the direct costs, the additional test results consume about an hour more a  day, equivalent to about 4,000 whole time equivalent GPs (to listen to a podcast on this paper click here).

On top of this, we should also be concerned about the subsequent re-testing, further investigations, referrals and, occasionally, treatment of a finding that was never going to cause a problem. A false positive rate of around 1% would generate around three million extra hospital attendances a year.

A new paradigm is needed – value-based health and social care. But how do we move to this? We need a culture of stewardship in which those who manage and commit the resources are committed to continuously improve what they are doing to identify and reduce lower value activities. 

But funds disinvested from low value care should not be to feed the black hole we label ‘savings’. Instead, money from low value care should be invested in higher value activity, or as a minimum some form of ‘gain share’ agreement must be established.  

In particular, we need to understand the budgets we are spending on the populations with common conditions and this requires a partnership between finance teams and clinicians. Indeed, when we’ve seen this in action in places like Scotland, we have seen excellent results.
The Academy of Medical Royal Colleges’ Protecting resources, promoting value report in 2014 highlighted the role of the individual clinician in investing resources wisely. The finance profession is making great moves, for example identifying people not only as directors of finance, but as directors of finance and value. What is needed, in the year of a new HFMA president committed to value, is for these approaches to come together. 

What is certain, in our uncertain times, is we need clinicians and finance professionals to work together to ensure the sustainability of the NHS.  

Join Sir Muir Gray at the HFMA/FFF Value Summit, 22 May, Millennium Gloucester Hotel, London -to hear more about joint working vital for sustainability

Find out more about the Healthcare Costing for Value Institute here