A winter’s tale

27 February 2018 Steve Brown

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Winter brings major pressures for the NHS each year, but few would deny that this year’s pressures have been even more severe than usual. Ubiquitous images of patients waiting in ambulances or crowded corridors have been backed up by statistics confirming plummeting access standards, increased demand and acute hospitals working well beyond recommended capacity levels.

Official figures show December and January A&E attendances up 3.7% and 5.5% respectively on the same months a year ago. NHS Improvement’s Q3 performance report said there were almost 400,000 emergency admissions via A&E in December – 5.9% more than in December 2016. And the rate of flu-confirmed hospital admissions was around three times higher than last year.Protest

The crisis played out under full media scrutiny. And the television images have had an impact, throwing NHS funding firmly into the public and media spotlight – even provoking protest marches calling for increased funding. It arguably helped to prompt the Department of Health to find extra resources to those in November’s Budget for the coming 2018/19 financial year (see A fresh approach?)

While the service’s ability to cope with winter pressures is undeniably influenced by the level of funding available, it is also true that the winter pressures themselves exacerbate the current financial position.

A tweet from NHS Providers in mid-January said the cancellation of operations that month – an officially sanctioned response to the rising non-emergency activity – would have a big impact on the end-of-year deficit, which has already increased from the forecast £623m at the halfway point in the year to £931m in the latest forecast. NHS Providers chief executive Chris Hopson had already written to health and social care secretary Jeremy Hunt raising trusts’ concerns about the ‘financial impact of the extra costs they have incurred and the elective income they are likely to lose’.

Changing income

NHS Improvement’s Q3 report recognised that changes in the make-up of providers’ income could have a major impact on their financial position. In general, providers income from elective work is down, while non-elective activity and income is up. However, expenditure tends to exceed income for higher-than-planned levels of emergency activity, the report said, while income would typically exceed expenditure for elective work.

So what exactly are the financial impacts on the NHS of this winter’s hike in demand and the service’s response to it?

NHS Providers has made a lot of the loss of elective income. In theory, this is absolutely right. Under tariff (or payment by results, to give it its old name), elective activity cancelled as a result of the NHS National Emergency Pressures Panel’s recommendation would lead to a loss of income associated with that work.

However, there are a number of caveats. Many trusts already plan for minimal levels of elective activity during January – so cancelling operations at this time of year has smaller impact in these bodies. However it should be said that elective income is down for the year to date overall, largely as a result of increased emergency demand through the year. Additional non-elective activity – which is filling beds and displacing the elective workload – does come with its own income. However, for areas operating under full tariff rules, this non-elective income would come in at a marginal rate of just 70%, where the activity is above planned levels.

And even in areas where the income for additional non-elective activity is higher than the loss of income for elective, additional costs of dealing with the spike in emergencies can far outstrip the net increase in income. In some further areas, payment by results has been set aside in favour of risk share contracts, which means income won’t always flex with activity.

UHCW planning

University Hospitals Coventry and Warwickshire NHS Trust (UHCW) chief executive Andy Hardy (pictured) says his trust didn’t stand down much more elective activity than it usually would in this period. ‘Our non-elective to elective mix is about 60:40 over the whole year, but from mid-December to end of January we have a working assumption that we will mostly do urgent cases, cancer and day cases because our beds are just full,’ he says.Andy Hardy

‘So we don’t think we cancelled much more than we normally would.’

The trust did attempt to keep a day surgery programme running. However, pressure for beds on some nights did lead to day-case beds being used for emergencies.

January’s board papers show that contract income for the first nine months was already under plan by £1.4m. But Mr Hardy says that, having planned for limited elective work in January, the trust has not seen a huge drop in profiled income for that month. In fact, the higher level of non-elective activity may generate more income than planned.

However, this will be at the marginal rate of 70%. And while in absolute terms this may amount to more income than planned for January, Mr Hardy says it will not have covered costs. ‘The challenge at 70% is that when you are having to staff up for extra beds overnight – for example, those day surgery beds – that’s all at agency or premium rates. Costs are well above this 70% rate.’

On top of the agency premium for staff at short notice, Mr Hardy says there has been a clear increase in patient acuity, so length of stay goes up. This ties up beds, putting pressure on the trust’s ability to admit patients as quickly as it would like, increasing bed occupancy and putting further pressure on any planned elective activity.

This increased activity piles pressure all the way back to the front door, with A&E having to cope with more attendances, fewer free beds to admit to and major staff pressures. As well as costs being higher, increased activity and pressure can also cost the trust in other ways. At month nine, UHCW’s sustainability and transformation fund (STF) income had already slipped by £2.5m against a plan of £9.5m due to the failure to meet the A&E four-hour target.

Elsewhere in the country, a CCG finance director acknowledges that in his patch there is no direct reinvestment of the 30% retained from marginal rate activity back into demand management. ‘However, we have diverted GPs from some of our other services into the GP streaming service at the local hospital,’ he says.

‘And between us and the council, we made sure the hospital was empty in the run-up to Christmas, with significant investment in the out-of-hospital system around domiciliary care, GP resilience and community services. So, the investment is there – it just hasn’t been badged in this way.’ He adds that the money retained from the marginal rate policy is not as large as it might be, with best practice tariffs for some work meaning activity is not counted.

Durham pressure

County Durham and Darlington NHS Foundation Trust chief executive Sue Jacques (pictured) says the trust’s hospitals saw significantly more activity than in previous years. Even traditionally quiet days, such as Christmas Eve, were noticeably busy this year.Sue Jacques

She estimates this year’s winter pressures have cost the trust £2m in lost income and lost efficiency. Increased activity and pressure in Q3 had already led to the trust marginally missing its A&E four-hour target, costing it £1.16m in STF funding.

Again the trust says the winter pressure-related additional costs are not predominantly down to the national recommendation to suspend elective work. ‘We planned to do very little elective in the week between Christmas and new year and then the first week of 2018,’ says Ms Jacques. ‘But because we had a lot more emergency patients in than planned, we were making finer judgements – not blanket bans – right through to the end of January.’

 As with UHCW, County Durham and Darlington was forced to use some day-case space as emergency spillover. ‘We have the benefit of an elective site in Bishop Auckland, so we can keep a lot running through there,’ says Ms Jacques. But she says the spike in emergency activity has still hit the trust financially.

‘There are two types of inefficiency,’ she says. ‘We have surgeons who are not doing as much elective activity as they would otherwise, so they are not bringing in the income. Then we have patients spread around the hospital and more of them than medical teams would plan to cope with even in our winter plans. The logistics of getting patients reviewed, sorted and discharged means it is more complicated and time-consuming and that means length of stay goes up and efficiency goes down. We have simply been running too hot – well above the 85% recognised level.’

Chesterfield action

Chesterfield Royal Hospital NHS Foundation Trust cancelled much of its elective programme in January (other than cancer and urgent cases). Finance director Lee Outhwaite (pictured) says the trust has lost elective income. ‘But this is highly likely to be offset by the higher non-elective income, despite the 70% marginal rate, due to the volume of non-elective cases involved.’Lee Outhwaite

A January board paper reveals that by the end of December, the trust had seen underperformance on day case and elective activity, particularly within surgery.  However, this amounted to an adverse variance of just £375,000 and non-elective had over-performed to the tune of £3.8m.

This increased non-elective income comes at a higher cost. The board paper said the non-elective over-performance was driven by price rather than volume and predominantly within general medicine. This backs many trusts’ assessment that acuity and patient frailty – particularly for patients with flu and other viral infections – have been higher this year. This manifests itself as higher length of stay and raised staff costs, for example, for increased levels of one-to-one support.

Mr Outhwaite agrees that temporary nursing staff have driven the additional costs of unscheduled care. ‘To augment the other nursing staff, we have moved back to ward-based roles as per our escalation plan during winter,’ he says. Extra bed capacity was opened up and some additional medical consultant capacity brought in.

One of the challenges facing all acute trusts is how to deploy staff. Cancelling an orthopaedic elective programme might create bed capacity for emergency patients. But not all the medical staff freed up can be reassigned to support increased emergency activity – or at least not to maximum efficiency.

‘We’ve tried to schedule more outpatients to avoid stranded costs on the elective pathway,’ says Mr Outhwaite.

But equally a trust might go the other way and cancel outpatient sessions to release consultant staff to support the unscheduled workload. At UHCW, Mr Hardy says delaying clinic start times was seen as the best solution – releasing consultants to wards ahead of their normal outpatient duties. 

Ms Jacques acknowledges that it is not straightforward to switch staff onto different roles – despite staff in general ‘going out of their way to help in any way they can’.

‘For example, with an orthopaedic consultant and their junior team, there is
some trauma coming in anyway, but outside that, they can pitch in to review general and medical patients – something we do daily at the trust,’ she says.

‘This is clearly not as optimal as having a consultant from the right specialty. So they can help out with the general busy-ness and check that patients are being reviewed, but they can’t work out the medical plan for a respiratory patient, for example.’

Some commentators have suggested asking consultants to switch supporting professional activities during periods of high non-elective demand to patient-facing activities could help. However, with many staff already going well beyond contracted hours to help out, this is not necessarily a solution.

The recommended suspension of elective care was lifted at the end of January, with the National Emergency Pressures Panel believing bed capacity was increasing and the flu position was stabilising. But there are still pressures and challenges ahead and thoughts are turning towards how a well prepared NHS could be even better prepared next year.

Some trusts are already exploring whether there are other parts of their hospitals that could be turned into emergency ward areas.

But there is recognition that the long-term solution in parallel with adequate funding is to develop a more integrated response across acute, community, primary and social care to keeping patients out of hospital and enabling faster discharge where possible. 
Supporting documents
A winters tale - March 2018