McKinsey’s prescription for the NHS

Civitas, 3 September 2009

£20bn cash savings necessary in the NHS by 2014, David Nicholson, the NHS Chief Exec, announced some months ago now.  Only now is one grand-plan ‘leaked’: a report from back in March by the management consultants McKinsey commissioned by the DH.  It paints a stark picture of type of cuts that will be necessary.

Here they are, as revealed today by the Health Service Journal:

-30,800 non-clinical posts, saving £600m

-£3bn – saving potential of increasing staff productivity in NHS hospitals

-£1.9bn – savings projected by cutting external contracts and supply costs such as waste and food

-£1.3bn – saved by cutting unneeded appointments and procedures

-£8.3bn – estimated value of hospital estates which could be freed up and sold

What it makes clear is that there are huge variations in efficiency and productivity across the NHS.  And that the current mantra of both the Tories and Labour that we can achieve the savings we need by better quality alone is somewhat utopian – a point echoed by an insightful paper published by the Health Foundation this week.

The question is how do we get there?  (That is, of course, assuming that we take the McKinsey report at face value.)  Here, the ‘shopping list’ of savings presented by McKinsey is cause for concern; it smacks very much as more of the same top-heavy, impersonal and abstract approach favoured by both management consultants and the government.  It was, after all, the self-same top-heavy approach that the government employed in expanding the NHS – remember the NHS Plan and its workforce and other targets? – that has wasted considerable sums of money.

A different tack is needed.  Effective cost savings and quality improvement will only be driven through a sense of urgency, yes, but also through local –and particularly clinical – ownership.  The NHS, dare I say it, is not short of money and resources.  It is short of effective communication, teamwork and organisational (and in some cases individual) commitment to patient care; to people; to doing the right thing for patients.

And second, we should not lose sight of what tends to drive performance and quality in other industries: competition, pluralism and the openness to disruptive innovation and new ways of working that this tends to breed.

The number one problem in the NHS (to do with a whole number of things such as perverse incentives, funding streams and professional self-interest) is that the institutions that consume the bulk of resources – major hospitals – have been able to over-shot the level of care required by most people, most of the time.  Care that then becomes far too expensive; in terms of buildings; in terms of clinical expertise; in terms of time.