Caroline Clarke, Chief Finance Officer and Deputy Chief Executive of the Royal Free London NHS Foundation Trust, gives her response to the findings of The King's Fund's 21st quarterly monitoring report.
This presentation was recorded at our breakfast event on 16 November 2016.
Well, first of all I would like to thank you for 21 times giving me the chance to fill in your report. It does have a certain therapeutic value. Last week my six year old daughter gave me 61p and she said “It’s for your hospital, mama” and my Comms director said “I think you’ve been talking about work at home a little bit too much!” So, look, we are known as being a pretty pessimistic bunch. I think that’s right. Accountants are trained to be quite cautious, so I take the, I don’t know if it is a criticism anymore, it might have been an adjective, I think it’s switched. I am at the optimistic end of the spectrum and I think in the medium term, I probably have a bit more optimism than some of my colleagues. I work at the Royal Free which is a great group of hospitals in north London. We see 1.6 million patients a year. We have 10,000 staff who we have to keep motivated and happy through, what is going to be a difficult winter, I accept. And the CQC thinks we’re good. And we are quite excited about the future. We’re one of these vanguard schemes. I don’t know if you have heard about vanguards. We’re being promoted as an acute care collaborative which basically means – can we share more services across the acute sector to get more efficient and provide better care for our patients in the medium term. And we think that is a really, really good recipe for success in the medium term but I don’t think you want to talk about medium term re-design, I think you want to talk about now. And it is quite tough out there. So, I’ll tell you a little bit about the Royal Free story.
So, we are quite big. We turnover a billion pounds. So a small swing in our numbers attracts quite a lot of attention as you can imagine. We get income that is related to the number of patients that we treat and what those patients have been diagnosed with and what we have done to them eventually. And we get that from commissioners, as Richard has told you, and over the years, although the number of our patients is increasing, the price we get per patient has been decreasing. And this isn’t just a 16/17 issue, this has been happening for the last three, four, five years really and those of you that know about health service finance will know that we get this tariff and the tariff has been coming down. There are lots of other things that happen in the relationship between providers and commissioners that forces the price further down.
So, just to give you an example, I did some analysis on our specialist services recently and over the last three years, for a particular group of patients, we probably received about 20 % less than we used to. So, there are big shifts happening and in any industry that I know, it is difficult to keep pace with that kind of price setting. So, I think it is difficult. In terms of my position, we have been running an underlying deficit for a number of years but due to, kind of, how the NHS tries to fix these things, with a series of what we call, non-recurrence of non-repeating adjustments, it has looked a bit better. But effectively last year, if you looked at our annual accounts, you would see a 14/15 million pound deficit.
Are there any accountants in the room? Oh right. You know what accountants do in accounts. We get audited. These are matters of fact and statement but our underlying position was probably a bit worse than that. I’m one of these people that at quarter to, said that I couldn’t hit my control total and that is largely because I reckon that I don’t think the commissioners can pay us for all the work that we have done and that, combined with what is happening to our pricing, makes quite a difficult story. So, then you may think, are you any good? Are you efficient? Are you productive you people? A lot of my friends are quite sceptical about people running public services. So, for my group of hospitals we are more efficient than the average as a national cost index. We’re lower than the national average. This year, I reckon, we’ll take about 5 % of cost out of our operating base. We are a bit text book on some of that stuff but it’s not enough.
And just to give you a flavour of the sort of things that hospitals do, to get more efficient. We consolidate services where we can. So, we bring services together. Support services, back office services, you might call them, but also clinical support services. So, pathology services, radiology services. We do stuff like that. Where services aren’t funded. There are quite a lot of services that don’t get funded by a commissioner, so we are all into that space now, to stop those. I think you mention that in your report. We are stopping the number of clinical staff that we have through those consolidations. We are clearly reducing agency staff, so I think any hospital that you go into has got a very, very big mission to reduce agency staff and that has been a theme across the NHS for the last year or so.
And we try and standardise processes, to take out waste and make them more efficient. So any of you that know about other industries. The NHS in some senses isn’t that different. So we are doing that. So, how does it feel in the hospitals? We are treating more patients than ever, that’s true. So, I understand the numbers in the report and they feel the same for me. So, we are seeing about 3% more out-patients between the first six months this year and the first six months last year, we are about three and a half per cent more patients came to our accident and emergency departments. That’s about 4,000 people, if you want the numbers, in six months. And our performance is not as good as it should be. So, you will know that 95 % of patients should be seen within four hours. I’d hope that more of our patients will be seen within four hours. But, actually we’re really struggling to achieve those targets. And one of the key reasons, is one that Richard highlighted in his report, which is actually the number of medically fit patients in hospital beds that really don’t need to be there. If you are medically fit, you don’t need to be seen by a doctor, you could be looked after in your home or in a nursing home or residential home or in a community facility. And those services just simply aren’t there like they used to be.
So, in my organisation we reckon we have got about 25 % more patients in our beds now like that, than we used to have. That is awful for them. That’s hundreds, thousands of patients lives wasted, hours in beds, just wasted. And that is really hard for our staff as well. Because nobody wants to do this. So, there is a real issue about staff morale and even the finance directors are saying that now. So, even the accountants have woken up that if you can’t galvanize your staff, the change of services will keep going and that’s an issue. That is a real concern for us and it is a real, real concern for our patients.
So, in terms of this report, I know better than to comment on the national position. You have asked me to comment on our position. And there is this real sense that people like me are overly pessimistic but I do think it’s a bit different now. I think the money is much harder. I think it’s something that has been happening over a number of years. That this isn’t just something that has happened in 16/17 and we have to pay attention to that. I think the number of conversations that we are still having with clinical commissioning groups around contracts and transactions is ridiculous really. And bring on the STPs, the sustainability and transformation programmes, to actually try and do some good there. I think it is great that you have included primary care in your report, Chris and Richard. I think it is really important. So all acute providers absolutely rely on thriving primary care to help us make secondary care successful and to make sure that we only treat the right patients in the right place.
And finally, I’d just like to add my support to your notes around social care. So, I have told you how many patients are in our beds that really don’t need to be in those beds and the quality of life would be radically improved by having really, really great social care. So, I think we would add our voice to that. That’s the Royal Free story.