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Funding and savings - our priorities
With the calendar year drawing to a close and formal planning nearing full swing it’s opportune to update you.
We expect to shortly receive our funding package for next financial year (starts 1 July) from Government.
The indication has been that funding will be about the same as this current year but with significant savings to be achieved nationally.
On top of that Waikato DHB needs savings to pay for the building programme.
I should stress that savings in a not-for-profit context is simply choosing to not spend in one area (likely to be an area of waste) in order to be able to spend it in another area, and that all spending is either front line or supports the front line.
In short, things will be lean (if you’ll excuse the pun).
However, before we feel sorry for ourselves we should remember that the
health sector (and education) are the only parts of Government receiving
substantial funding increases and that in much of the world,
particularly Europe, the UK and Ireland, deep funding cuts are happening
in health.
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Continuing the relatively good news, you shouldn’t expect any changes in direction or major new projects in the next financial year. We have more than enough to do in what we are already doing, although there will be some Government initiatives (mostly already announced) and increases in health targets.
On the subject of health targets we – Waikato DHB – are on the cusp of having our funding reduced because we are languishing in the acute 6 hour target performance. We don’t want to lose funding or suffer reputational damage, and I ask the people who can assist in achieving the target to do so.
I also acknowledge that many people continue to work very hard on it - I thank you for that.
While in the short term we continue to work on the 200 or so projects that we have on the books, and respond to the ever growing activity, volumes and demand (we call that “business as usual” which looks like an oxymoron), we need to keep an eye on the medium to long term objectives.
In short it is moving toward “one system” or “whole of system”, by shifting the focus of treatment and care from hospital to the community, getting our hospitals better integrated within and between themselves and with primary care; and ensuring that we have the infrastructure to achieve it, being our workforce, IT and facilities.
A lot easier said than done.
I appreciate your continued contribution and support.
I’ll write to you again before Christmas.
All the best
Craig
28 November 2011
Looking ahead - 2011
I wrote an article on our priorities last year, at the start of our formal annual planning process. Planning is now well advanced and the purpose of this article is to outline the major things that will be different next financial year (from 1 July).
Thank you
Before getting into that, I want to start by acknowledging and thanking staff for what you deliver in a very demanding environment.
This DHB continues to grow and its performance improves in an environment where we have the significant disruption of the Waikato Hospital rebuild, and beside that, too many other projects on the go.
To take just one output measure over the last three years, our medical and surgical discharges, as a DHB have increased from 21,686 to 25,500.
Health targets
With less than three months to go until the end of this financial year my biggest concern is to achieve the Government’s six health targets and budget. Achieving the targets, besides seeing better outcomes for our patients, is a matter of credibility and confidence with the Minister and Government. The world revolves on relationships and well performed DHBs get considerations that poorly performed DHBs don’t.
All the targets are about improving health outcomes or the patient experience of the system. In this DHB we don’t do things to achieve targets that wouldn’t otherwise make good sense. Anything we do is about quality and making changes that benefit the public, patients and staff.
The two targets that I am concerned about are the acute six-hour target and smoking cessation.
Smoking cessation is simple - it’s about individual health professionals doing their bit to contribute to prevention. When that happens, we’ll meet the target. Some areas are doing really well and I’m very appreciative of your efforts.
The acute six-hour target is more complex in that it while it needs individual commitment, it also entails issues around how we organise between ED and the rest of the hospital, and processes. This target reflects how the whole hospital works in moving patients through the system. And it can be achieved as other big DHBs are showing.
Priorities
Our overall priorities continue to be:
- Financials
- Chronic conditions
- Quality improvement
- Workforce
- Rural
- Redevelopment
- Regionalisation
What will be different?
The relative weight of the priorities can be expected to change from year to year.
The changes in 2011/12 are:
Financials
If ever there is going to be a heightened sense of obligation to be financially assiduous it is now. We’re all aware of the impact on the Government coffers of the Global Financial Crisis and Christchurch earthquakes.
Just two parts of the public sector will get funding increases this year, being health and education, and it’s looking as if the rest of the public sector will have to pay for it through spending cuts. And that’s on top of a couple of lean years for them.
Naturally the Government demands value for money from its extra investment in health.
Although Health is getting funding increases, we cannot grow our way through the next few years, which means that we will have to reduce our rate of cost increase. If we fail, we will not have the cash needed to fund our investment plans - new buildings and equipment, IT and extra services.
In our latest plan we have already had to push the Older Persons & Rehabilitation Services build out about 12 months because of a lack of cash (we are now planning its completion in early calendar year 2014).
The facts and figures below are of interest. They are extracts from a speech by our Minister, Tony Ryall, on 24 March 2011, in his other role as Minister of State Services.
“Around the globe, governments are making tough and often unpopular decisions to secure financial and economic sustainability.”
“The government in the UK - like us - has been confronted with massive deficits.”
“They're planning to cut billions and billions of pounds from the budget by freezing public sector wages for two years, freezing recruitment and losing up to half a million public sector jobs by 2015.
“In Italy, the Government passed an austerity package to achieve around $50 billion of savings, which also includes a freeze on public sector wages.
“The Irish have cut public service salaries by up to 15 per cent, and plan to cut up to 30,000 state sector jobs by 2014.
“France is shedding 100,000 public sector jobs by 2014 and cutting departmental budgets by 10 per cent over three years.
“Fortunately New Zealand's economy has weathered the storm better than most.
“But we are still borrowing an average $300 million a week to protect and grow our important social services, including health.
“This year alone the Government's cash borrowing is expected to be around $16 billion.
“The Treasury estimates that the total financial cost of damage from both Christchurch earthquakes to be around $20 billion; about $5 billion for the 4 September earthquake and $10 - $15 billion for the 22 February earthquake.
“It is thought that our total tax revenue could also be down by $5 billion over the next five years. The total annual tax take is $70 billion.”
Catalyst
Maureen Chrystall, our Chief Financial Officer, has written a number of articles on “Catalyst” which is a savings’ programme she leads.
When we talk about savings we should all be clear that savings in our context means that we will shift spending from one area to another and more precisely that we will stop wasting money in one area so that we can spend it in another area. We are a not for profit organisation, so no funds are distributed to shareholders, and ultimately everything we get is spent by the DHB.
There are some messages about Catalyst that I want to reinforce –
Catalyst is not about:
- Reducing quality or volumes
- Working harder
- Nit picking or doing things that reduce morale. When speaking with staff I often use the examples of removing biscuits, or reducing the quality of the coffee, or handing in the empty pen to get a new one (yes, it used to happen in the public service).
- It’s about eliminating waste through process change, although we will of course take unit cost reductions where they are positive for the DHB.
Two other areas that there will see more activity in than last year are:
Primary care
There is nothing involving us that is of more long-term importance than what is happening in primary care.
This is the only potentially large-scale transformational activity in the sector and if it’s not successful, then the health sector and the economy will be in significant difficulty.
The health sector is facing the increasing burden of chronic conditions and the response to date has largely been more of the same, bigger and bigger hospitals to manage more people.
It is not sustainable. People with chronic conditions should be managed in the community, it is better for them socially, in terms of convenience, and clinically.
Maori agencies and providers are working on Whanau Ora proposals. Meanwhile Midlands Health Network (what were five PHOs including Waikato PHO covering about 450,000 people) is implementing its plan. This DHB is in close support.
Its major initiatives are:
- Patient Access Centre
- Integrated Family Health Centres
- Alliance Leadership Team
Patient Access Centre
This has also been known as Single Point of Contact and Referral Centre, which gives an idea of its purpose, but it will be more than a call centre. It will be the patient point of contact for triage, scheduling (i.e. all referrals to services including hospital); system initiated recalls and reminders to patients, and updates to patient information and plans.
Clearly there will ultimately be a significant interface with hospital services. The detail of this will take months to work through.
Integrated Family Health Centres
Primary care has been characterised by small, often one or two GP practices. The intent is to achieve critical mass so that practices can offer are far greater range of services (e.g. pharmacy, physiotherapy, podiatry, community nursing) as well as being more sustainable. An integrated family health centre may serve up to 100,000 patients. This may be achieved either virtually (e.g. through joined up IT) or through being physically combined.
This will affect DHB-employed community nurses.
Midlands Health Network is looking to have two integrated health centres in place in Waikato initially.
Alliance Leadership Team
This small group has people from the primary and hospital sectors, being clinicians and management, whose role it is to govern existing primary care funding and look for better ways to spend it. The team will actively look for opportunities for devolution from secondary to primary. That is, things currently done in a hospital setting or via hospital related staff that could be better done in primary care.
The extent of its impact on hospital-employed staff is difficult to predict.
Regionalisation
The Government and its predecessor gave DHBs plenty of messages that DHBs should work together more. Alongside strengthened Government messages (“don’t do it 20 times”), legislative changes, and a change in national agencies (in IT, workforce, procurement, quality), DHBs are now becoming organised and working in a structured way on collaboration.
All Midland DHBs recently approved further work to look at DHB administrative services going into a single jointly owned regional entity. That was after initial work suggested that substantial financial and service benefits should exist.
Most benefit is seen as being in the costs that DHBs can avoid in the future, rather than significant reductions in current costs -
www.midlanddhbs.health.nz
Consideration of the options for regional activity of back office and support functions. For example:
- Procurement
- Information Systems
- Finance
- Legal and Regulatory
- Workforce (Recruitment / Learning and Development / IR)
- Media and Communications
- Audit and Risk
Regards
Craig Climo
12 April 2011
