I remind committee members that we opted to follow the Finance Committee's guidance and focus on specific initiatives as well as on the health budget as a whole. We have already taken evidence from officials on the efficient government proposals. This week, we have with us Andy Kerr, the Minister for Health and Community Care, and those same officials.
Thank you for your welcome, convener. I reconfirm to the committee our drive for a more efficient and effective health service. Since I became Minister for Health and Community Care, my discussions with chairs and chief executives in the health service have focused on that drive. We need to deliver efficient services while maintaining high-quality services for the public. I also want to put it on the record that the efficient government initiative will reinvest resources in the health service. It is not a question of removing resources for spending elsewhere; it is about making sure that we realign resources to meet patient need—that is the driver of our work.
Thank you. Your letter to me has been circulated to the committee, so members are aware of your written evidence.
On the subject of the letter, I advise you that although the cost of employing prescribing advisers is given as £2.5 million, the actual total cost is £3.2 million. We got the figure to you as quickly as we could but some additional support costs and other costs were not identified. I wanted to correct that for the record.
Thank you.
I tried to get an answer to a technical question from the civil servants who appeared at our meeting two weeks ago. I wanted to know about the process that is involved in the efficient government initiative, making savings and reallocating funding. Did you, as the minister, say to your department, "I want a 2.5 per cent saving in this financial year and a 5 per cent saving by 2007-08. Go away and find them"? Alternatively, did you say, "We need major savings. There must be some savings in there. Go away, look at your department and come up with figures"? Which of those two methodologies was employed—was it one or the other?
It was the other—in other words, the latter of the two options that you described. I want to save as much as I possibly can—I do not want to rest with the numbers that we have given you. In the Health Department, we have a constant drive to realign resources to ensure that we can do even more with the substantial budget that is available to us.
I am glad to hear you say that there is a bottom-up approach. I absolutely agree that that is the right approach. However, the planned savings are around £50 million from NHS procurement, £20 million from improved prescribing of drugs, £10 million from NHS support services, £10 million from NHS logistics and exactly £1 million from care commission efficiency savings. It seems to me that those round figures are indicative of an approach whereby the department was told to come up with certain savings.
I noticed your fascination with zeros in your exchange with the chief executive at the committee's meeting two weeks ago. Given the scale of the budget and the billions of pounds that are available to us, we have a process of setting targets and rounding up.
I am delighted to hear that. I would like the civil servants to tell me why they could not tell me that when they appeared before us at our last meeting. I thought that that was odd.
I had great joy watching the DVD of the committee's deliberations of the week before last. To be fair to the officials, I think that they tried to answer that question. Either Adam Rennie or Scott Haldane said that the figures were set but that the reality could be on either side of them, and I want the outcome to be on the upper side, as opposed to the lower side, of the figures.
Following your lead, minister, I would say that I think that the Executive anticipates cash savings of £342 million and time-releasing savings of £174 million. What proportion of the anticipated savings has already been reallocated and where has it been allocated to?
Under each of the headings, we have identified the money that we need to free up in the health service at board level so that we can continue to innovate in the delivery of services. The incomings and the outgoings have not been finally determined, but we are saying to boards that they must deliver on this agenda in order to free up resources and to spend money on patient care. There is no exact balance sheet for the money that we will save through efficient government and where it will be spent, but we are clear that that money must be reinvested in patient care. In the context of historic growth in NHS budgets, that will allow us to release even more resources to go into front-line patient care. The money will simply come through the budgeting process of each health board. Money that we save at the centre will also go into patient priorities. As we develop our budget in future years, we will take cognisance of the savings and will include them in our plans.
You might have to go over that again for my benefit—the fault might be mine. Are you talking about notional savings that you anticipate that the boards will make? What if they do not make those savings?
They will make those savings. If I do not achieve the savings that I am responsible for in some of the central services, there will be a shortfall in my budget, which I will need to take action to deal with.
You will not be able to reallocate funds to other services, so some services could be caught in a vicious cycle. What happens if the boards cannot achieve the savings and therefore cannot reallocate funds to front-line patient care?
It depends on the individual circumstances. For instance, if a board is, for some reason, sitting doggedly outside e-procurement and knowingly buying a nurse's tunic for £20 when we can get it for £15, I shall deal with that directly. In other words, I shall, if necessary, instruct that board to become part of the e-procurement process, unless it can provide me with a reason for not doing so. This is simply an extension of my previous life as Minister for Finance and Public Services, when I told local authorities that even if they did not take advantage of e-procurement and shared services, we would assume that they had done so and remove the resources from their budgets.
In front-line services?
Absolutely.
Do you include in front-line services the objective of reducing the health gap between the most affluent areas and the most deprived areas?
Absolutely. I shall respond to the Kerr report in due course; I cannot tell you when, because the matter is with the Parliamentary Bureau and that is how the bureau works—as you know better than I. However, when I respond to the report in Parliament, you will see that health improvement and health inequalities will be a significant part of our attempts to reconfigure our health service, as identified in the Kerr review. That is where we need to find the resource to deliver change in the health service. Therefore, during that process, I expect not just to have the so-called normal budget of the health service but to achieve the additional resources that we can reallocate to those priorities. That is critical to the implementation of Kerr and to our challenge around health inequalities.
Those initiatives will depend partly, but not solely, on the reallocation of resources. Will there be new money in there for them?
I would certainly argue that the response to Kerr and our challenge around health inequalities will not solely rely on the realignment of resources through the efficient government programme. We are doing many good things in relation to health inequalities at the moment that do not rely on realignment.
Four NHS boards currently have an overspend totalling nearly £62 million, and Audit Scotland has claimed that the overall deficit is increasing annually. At the same time, you are saying that you expect efficiency and time-releasing savings to be made. If you are so confident that they can be made, why are you not being more specific about where the money will be reallocated to?
First of all, you paint a picture that I think is inaccurate.
That is what Audit Scotland has said.
There is one board with a significant deficit—Argyll and Clyde NHS Board. The other boards—Lanarkshire, Grampian and the Western Isles—have delivered to me a five-year recovery plan that clearly points out how they will recover their situations. There is a clear route for how they will respond to their current deficits, so the picture that you painted of four boards with deficits of £62 million is not quite how I would describe the situation. There is one board that sits outside that picture quite dramatically, and you will appreciate the action that we have taken in relation to it. The other boards have presented to me a recovery plan, which has been signed off by the NHS finance department in concert with the boards to ensure that we achieve that plan. Let us get that matter resolved.
I take it that the recovery plans that have been submitted include the cash-releasing and time-releasing savings.
I am not conscious of the absolute data. Kevin Woods may be able to comment.
When a board is in deficit in the way that Shona Robison described, we require a separate recovery plan for it to show us how it will achieve recurrent balance over a period. It also has to deliver its additional 1 per cent efficiency savings. At the end of July, which is early in the financial year, something like £25 million of savings had been made throughout Scotland, which is 28 per cent of the target. Therefore, we are on track to deliver the efficiency savings.
So that is a yes. The recovery plan takes into account the additional savings that you require.
The boards have to do both.
Going back to Duncan McNeil's point, if it happened that a health board was not going to be able to make the savings, perhaps because they cannot get their sickness absence under control or because consultant productivity does not rise as you expect it to, what would be the result of that failure? Would the health board have to compensate for that from within its own budget, or would the overall savings picture be considered, so that savings would perhaps be reallocated from one health board to another? How would you manage that process?
I would not reallocate money from a successful board that has taken tough decisions to one that has not.
So the health board would have to find the money from within its own budgets.
If you recollect what I said in response to Duncan McNeil's question, the monitoring and analysis of reporting systems that we and the boards have show us, in relation to procurement for instance, that we are making substantial progress. Kevin Woods commented on the management of absenteeism at the previous meeting. We had a very good response to our desire to tackle absenteeism in the health service, and people want to work with us.
They would have to manage such a deficit within their own budgets.
Yes. I would need to consider whether something particular was going on. For instance, sometimes there is a human resources problem and a board cannot recruit people. However, in response to the stark way in which you put your question, I would expect the board to consume its own smoke in relation to the savings that it should have made, unless it has a good case for not doing so.
Would it be possible for the Health Committee to be included in the regular reporting of how health boards are performing in relation to cash-releasing and time-releasing savings?
I would have to consider that. What I do not want is sensationalist reporting on a regular basis. Those quarterly results are short term in relation to a much longer-term process.
If you are so confident that things will be fine, I am sure that you will not have a problem.
We have to be responsible with the information. Politicians have been irresponsible with information in the past.
Surely not.
If we are tracking progress over a significant number of years I want to ensure that we do not have a situation in which a report from a board in crisis gets reported while another report, from a board that has made great achievements, does not get reported. However, I will consider the systems.
I am sure that the committee will use that information sensibly.
I will decide that.
I was taken with your "consume its own smoke" metaphor, which is not one that I have come across before.
We have talked a lot about savings, and my question is about investment and single electronic health records, which is an issue that we discussed with Kevin Woods when he gave evidence recently and which is mentioned in your letter to the committee. I am concerned about the timescale for rolling out the single electronic health record. You say in your letter that you hope to be going to procurement next year. The timescale that we have been working to is three years, although evidence from elsewhere in the United Kingdom suggests a timescale of three to four years. My concern focuses on the new initiatives in health care provision. In my area, an ambulatory care hospital is being built at the Victoria hospital, and there is another one at Stobhill hospital; they are due to go online in 2008. Those new ways of delivering health care focus heavily on electronic patient records and data exchange. My concern is that if you are talking about a timescale of three years, 2008 is pushing it, and if you are talking about a timescale of four years, we could be looking at significant problems. What assurances can you give me?
First, to get the context right, we are not starting at year zero in relation to some of our systems. We have general practitioner prescribing and airline booking systems in many boards, and procurement is also working effectively in many boards, therefore, some systems are already working. At the centre, we have to provide the infrastructure—the plumbing—for those systems to work, and the protocols so that systems are compliant with one another.
It does, but my concern is that we are about to start building new buildings, and the infrastructure has to be laid now. Do we know what infrastructure is needed, so that we do not build a building that has to be taken apart or in which—this would be worse—we are told we cannot have particular systems because of the way in which the building was built?
We have planning networks; for example, the boards feed in to the department's e-health group and, recently, I met finance directors to discuss some of the work that we are doing with them. It is not as if people in Glasgow are sitting there saying, "Let's design a Glasgow system." They are aware of and plugged into the other work in the Scottish health service. I will seek to provide further reassurance in correspondence, but we are rolling out the specification and stating what we intend to do at a national level, and the boards have been part of that work. Therefore, anything that they roll out in their local environments will be able to operate with the national system.
They just do not talk to one another at the moment.
As I was about to say, convener, we are providing the bit in the middle—the sky store—where information can go and then be dropped in to other parts of the system.
I would welcome that reassurance in writing.
No problem.
You mentioned prescribing, on which Jean Turner has a question.
The first thing that one thinks of when making cuts is prescribing more generic drugs to get the drugs bill down. We have probably reached the ceiling on that. I assume that a good bit of the £20 million of savings by 2007-08 is to come from e-procurement. Has the £20 million efficiency saving been factored into projected spend? Do we know exactly from where we are getting the £20 million? I take it that that is the figure for Scotland.
I remind members that we are not talking about cuts but about the NHS making good use of efficiency, e-procurement and hard bargaining with service suppliers.
As you will be aware, there is a difference between the primary care sector and the secondary care sector in charges for drugs. However, a crossover occurs when people go into hospital. They take their drugs in with them because doing so is easier than getting new drugs. When drugs are taken in, they quite often disappear into a void and the general practitioner has to write basically the same prescription again—only one or two items will be different. To me and to a whole lot of other people, that might well be an area in which savings can be made. However, who would get those savings?
That is an interesting question. We are dealing with the issue of inappropriate prescribing when people go back into the community. I ask Bill Scott to add some points of detail.
Within the next three years, a number of generic drugs will come on stream. They will cost less than their branded equivalents, which accounts for part of the savings of £20 million.
Will a health board be able to use the savings within its area?
Yes.
Will you check that?
Yes. We will regularly monitor the health boards' performance in relation to that work.
Although it is cheaper to buy generics, the problem is that using generics means that the patient can get a white table one week and a peach tablet the next week. With elderly people—and sometimes with younger people—that can mean that, although money is saved, compliance is not achieved because people get confused.
I agree that that might confuse patients. The first thing that I must say is that 80 per cent of prescriptions are for generic drugs. That has taken a lot of hard work on the part of front-line staff, who have worked with patients to help them to understand what generics are. Because the products are licensed in Europe, we cannot set a Scottish or a United Kingdom standard for the colour and packaging of every generic drug; that is a commercial decision. However, over the past 20 years or so, people have become used to going into a supermarket and purchasing own-brand products. That shows that the concept of the generic product is understood by the public and there is now less resistance to using generic drugs. People realise that using them is a way of ensuring value for money in prescribing without adversely affecting patient care.
Interesting work is being done in the private sector in relation to the idea that dose boxes—those boxes with compartments that say, "Monday lunchtime", "Monday evening" and so on—can be designed around the individual patient's needs. That would mean that, regardless of whether the Monday lunchtime tablet is pink, blue or purple, the one that is in that compartment is the one that is taken. Some interesting work is being done to find ways in which we can better manage patients who take a number of drugs.
As Jean Turner has graciously conceded that we can move on at this point, Shona Robison will ask about one of the key issues that we want to raise with regard to the care commission.
The care commission is becoming self-funding and I am sure that you are aware of the concerns that some organisations, particularly smaller ones, have raised about the fee level and their ability to pay those fees. The care commission's efficiency saving is estimated to be £1 million by 2007-08. Can you confirm that any efficiency savings that are made in one part of the care commission can be reallocated to other parts of the care commission and could, therefore, be used to keep the level of fees down, should the commission decide to do that?
Before I let Adam Rennie in to respond to that, I should say that I have noted with interest the discussion in this committee and elsewhere about the care commission, its fees and its impact on service providers. In other work that we are doing we are trying to ensure that we set tolerance levels in the audit process. We focus on those areas in which there is more difficulty and we allow those who are performing better a longer time between audits. Adam Rennie will advise the committee of some changes in relation to child care and childminding resources.
The care commission is resourced from the fees that it receives from the service providers that it regulates and from subsidy from the Executive, which is called grant in aid. The vast majority of the cost of regulating childminders and day care of children services is met through grant in aid. The £1 million saving from the care commission is being achieved by various changes in the regulation of childminders and day care of children services. I described those changes to the committee a couple of weeks ago. The impact of the £1 million saving is to reduce by £1 million the amount of subsidy that the Executive would otherwise have to give the care commission. That £1 million is available within the Health Department's overall budget.
So it is not really a saving to the care commission at all.
It is a reduction in the care commission's total costs.
That is a different way of describing it, is it not?
It is an efficiency because it is achieving the same output for a lower amount of inputs.
But it will not be there for the care commission to reallocate.
Not on the basis that we give the money to do that work; it is our investment and we get the return on it.
Are there any other examples of that type of efficiency saving, which is about the amount of money that comes from the Executive rather than about the money going into front-line services?
The purpose of the care commission is to regulate providers in a way that improves service quality for service users. Clearly, both we and the care commission want that to be done as efficiently as possible. In the case of childminders and day care of children services, the costs of regulating which are, as I described, heavily subsidised by the Executive, efficiency savings lead to a lower subsidy for that activity from the public purse.
That concludes our specific questions. We now move on to more general issues. Kate Maclean has a question on objectives and targets.
I was interested to hear that the minister watched a DVD of the Health Committee. I would say that that was an unwelcome insight into Andy Kerr's social life.
You missed the freeze frames.
If you took that a bit further and watched a DVD of last year's Health Committee meetings you would see that I asked questions about targets because I was concerned about the way in which they had been dealt with. Last year, there was a reduction in the number of targets because some were amalgamated and some disappeared altogether. It was not clear whether the targets had been met or why they had been amalgamated. One of our recommendations was that changes to the Executive's health targets should be published as a matter of course along with the draft budget so that there is some explanation for them.
I am also an avid viewer of teletext—that was a joke.
No.
That is interesting.
I am not on a page at all. I do not have the document in front of me. The targets that I am talking about—the ones that have been amalgamated into target 5—surround waiting times, essentially. I do not have the document in front of me but, from memory, that is what they are for.
Those were the targets of 18 weeks from GP to out-patient and 18 weeks from out-patient to treatment, for hips, cataracts and heart interventions. I would argue that those targets were loudly announced around Parliament and elsewhere in the context of "Fair to All, Personal to Each". That is how they have become part of the budget process, because they were a significant part of the "Fair to All, Personal to Each" document. I will reflect on what you have said about clarity and will try to provide any further information that you may need on the subject.
To clarify matters, I am not necessarily saying that targets should not be amalgamated. I am just saying that it is not always clear. It was not clear last year why the numbers had gone down from one amount to another amount—I cannot remember the figures—and why some targets had been amalgamated, while others had disappeared, although that was not obvious. The targets are largely the same this year, but there has been the change where targets 8 and 5 have been amalgamated into target 5. I do not think that that is clear, so an explanation in writing would be useful.
I will reflect on that and ensure that, if there is any variance, we explain that variance to you.
I refer to page 70 of the draft public plans, under the heading "General Dental Services". You will see that the budget heading goes from £203 million in 2002 right up to £253 million in 2005. In a statement six months ago, on 17 March, when Rhona Brankin was the Deputy Minister for Health and Community Care, she said that the spending would move from a baseline of £200 million last year to a baseline of £350 million within the next three years. We knew that six months ago, when the statement was made to Parliament, so why are the two columns for 2006-07 and 2007-08 blank in the document before us today?
If I recollect what was said at the time—I am happy to hear from Kevin Woods on that point—we are still going through a negotiation process, and the allocation of exact resource around that will be part of the outcome of those discussions. In a sense, it is to do with those negotiations about how we see that resource being spent, so it will follow through into the budget itself.
That is essentially it.
But surely Rhona Brankin said to Parliament that that money was there and that it was going from £200 million last year to £350 million in three years' time. I would have thought, therefore, that that was the entire purpose of having a draft budget for 2006-07. You have blank columns there, although you told Parliament that they should be filled in. What I am looking for is a commitment that that should be there.
My apologies. I have got you now. I think that that is fair comment. I shall find out why that money is not in the document. What we have tried to do with the specifics around that additional resource is to await the outcome of the negotiations and not to reveal our negotiating hand.
Will you get back to us on that?
On the global amount, you have a fair point.
Thank you.
Kevin Woods led on this discussion as we went around the country doing the annual reviews, so I will let him deal with your point. First, however, I will say that we have told all boards that they must ensure that they have effectively reconfigured their services to deal with the challenging fact that, instead of having someone working in an accident and emergency unit for six months, they will have them for only four months. They must consider what that means in terms of training and the help that can be provided in the environment that that person used to work in. We have been working with boards to ensure that they are redesigning aspects of their service—using ideas such as the hospital at night initiative—to ensure that they are prepared for the challenges that MMC will bring, along with its benefits. Boards have to work out how they can supplement or replace the skills that will be lost to certain working environments.
Modernising medical careers is an extremely important initiative that will bring significant benefits. It is a work in progress; the implementation has already started. The key issue to which the minister is referring relates to the fact that we will have people properly trained, which might mean that we have less time available for services in some specialties. That is why, with NHS Education for Scotland and the NHS boards, we have set in train detailed examination of the impact of MMC, specialty by specialty, board by board, so that we can assess how it will unfold on the ground and ensure that we can take the necessary action in good time.
Although we will get more consultants faster this way, which is good news, it means that we will not have the doctors there for as long as we do at the moment.
I would argue that we do but, of course, we would want to verify that through our workforce planning processes, for which we have a national framework.
As the committee knows, earlier this year, we published the workforce planning framework in order to put in place a proper system for assessing the numbers of people that we need in all of the professional groups. We will not start to see the benefits from that process until the new year. We have specifically factored in a requirement that people have regard to MMC in that context.
I assume that you anticipate that, during that transition, the numbers might fall short and there might be a great risk of an impact on services. How would you deal with that risk? Will you bring in the private sector or doctors from abroad as part of a contingency plan to cover such a dip, or will we await the crisis and then react to it?
We are not awaiting or expecting a crisis. We are trying to understand and quantify the problem and take steps now to minimise any effect. For instance, the hospital at night initiative is a way of helping to overcome some difficulties. Some specialties have bigger problems than others, potentially, but it would be premature to say, "We think we've got a problem of this size in this specialty in this board." The situation is variable. We want to get to the bottom of the matter and understand it and, as I said, we will be in a better position to do so in a few weeks' time.
I ask the question in a genuine way. Will it impact on one health board more than another, perhaps in areas where there are teaching hospitals or whatever? Is there an even spread? Where will the impact mainly fall? Will it be general and across the board or will there be hot spots?
It will impact differentially according to the medical staffing that exists in different parts of Scotland. For example, the impact is potentially greater in parts of the country that have small departments so, obviously, we are focusing on some of those.
That is what concerns me. Not all of it is in your control—you mentioned the royal colleges, among others who may have an influence on the pace. I am also anxious that in the smaller hospitals the blip—the short-term problem, as you described it—will be used as an argument for further centralisation or concentration of services. I am concerned that it will be used as yet another piece of evidence to show that we cannot sustain small or medium-sized hospitals.
In the discussions that we had with individual boards, they all addressed the matter in similar ways. There was no expectation on my part, or indeed on theirs, that we could not manage the process. I hear what you say about the potential impact on smaller boards or hospitals but they are planning for the process now, so it should not have the effect that you describe.
Mr McNeil mentioned uncertainty in relation to the royal colleges and organisations other than the Executive and the health boards. Last week, Scotland's new chief medical officer, Harry Burns, and I met with the presidents of the royal colleges here in Scotland and it is fair to say that we had constructive discussions. There is enormous good will and determination to ensure the smooth introduction of the new programme. Everyone is clear that they want to work together and, wherever possible, to find solutions to the problems here in Scotland. There is determination to do that as quickly as we can. As I said, we will take stock in the next few weeks, when we have more information from NHS Education for Scotland, which has been leading the detailed work on our behalf.
The point is made, minister, that there is apprehension down the line that there might be an issue that needs to be monitored.
I note that.
Finally, Shona Robison has a question, which will be the end of the process.
My question is on the use of the independent sector. In "Fair to All, Personal to Each" the Executive stated that £45 million was going to be spent over the next three years on negotiating contracts with the independent sector. Can you provide more detail on how that funding has been allocated for 2005-06?
I cannot give you the detailed figures. We have per-board figures for the distribution of that resource and, from the national waiting times unit, how it is proposed to spend that money, which I am happy to forward to the member.
I have a supplementary on the outcomes for those contracts. Will they require the independent sector to deliver X or Y? You will be aware that in England there have been difficulties in delivering contracts. In some cases, only 40 or 50 per cent have been delivered. How will you manage that process?
By not doing our business in the same way. We are having individual contracts. We will get a commitment from the board about what it requires and then go to market. We will also aggregate the procurement—or get the best value for the taxpayer. My understanding of the situation in England—I emphasise that it is my understanding—is that a certain number of procedures were bought, then boards were asked, "Can you use this capacity?" We start by determining the capacity that is needed, what patients require, and where the pressure points are, then we go to market to address them.
But independent providers will only be paid for what they deliver?
Absolutely correct. The contractual basis will be per procedure, per number of patients and so on, so it is very focused.
Minister, you said that you would come back on a couple of issues. As long as I receive information in writing by 20 October, we will be able to incorporate it in our thinking for our report.
I will respond to Kate Maclean on targets, Mike Rumbles on dental budgets, Shona Robison on reporting on efficient Government, Janis Hughes on IT investment and Duncan McNeil on MMC. I am sure that not all of that will feed into your report.
Just watch.
The information should come to me, because it will all need to go to the clerk.
Absolutely. We always do that, convener.
Thank you, and thank you to your officials.
Meeting continued in private until 16:08.