Audit Committee, 12 Mar 2008

Meeting date: Wednesday, March 12, 2008

Official Report 292KB pdf

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“Overview of Scotland's health and NHS performance in 2006/07”

Under item 3, we will hear evidence from Dr Kevin Woods, Alex Smith and John Connaghan. I ask Dr Woods to make a brief introductory statement.

I welcome the Auditor General's report and his assessment of the progress that NHS Scotland has made against the top priority targets for 2006-07. The report reflects positively on staff in the health service who must take the credit for this record of progress and improvement.

A key example of that impressive performance is, of course, the unprecedented reductions in waiting times. The reductions have been maintained since the period that is covered by the report and are planned to fall further over the next three years.

As the committee will know, we set out NHS board performance targets in a framework called HEAT, which covers health and health inequalities, efficiency, access and treatment, including quality measures. We believe that establishing and maintaining such rigorous and systematic targets and reporting on boards' performance against them are important in encouraging better performance. The HEAT framework also provides the basis for boards and the Government to account to the public and the Parliament for performance. Indeed, the Auditor General was able to use the HEAT framework in reviewing and commenting on NHS performance in 2006-07.

On financial performance more specifically, I was pleased that the Auditor General's report acknowledged that NHS Scotland is in an improved financial position and that boards have significantly reduced the use of non-recurring funding to meet their financial targets.

Under the 2007 spending review, health spending will increase by an average of 4.1 per cent over the next three years. We have set out our detailed spending plans in the budget, which is designed to support the achievement of the Government's strategic objective for health. "Better Health, Better Care", which was published in December, describes the Government's priorities, which are to improve health, to reduce health inequality and to improve the quality of care to patients, including shorter waiting times.

We have significantly developed the HEAT core set of targets for 2008-09 to reflect new priorities. For the first time—this will be of interest to the committee—HEAT targets link with the new national performance framework, which sets out the new Government's purpose as described in the budget document in November. The committee will be aware that the national performance framework includes seven high-level targets—one of which is for longer, healthier lives for people in Scotland—and a total of 15 national outcomes. The revised HEAT targets for the coming year explicitly link into those outcomes and show how the NHS will contribute to achieving overall objectives.

As in previous years, NHS boards will be publicly held to account on their 2007-08 performance through the annual review process, which is chaired by the Cabinet Secretary for Health and Wellbeing. I can advise the committee that, in addition, we intend to publish a new annual report on the NHS in Scotland during 2008. It will set out an assessment of overall performance in a concise and accessible way. The report will draw together data on boards' performance against all HEAT targets, and it will provide information on progress, related developments, costs, output and quality in a publicly accessible form.

In conclusion, although the NHS has made good progress, there is obviously still much to be done in this 60th anniversary year of the NHS to improve health, to tackle inequalities and to improve health care in Scotland. I am confident that the strategy that we have set out in "Better Health, Better Care" and the supporting set of priorities captured in the HEAT framework and through our local delivery planning system provide a sound basis for further progress.

I hope that my short summary has been useful to the committee in setting the context. I will be happy to answer any questions.

Thank you very much. We start with questions from Jim Hume.

You have probably covered the two points that I wanted to ask about, Dr Woods. The NHS has previously not published annual reports on finances or performance. Will you clarify that reports will be published on not just NHS performance, but finances? Will you also clarify that the new HEAT targets will match the Government's targets, including those on cancer, smoking and teenage pregnancies?

Yes, I am happy to do so. You have described our ambition—that is exactly what we want to do.

Ambition?

Our intent—that is what we are going to do.

The word ambition implies something slightly different.

If ambition is the wrong word to describe a determination to do something, forgive me. We are going to do it.

We are all ambitious, but we do not always achieve our ambitions. Thank you.

This is a much more constructive issue than the one we were talking about previously. What are you doing to ensure that the NHS gets best value? How do you compare the NHS in Scotland with that south of the border and with continental European countries?

We look closely at how health care policies are developing throughout the world; we do not limit ourselves to a neighbouring country. We are interested in developments in other parts of the United Kingdom, Europe and beyond. It is fair to say that we take cognisance of what is going on.

Of course, one has to be careful about comparisons, as they can be exceptionally difficult to construct. If I may, I will illustrate that, and then I will ask Alex Smith to comment on best value, which we embrace, and locate that within the context of a programme that we are developing on efficiency and productivity. John Connaghan might have something to say about that.

There have been comments made that cancer survival rates in Scotland are not as good as they are in other European countries. However, the more detailed work that has been published demonstrates that cancer survival rates in Scotland compare very well with those in many other countries. What was being talked about was partly a consequence of comparing different measurement systems as used in different countries. As it happens, Scotland has a very good system of measuring cancer and cancer survival rates, which is based on very good cancer registries and the work of the Information Services Division. The point is that we look closely at experience elsewhere. We are not at all complacent—we are very proactive—but we have to be careful about comparative data.

Mr Smith might want to say something about best value, and then Mr Connaghan can talk about efficiency and productivity.

The NHS embraces best value and seeks continuous improvement—we touched on that earlier today—but it is sometimes quite challenging. Audit Scotland has examined best value in the NHS and the committee will have seen the report, which was quite encouraging. In the NHS, it is our efficiency and value for money that demonstrate best value, but it was important to say that we do business in the context of continuous improvement. The NHS has achieved efficiency and we continue to report well on that—the report before us confirms that. John Connaghan will want to extend that into benchmarking the other work that we do.

I will say a word or two about the three key components of best value, continuous improvement and redesign.

On the support that we give to the service for redesign and continuous improvement, we do, indeed, attempt to import the best from south of the border, other countries and from within the NHS. Many good things are happening up and down the country.

From time to time, we publish good case studies and "Delivering Better Health, Better Care Through Continuous Improvement" is one of the most recent. It gives an idea of some of the national programmes that we have running and of other things such as the work of the unscheduled care collaborative programme. The document contains 47 examples of good work being done in Scotland.

Benchmarking is also important because it allows us to employ metrics and measurements, not just within the NHS in Scotland, but outside the NHS, although, as Dr Woods said, we need to be careful about that. In the past year, we have published a major report on theatres and one on mental health. I am not aware of any other publication in the UK and—I think—Europe that examines mental health efficiency and productivity benchmarking. We expect great things to come from the benchmarking programme, and we intend to roll out more reports during the next year or two.

The last strand is where we need to stitch all the individual programmes together on a whole-system basis to gain an overview and determine whether the programmes are working. That is why we recently took the opportunity to establish a national group that will concern itself with national strategy on productivity, efficiency and best value and ensure that the proper support is available throughout the NHS.

The briefing that we had from NHS Lothian mentioned that it has worked with GE Healthcare Ltd on the kaizen process—is that right?

Yes—the kaizen blitz.

That is right. The process involved team working. We were told that, by bringing together everyone in the team from the porter right up to the consultant—I should not say "right up"; I mean "including"—they were able to increase productivity substantially. What are you doing to develop that work in other areas of activity and other parts of Scotland?

The programme that you mention is an interesting one. We have similar programmes in most other health boards. We have spent quite a lot of time trying to build capacity within NHS boards for them to undertake similar work. There are different approaches, and that is just one example. Nonetheless, we are interested in it. We had some presentations about such examples to disseminate that learning to all NHS chairs. In late June, we will hold our annual NHS conference, which is an opportunity for people to talk about such improvement experiences and share them.

Mr Connaghan might want to elaborate, but I will say one other thing about best value, efficiency and productivity. In 2006-07, we had an efficient government savings target of £353 million. I am pleased to say that we surpassed that target. We delivered savings of £358 million through our efficient government programmes. That performance has carried on into 2007-08. Indeed, our performance in the current financial year might be slightly better. There will be a formal report on that in due course. We take efficiency, productivity, efficient government targets, redesign and continuous improvement seriously.

Sorry—what is the figure for the savings that you achieved for 2006-07?

It is £358 million. I think that the figure is stated at the back of the Auditor General's report

Yes. And you expect to surpass that in the current year.

I do not know whether Mr Smith can tell us that.

The target for the three years to the conclusion of 2007-08 is £531 million. That will be exceeded by as much as £80 million. However, that is a projection at the moment. The figures have not been published.

But the target will be exceeded.

We have exceeded it already and we believe that we will exceed it further.

How does your work fit into the new national performance framework for the Government as a whole?

We will give you a more detailed note on that, because it is difficult to explain, but as I tried to suggest, we have tried to ensure that there is effective alignment between the specific targets that we have in the NHS and the 45 indicators and 15 national outcomes, so that we can be clear about what contribution the health service will make alongside the contribution of other parts of the public sector.

You will find a description of the system in the information that was published at the time of the spending review. What we are doing underpins that. We have thought through the connections between the specific targets and the content of the framework.

In paragraph 59 of his report, the Auditor General made the case that, despite a drive for service redesign to shift the balance of care, there has been no change in the balance of funding between acute, community and primary care services during the past three years. Dr Woods, are you concerned by that finding? What steps is the Government taking to try to ensure that boards shift funding to community and primary care services?

I will make a number of points. First, the current means of measuring progress on the objective are not adequate. We need to do more on that. That is why we are developing a new approach to measuring performance and achievement against the policy. Forgive me if this is a bit detailed. We have been impressed by work in NHS Highland on what its board calls the "cost cube", which is a way of capturing financial spending and performance activity by programmes of spend. It is interesting that in his report the Auditor General gave an example of the use of programme budgeting in a primary care trust in England. The cost cube model takes that approach but goes beyond it and disaggregates the spend by community health partnership. It creates a method whereby we can analyse spend by programme and place and we can generate the detailed information that is needed if we are to discuss how services might be changed and what such change would mean for resource and activity shift.

The work originated in NHS Highland, as I said, but we are working with colleagues in other parts of the health service to develop the approach, which will give us a much better method of tracking the policy's achievements. The current instruments do not provide the degree of detail that we need, which is why we have embarked on the development work.

Secondly, three years is a short time for such significant change. We always conceived of the policy as a long-term shift. At the time of the national service framework, we talked about a 10-year programme. That is pertinent, because if we cast our minds back, it is clear to us that there has been significant transformation from institutional care to much more community-orientated services for people with learning disabilities and mental illness. That transformation took at least a decade to achieve.

There are signs of progress. The Auditor General's report, "Managing long-term conditions", about which we have corresponded, raised issues to do with progress in the area, which we fully accept. We are trying to use the opportunities that are presented by, for example, managed clinical networks and our work on risk prediction to accelerate the programme.

Lastly, but by no means least, it is important that we build on the successful introduction of community health partnerships, which are an essential building block for the policy. I note that the Auditor General said that until the end of 2006-07 we were getting the infrastructure in place and that we need to move on and take advantage of the organisational arrangements to secure benefits for patients. Considerable benefits have already been achieved. For example, there has been much progress throughout Scotland on diabetes.

I apologise for the length of my answer, but we are talking about a pretty big policy area.

Can I ask a supplementary? Do you still have concerns about the amount that the NHS is having to spend on bedblocking?

We refer to delayed discharges, of course. Traditionally, we have spent about £30 million per annum on delayed discharges. The very good news is that the data that were published at the end of January recorded the lowest ever number of people whose discharge had been delayed for more than six weeks. Our target is to reduce that figure to zero by the end of this month. There is a period in which the data must catch up with what is happening on the ground. We are encouraged by the progress that we have made in that regard. For the moment, we are content with the resource that has been allocated to achieve that.

How is the NHS using data on the causes of mortality in deprived communities to address health inequalities?

The adverse consequences of deprivation for the health of people in Scotland form one of our key concerns. The data that are presented in the overview report give a high-level picture, which shows that although health in Scotland is improving at a good rate, there are still some important inequalities that we need to address.

I will illustrate the connection between those two points by citing the example of coronary heart disease, which is one of our major killers in Scotland. In 1991, the death rate in the most deprived communities was 205 per 100,000 of population. By 2006, the death rate in the equivalent most deprived population had declined to 90 per 100,000, which is a highly significant reduction. Through our policy, we want to accelerate the rate of reduction in mortality in the most deprived communities. The ministerial task force on health inequalities is considering that issue and I notice that, today, the Health and Sport Committee is taking evidence on what some of the appropriate policies might be in that regard.

I will focus on two such policies. One is about reducing risk factors, which means addressing issues such as alcohol consumption, diet, exercise and smoking—which remains an issue for us. It also means doing more to ensure that people who can benefit from modern therapies get access to them. In that regard, our keep well initiative, which we run as part of what we refer to as our anticipatory care programme, is showing extremely encouraging results in taking health assessments and subsequent treatment to parts of our population with whom, traditionally, it has not always been possible to engage in quite the way that we would have wanted. There are some excellent examples of the operation of those projects in different parts of Scotland.

That was another lengthy answer, but addressing health inequalities is central to our work, which is driven by our analysis of the data and what the evidence tells us about what works.

Paragraph 13 of the report says:

"Mortality rates from chronic liver disease have also risen over the last 20 years".

In your letter to the committee of 15 February, you said that, as part of the current spending review, £20 million is to be spent on reducing the harm that is done by alcohol misuse. Do you have any details on how that money will be used?

The alcohol problem is a serious issue for Scotland. The rising trend in consumption and the adverse health consequences of that have been well documented. I believe that the chief medical officer has spoken about that in various places at various times, and the point is also made in exhibit 5 in the Auditor General's report.

The total budget proposed in the spending review to tackle the alcohol problem is £85 million over three years. We will set out much fuller details of the actions that we intend to take in a document that we intend to publish in late spring or early summer. It will set out the Government's plans for tackling the adverse consequences of excessive alcohol consumption.

One area that we are particularly interested in—and one intervention that the evidence suggests is effective—is known as brief intervention in primary care settings. It has emerged from the work of professionals in Scotland, and it involves taking the opportunity to raise issues of alcohol consumption in the primary care context. We will want to do that, but we are planning also to invest in additional nurses working on alcohol issues in primary and acute care settings. The full detail will be published in the plan.

We hope that the £85 million will go some way to reducing the levels of chronic liver disease shown in the statistics in exhibit 5. When we consider the number of deprived communities in Scotland, alcohol is a major issue that needs to be addressed.

I agree, and the policies that we are pursuing beyond alcohol to tackle the adverse consequences of deprivation on health will also make a contribution. We often talk about a complex of issues—not just alcohol but diet, exercise and smoking. We have a range of initiatives that are increasingly designed to provide support to deprived populations.

There was a marked rise in drug-related deaths between 2005 and 2006. Can you shed any light on why that might have been the case?

I am not sure that I can point to a single reason. If it would help, I will be happy to investigate whether we could submit a more detailed note on the issue.

We will set out the Government's plans to address drug abuse later in the year, and we have already identified in "Better Health, Better Care" some of the key themes that we will aim to address. They include improving our approach to drugs education and information, better treatment for drug abusers, better help for children whose parents are substance abusers, and better enforcement. We are backing the initiatives with additional resources—about £94 million for treatment and rehabilitation over the spending review period. Again, we will set out the details later.

On the specific concern that was raised by Stuart McMillan, I would rather send the committee a more detailed note on the causes, if we understand them, of the increase in drug-related deaths.

I will bring us back to mortality and deprivation and some of the things that you have outlined should be done and, indeed, have been done. Should more be spent on health in deprived areas per head of the population?

That is our policy. The resource allocation framework that we use for NHS boards includes a specific adjustment to distribution of resources to take account of that. Beyond that, in many of the policies that we deploy in relation to smoking, alcohol, drugs and so on, we recognise that there are additional needs in deprived areas. The short answer is yes.

The latest resource allocation has just been made. Was it based on spending more per head of population in areas of deprivation?

The allocation for 2008-09 is based on the Arbuthnott formula, which includes a specific adjustment for what is known as morbidity and life circumstances, so the answer is yes. Deprivation is one important factor in the formula—there are others.

Was an adjustment recently made to resources that reflected population growth rather than deprivation and mortality?

Mr Smith might want to comment on that. I do not know whether you are talking about the review of the resource allocation formula, which was carried out by the NHS Scotland resource allocation committee, or NRAC. That committee was chaired by Dr Karen Facey and ministers have just accepted its recommendations. The formula operates by combining a number of adjustments that are based on population. The starting point is population, and adjustments are made to take account of morbidity, life circumstances and excess costs. In the past, Lord Foulkes has asked me about allocations to rural health boards and the extent to which we take account of remoteness and so on. We put all those factors into the formula and the result is the allocations that are made. I hope that that answers the question.

Okay. I can pursue that elsewhere.

I have some questions on cost pressures and provision for negligence pay-outs within the service. I understand that the NHS set aside £208 million for clinical negligence pay-outs in 2006-07, but the actual amount that was paid out in that year was £23 million. In itself, that sum is pretty high compared with the 10-year average, but it seems that a huge contingency is set aside that is not used or required. How does that pass the test of best value? Could some of that money be reinvested in the service?

I ask Mr Smith to comment on that.

Ideally that would be the case, but under the accounting regulations, we have to make provision where we believe that sufficient risk has been identified and can be quantified. That is what we have done. The position is quite volatile and the provisions and the actual settlements vary. Willie Coffey is right to ask why we sit on such provision when, in a better situation, the money would be deployed for direct patient care. However, while significant risk exists, it is required that we make proper provision for it.

In the long term, we can address the matter by improving the quality of our services and reducing the risk in how we deliver them. That is what we are trying to do.

Audit Scotland highlighted the issue in a report in 2000 and I understand that an indemnity scheme was devised at that time. I think that it is called the clinical negligence and other risks scheme, or CNORIS. However, it seems to me that nothing has changed in the assessment of risk, and that huge amounts of money that could be used to deliver better services are not being used. Notwithstanding what you said, how on earth can we be in a position in which up to £180 million is set aside this year and not being used? The pay-out has never peaked beyond £23 million, but nearly £200 million has been set aside. I cannot understand how that represents prudent financial planning.

I have tried to respond to your challenge, and I do not disagree with your position. In an ideal world we would not be in that situation, but it is difficult for us not to make that assessment of risk. We would be criticised if we allowed ourselves to reach settlements that exceeded provision that we had made—that can happen—and we would be in a much more difficult place.

We have tried to spread the load by examining how we approach the matter. We continue to consider the issue, which I am sure will feature again.

What happens to the money at year-end?

It is within the provision—it is income expenditure, on which we produce our accounts, in resource accounting terms. That is how we are judged. Cash does not actually leave—

No, but does the notional allocation, or whatever you call it, go back to the central budget?

That provision is there, so it rests and the outturn remains the same.

I make two additional points. First, the data in the Auditor General's report indicated that there is some volatility annually in the amount that we pay out, which is to do with the nature of the cases. I think that there was an increase in 2000.

Secondly, it is Government policy to introduce a no-fault compensation scheme. We will address the matter later this year and during the remainder of the parliamentary session.

How sustainable are the financial positions of boards that rely on non-recurrent income, given that boards are no longer allowed to use capital funding to cover gaps?

As I said in my introductory remarks, we are pleased by the progress that has been made in reducing reliance on non-recurring provision. In past years, boards were sometimes able to make capital-to-revenue transfers, to secure their in-year position. We have been trying to reduce such activity. Alex Smith will correct me if I am wrong, but I think that for 2007-08 our forecast position on the use of non-recurring resources is about 0.2 per cent. That means that we are getting close to a situation in which many boards are, in effect, in recurring balance, which is an important position to reach. We want boards' financial plans to contain evidence that convinces us that they can sustain that position and meet their efficiency targets. As the committee knows, one board in particular presents issues in respect of achieving that. Mr Smith might want to elaborate on what I have said.

I do not have much to add. We are in a much better position than we have been in previously. That has not happened without considerable effort being made to ensure that we find other ways of sustaining services, through service improvement, change and so on, instead of relying on opportunistic gains. Of course, such opportunistic gains will no longer be made, because profits on sale of assets will no longer be available to use in that way. There will always be sources of non-recurring income, through refunds for example, but such income will be much less in the future, so our ability to use it will diminish. The good news, which is backed up by evidence, is that we no longer rely significantly on such income. That is how we intend to continue.

How does Western Isles NHS Board fit into the picture?

That is the board to which I just referred. If you can bear the repetition, I will say that our objectives are to achieve in-year balance, to secure a recurring position as quickly as we can, and to address the accumulated deficit. If we were convinced that the board had a set of coherent plans, we would think about the approach to the accumulated deficit, but our approach will probably be based on brokerage.

That concludes this part of the meeting. I thank Dr Woods for his evidence on two lengthy agenda items. Your contribution and that of your colleague have helped us.

Meeting suspended.

On resuming—