Bosses at Blackpool Victoria Hospital say they will be forced to make £21m of savings this year amid a shortfall in government funding.
Despite ending April with £3.9m in the bank – more than the predicted £200,000 – care still faces being redesigned in a bid to cut costs.
In an interview with The Gazette, finance chief and deputy chief executive Tim Bennett said: “It’s unfortunate, depending on your point of view, but we have to make savings and efficiencies every year.
“Last year we delivered £19 million by the end of the year. This year we have to deliver £21m, so it’s an even bigger target this year.
“Every year, we have to deliver these efficiencies just to almost stand still because, the way the funding works, we don’t get properly funded for inflation and pay awards and stuff like that.
“So we have to find some of that money ourselves from our own internal efficiencies, and that’s what we are doing.”
Mr Bennett accepted patients will see changes to the care being offered, but pledged: “I would hope they will all be positive ones.
“There will be no, ‘We are going to stop this’, or ‘We are going to cut this out’. We have not done any of that here.”
An ambulatory care unit, aimed at reducing needless admissions for tests, was opened beside A&E last year, while two community services are being rolled out to help those with chronic conditions keep them in check.
Mr Bennett said Blackpool Teaching Hospitals NHS Foundation Trust, which runs the hospital, did ‘slightly better than expected’ by ending the year with £3.9m in the bank.
“It’s a lot of money, but in the context of the trust with an annual spend of over £400m, it’s not a huge amount. It’s satisfactory.”
The plan for 2017/18 – though still early in the financial year – is to have a cash balance of just over £6m.
“We have set ourselves a target of getting above £5m. That’s the lower floor of cash we should be operating with at any one time.”
Last August, the hospital announced ‘radical changes’ in the face of a plummeting bank balance, which stood at £27.4m just four years ago.
Chief executive Wendy Swift said that figure would ‘never’ hit zero, and said there was a £10m shortfall in funding.
Gordon Marsden, MP for Blackpool South, said: “I’m extremely concerned about the situation at Blackpool Victoria Hospital and have been for the past few months, with lots of difficulties being reported by my constituents.
“This is clearly a significant effect of government policy and I will need to look very closely at the proposals that the hospital is putting forward.
“I hope that these do not impose unbearable restrictions on the people who most need healthcare.”
Paul Maynard, MP for Blackpool North and Cleveleys, said: “I have always been committed to supporting increases in funding for the NHS.
“Just this week we announced extra spending in A&E and the Vic. We need to further improve funding for the NHS more generally and encourage all services in the area to work together as well.”
What did the trust do to get its bank balance back up?
Mr Bennett said there were a ‘number of different factors’ that combined to leave hospital coffers in a better state than previously expected.
“It’s partly because we managed to make more savings towards the back end of the financial year than we expected, but also we got some additional funding we were not anticipating,” he said.
Extra cash was given towards the trust’s IT systems, while £2.3m more money was paid in incentives and bonuses because of the work done to hit financial targets.
The trust qualified for a £10m Sustainability and Transformation Fund (STF) – given for breaking even financially, and for hitting cancer, A&E and overall waiting time targets – but only after arguing its case.
“We didn’t achieve the performance standards in A&E but we applied for mitigations, and to still get the STF, because the main reasons we didn’t achieve the standard is because of the problems we had over the winter.
“We had an extremely busy period and we have a lot of patients in hospital who didn’t need to be here, and delayed transfers of care.
“There was an appeals process and we agreed we should not lose the funding.”
How will the extra cash be spent?
A boost from an expected £200,000 to almost £4m has been welcomed by the trust.
But what will happen to that extra cash?
“We have done well locally,” Mr Bennett said.
“We know some trusts did not get all their STF monies because they did not achieve their core targets and various other things, and they have lost out because of that.
“So we have done well to get it, and to secure that extra funding. It’s good news for us and for the people of Blackpool.
“It means we can invest in some of the equipment we want to.”
Why did Blackpool’s trust do better than some others?
“We have had quite a good programme around driving efficiencies, which delivered some results,” Mr Bennett said.
“We’re pretty good at securing additional funding.
“Where there are opportunities for bidding for any extra bits of money, wherever it may come from, we’re pretty good at that.
“We do a little bit better than other places in that regard. Success breeds success. If you do slighter better, you get a bit more STF and it grows from there.
“It makes it easier and hopefully you get on the right path – on the right treadmill.”
Where have the savings come from?
A ‘lot’ came from back office operations, Mr Bennett said, such as the transferring of 180 members of staff to a private company, set up to save around £2.5m a year in tax.
It meant the estates department was split into a subsidiary company, though employees were promised they ‘should not notice a real difference’.
There have been efforts made to reduce the amount of time people stay in hospital, and to axe the number of people admitted.
Bringing in more staff medics has helped to lower the ‘premium’ cost of agency staff, Mr Bennett added.
He said: “There’s no one single thing. It’s the overall programme and approach to driving out efficiencies.
“We have got a lot more to go at. We have got some big targets to achieve this year but we are set up in the right way to do them.”
How does the trust know how much money it has to save?
NHS funding can get complicated but, in simple terms, the trust will have to make up the difference between its government funding and its expected costs for the year.
Mr Bennett said: “We get told how much money we can expect for the coming year, but we then get told what the pay increases are going to be for staff, and we have inflation and other things we have to pay for.
“The amount the pay awards and all the other things come to, come to more than the funding we have got.
“So we have to find some savings from somewhere.”
All the easy cuts were made ‘five, six, seven years ago’, Mr Bennett said. “Now it’s down to redesigning care that is less costly than it was previously. Fundamentally, that’s what every trust is trying to do.”
What will this mean for patients?
The medical and nursing chiefs have the power to veto any cost-saving measure if they think it may have an ‘adverse’ affect.
If any concerns are not resolved, “we don’t deliver that scheme”, Mr Bennett added.
That goes for back office cuts as well as clinical savings.
“I dare say, for example, you could go and buy some of the medical equipment we have got at much less a price than we are paying,” he said.
“But if that’s going to have an adverse impact on the quality of care, or some other implication, you wouldn’t want to do it. You wouldn’t want to be told, if you needed a hip replacement, ‘Good news, we now get them at a 10th of the price but they don’t last that long’.”
So what differences will patients see?
“I hope there won’t be any negatives, put it that way,” Mr Bennett said, hailing the hospital’s ambulatory care unit as an example of reducing costs while keeping care quality high.
“We put patients into ambulatory care and do all the investigations and get as much intensive medical input as quickly as we can, to try and stop them being admitted into hospital. The problem is, once people are admitted, it’s harder to get people back home again. If we can keep them out, it’s better for them, and all the evidence suggest better outcomes, but it saves money as well.”
The trust has also launched a new frailty service, which is aimed at ‘picking the most frail, elderly patients’, in A&E and giving them a specialised care package.
The Extensive Care Service, which sees those aged 60 or over with two or more chronic conditions given specialist care at a GP surgery, has also been rolled out.
“A lot of the focus this year is taking those big programmes and making sure they are applied everywhere.
“Until you have it all up and running, you don’t see all the benefits. And until you get all the benefits, you can’t release the staff to go and support that other model.”
Once fully up and running, the services will take some of the pressure off the hospital and save money, Mr Bennett said.
What are the trust’s biggest challenges?
“We have got a growing elderly population,” Mr Bennett said. “We know that increasingly, as people live longer, they have lots of complex medical issues, so there’s that growing demand all the time.
“We are still overly reliant on agency staff, less so in terms of nurses but we are still reliant on doctors. Frankly, there are not sufficient qualified staff to fill all the posts in the NHS.
“The overall financial position is very tight. It’s not easy. We have a big efficiency challenge going forward, and we will have for the foreseeable future. There’s no indication that’s going to change anytime soon.”
Has the proposed £10m loan from the council gone through yet?
“We were referring to £10m at one point, but it’s actually £9.2m,” Mr Bennett said.
“It’s been agreed but we have not drawn it down yet because we are still finalising the terms of the legal agreement.
“It will be put into place within the next two to three weeks, subject to any final legal provisions.”
The sum will pay for ‘significant investments’ such as medical equipment, but will not be spent ‘all at once’.
“The loan with the council was the best deal in terms of value for money we could get hold of.”
The loan will be paid back with interest over 10 years, with Blackpool Council leader Simon Blackburn describing the payment as a “secured loan to an organisation we know can repay it”.