Simon Stevens interview – Health Policy Insight, January 2015

Interview by Andy Cowper

Health Policy Insight: No healthcare system has yet achieved the level of productivity gain required in the 2015-20 period - though Spain, Portugal, Ireland and Greece have all made big cuts. Why will the NHS be different?
Simon Stevens: There are three main zones where we have to unleash major efficiency improvements. Number one, where most efforts to date have focused, is in individual NHS organisations and providers.

The evidence here is that we have not yet run out of road. Monitor’s work on spread of provider unit costs found variation of about 5-5.6%. Over a five-year period, we’d get an annual 1% efficiency in ‘catch-up’ mode.

On top of that comes ‘frontier shift’ (i.e. doing things better), where the NHS has recently averaged about 1.2-1.3% a year. We don’t envisage this will slow down; if anything, it should speed up. Those are both largely institution-specific opportunities.

Secondly, there is efficiency between individual organisations and across the NHS: so-called ‘whole system working’. This is pretty unexploited, given how we’ve set efficiency goals in the past: efficiency at the interface has not really been the approach.

Many of these efficiencies will not necessarily be cash-releasing, but they contribute to offsetting the £22 billion gap by 2020. One single example: the 380,000 people a year who fall at home and are admitted to an acute provider as an emergency. If the local fire service, while doing home safety checks for smoke alarms, also talk about slippers and rugs while they’re there, as some are already doing, further gains are possible.

Or look at the shared agenda of councils and the NHS locally about avoidable care home admissions. Some of these savings can be recycled into funding preventive social care. Or look at the gumming-up of the system as a result of poor care co-ordination between different parts of acute, community and primary care. Or the confused ‘front door’ of the NHS for urgent and emergency care, so that A&E is increasingly where people get their out-of-hours care. This all suggests that we’re in an ‘opportunity-rich environment’ of care redesign, as laid out in the Five Year Forward View.

Thirdly, we have to look at our ability to ‘bend the curve’ by slowing the rate of increasing spend for some conditions that we know are preventable. Type 2 diabetes caused by obesity is an obvious example. Over 5-10 years, prevention will play a part in sustainability.

If we’re not serious on broader prevention, then we will use an increasing share of whatever funding the nation chooses to spend on the NHS on diabetic retinopathy, peripheral vascular disease, amputations and so on.

We also have to ask what is our alternative? The Five-Year Forward View (FYFV) made the case that the next government should double the rate of NHS investment over the next Parliament, relative to growth over this last Parliament, while recognising that the latest data from the Office for Budgetary Responsibility and the Institute for Fiscal Studies show some very hard trade-offs remain for whoever forms the next government.

So we can’t ignore the efficiency opportunities, given the overall envelope of public spending - nor the opportunity costs that would cause for other areas of public welfare.

HPI: One of the most exciting opportunities within the 5YFV is to find new organisational forms bringing primary, secondary and social care together. Assuming that this is essentially about how care is provided, how can you stop commissioners vetoing what they see as a provider cartel?
SS: We will need to safeguard against two particular risks with vertical integration.

One is the risk that, rather than getting smart use of resources across services, you end up Balkanizing primary and community care and pulling funds into acute care settings: the danger of supply-induced demand. That is what some of the United States’ Accountable Care Organisations (ACOs) are producing.

The second risk is that you could see a lack of patient responsiveness: ‘like it or lump it’ care.

So to prevent these risks, we’ll have various tests – starting with a default assumption of a partnership of equals between GPs, community services and hospitals if health economies want to form a primary and community system (PACS). And to address supply-induced demand, PACS will have to be capable of taking delegated funding decisions for their accountable population, to get them to internalise the need to make good decisions about how they’ll care for their population as a whole.

HPI: In your HSJ Lecture, you said that acute providers would find it harder to take on a population risk than they imagine. Why?
SS: Because managing an institution is so different to managing a care system. A typical acute NHS provider, such as a district general hospital, may only manage 35-50p of each pound of NHS spending that its patients incur.

Having a clear line of sight on the ‘whole pound’, and a better understanding of patient behaviours outside the acute hospital and how to influence that, have not traditionally been part of what hospitals have been asked to lead on.

HPI: The proposed new standard contract bans NHS providers from refusing out-of-area referrals. Why?
SS: There are at least three key principles involved here, and we need collectively as NHS system leaders to work out what is the right way of meeting all three.

The first principle is that for most services, patients whom the NHS agrees need care or treatment should have a reasonable set of choices. They should include local options where sensible, given the service under consideration – for GP services, that’d be very local; for hip replacement, slightly less so; and for transplants, less local still.

Secondly, sometimes providers will have a capacity constraint. In such cases, if many more non-locals want to be treated there, it may be reasonable to say to them ‘the NHS is offering you a timely alternative that’s more locally convenient for you: however, if you want to wait longer for your preferred provider further afield, that’s fine but that provider should not then be penalised if your care breaches national waiting standards’.

Thirdly, the NHS Constitution requires hospitals to treat patients in non-discriminatory fashion, which might argue for applying the ‘taxi rank’ principle in certain circumstances to ensure that patients choose providers rather than providers choosing patients.

We need to bring those three principles into a practical balance, and this is something we’ll have to discuss further.

HPI: If we agree that previous failure regimes have failed, how will your success regime succeed? Do you currently have the right mix of legislative power and stakeholder engagement to guarantee this ontological triumph?
SS: Defining failure or success in the NHS has tended to be about the individual institution, rather than the whole system locally. That approach also often rested on an unspoken assumption that financial or operational problems were just about the quality of local managers. And it assumed that labelling them in those terms would trigger a cultural change; new leadership behaviours; and the community response to drive required improvement.

In practice, I think we can often challenge all those assumptions.

Yes, sometimes there has been poor performance and institutional leadership that was not good, and we may have to call a spade a spade as a precondition to fix that. But for many distressed economies, that have been 'under water' for a decade or more, it seems obvious that rotating personnel - specially the chief executives - has not succeeded. If that approach were going to work in those health economies, it would have done so by now.

That said, the success regime isn’t going to be happy-clappy ‘kum-by-ah’ stuff: it’s going to require some tough talking and difficult decisions. Collectively, the NHS has traditionally put lots of money into those health economies by the back door after the event, without leveraging sustainable change. That didn’t work either.

So there will be firm conditionality linked to all funds for transformation in those geographies. We need a coalition of the willing to step up and do something genuinely different. We’ll focus at both ends of the spectrum: most of our early effort will be directed to those challenged geographies - and also to those who are ready for transformation.

HPI: Does the FYFV's focus on Multispecialty Community Providers and Primary And Community System acknowledge that when the money has run out, NHS England has to reinvent itself as the NHS Provider Board?
SS: It’s going to take a joint effort by the national NHS leadership bodies. We, the Trust Development Authority, Monitor, Health Education England and the Care Quality Commission will together be in the business of helping local care systems reshape themselves in line with each individual locality’s needs. We’ll be ecumenical, and occasionally evangelical!

HPI: Does the NHS have a culture which tends to bullying and covering-up, as many people allege? If so, what is your role in addressing this?
SS: Overall, the quality of care in the NHS is high. Net public and patient satisfaction are strong. Most staff find the NHS a stimulating place to work, offering rewarding careers doing meaningful and compassionate jobs. We see evidence of this in the NHS patient and staff surveys.

However, we also see from staff survey and high-profile examples in some institutions and hierarchies that this isn't the culture everywhere. And organisations that haven’t got the right kind of culture for their patients and staff have to change.

We see big variation. For example, we know there’s more to do in some ambulance trusts to improve the proportion of staff saying that their ideas for improvement are taken seriously.

We still have a lot of improvement to make in partnership with our black and minority ethnic NHS staff. The proportion reporting they’ve been bullied or harassed is double that of white staff. Such big differences mean that we know we can do better, as many employers are.

The Secretary Of State and I asked Robert Francis to look at whether current whistleblowing protections are sufficient. Of course not every individual whistleblower will always get everything right, but the act of whistleblowing and of patient complaints often do NHS a favour by indicating where problems lie - but it doesn’t feel like that to many who do so.

HPI: Cumulative prospect theory suggests that people weigh losses more highly than gains. How will you support local health systems to sell the benefits of major change which involves what opponents can frame as cuts and closures?
SS: If we succeed in making our argument in the FVFY on funding, then the current projections are that the NHS budget will continue to grow faster over the next five years than it has over the past five.

But of course it will be hard choices at the margins, and we’ll need to change how many services are run.

I don't think NHS leaders should beat themselves up too much on this point: we’ve actually been very effective at adapting to change and new ways to offer care over decades, much of which has been driven by new technologies and treatments and treatment modalities. We know how to do this, given the right tools.

Our best shot to get that right will be to engage with local communities, voluntary organisations, front-line clinicians and patients.

HPI: Delivering major change requires not only the vision, but also capacity, capability and cash. Have you got the three Cs you need?
SS: Those are three key considerations. We know what the model of delivering large-scale change requires. Create shared vision. Win hearts and minds. Form a guiding coalition. Over-communicate. Don’t declare victory too soon, while getting some early wins. Provide technical and financial support to allow change to occur.

If we’re deliberate and thorough in all these areas, and a few others, it’s doable. As I’ve said, this is not a discretionary activity.

HPI: You’ve got the cash you need?
SS: To borrow the Chancellor’s word, for next year we’ve now got a ‘downpayment’ on the Five-Year Forward View, including £450 million for transformation next year.

Within this, providers of specialised commissioning will again see the largest funding increase, but there will also be real increases for primary care and mental health. And the number of CCGs more than 5% below their fair share of funding will be reduced from 34 to 17.

HPI: The Secretary Of State recently called for NHS to move its culture, becoming one less of Stalin and more of Gandhi. Do you think he wants more passive resistance from the NHS, or something else?
SS: I assume that he was referring to the importance of creating more of a social consensus on change, bringing people with us and mobilising intrinsic motivation, rather than using diktat and fear. Who could argue with that?

And given Stalin’s appalling record as one of the 20th century’s most murderous dictators, in the same league as Hitler, Pol Pot and Mao, it would be a nice moment to excise that adjective from management discussions, given that the NHS’s mission and ethos is the polar opposite.

HPI: Your speeches emphasise your aim to avoid robbing Peter to pay Paul (despite its success in focus groups of the Paul demographic). Are you going to top-slice the CCG budgetary Peters to help reform the health economy Pauls, and if so by how much?
SS: For next financial year, no. £450 million is specifically earmarked for transformation, so the rest of the £1.5 billion is to sustain front-line health services.

HPI: Are the weekly Monday morning system performance meetings of the tripartite (NHS England, CQC and Monitor) with the Secretary Of State an admission that the NHS remains resolutely un-liberated, or is there a weekly crisis such as the 2012 Act says permits the SOS to intervene?
SS: The meetings are a pragmatic response, giving us the benefits of having aligned leadership, while respecting the different roles that each of us have to play. I’m entirely comfortable with that

HPI: How have NHS England as a specialist commissioner and CCGs improved the NHS's technical and allocative efficiency?
SS: We’re bringing a blend of local responsiveness and national consistency, more rigour and greater transparency to a range of decisions that were previously made in differing venues with differing logics.

We’re focusing on improvement in a number of high-profile areas, including mental health, cancer, learning disability and obesity – there will be a big push over the next 12-24 months on connecting commissioning levers with improvements.

HPI: If there were a more consistent way of training managers to do things such as bed management, would we have fewer issues?
SS: Inspirational local leadership and rigorous operational management are complements, not substitutes. Where internal hospital processes aren’t well-managed, they cause delayed patient discharges and then poor patient experience in A&E: it isn’t just about community and social care capacity. Core operational ‘blocking and tackling’ also has the potential to sort out some of the diagnostic delays in cancer pathways and elective care referral-to-treatment performance. So yes, I agree with you.

HPI: Why is there an absence of a co-ordinated workforce policy? Is this the product of DH workforce functions being outsourced?
SS: I do think we need more co-ordinated action on national health and social care workforce issues. That’s why, as a follow-up to the FYFV, we’re starting a national workforce board that will bring together employers, Health Education England, staff representatives, NHS England and others to create a forum where the bigger issues can be tackled – just as we are doing with the national information board.

HPI: What would have been different if you'd been NHS England's first chief executive?
SS: There would have been one fewer national NHS leader called David.

With thanks to Simon Stevens and Tom Easterling

Simon Stevens material from the HPI archives
Simon Stevens talk at the Kings Fund, 2009
Simon Stevens interview, 2009
Simon Stevens interview, 2011
Advice on starting the NHS England job, 2014