"Difficult decisions" needed as Lancashire NHS is faced with £200m savings target

The NHS across Lancashire and South Cumbria is facing the challenge of having to find £200m in savings – in the space of just a year.
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The target was agreed at a board meeting of the region’s integrated care system (ICS), at which one hospital boss warned that the scale of the task meant “difficult decisions” would have to be made about the services on offer in different localities.

Board members signed up to the savings tally – which amounts to five percent of total NHS expenditure across the patch – after hearing an estimate that the collective deficit of healthcare organisations in the area could be as high as £340m.

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The financial issues facing the region long predate the pandemic. In March 2020, just as the full impact of Covid began to be felt, the forecast budget shortfall already stood at £277m – and that was even after planned savings of £163m had been factored in for the year ahead.

The NHS across Lancashire and South Cumbria has set itself a tough savings target for the year aheadThe NHS across Lancashire and South Cumbria has set itself a tough savings target for the year ahead
The NHS across Lancashire and South Cumbria has set itself a tough savings target for the year ahead

Some of those measures were not ultimately implemented as attention shifted to dealing with the pandemic – and a report by ICS executive director of finance Gary Raphael described the NHS in Lancashire and South Cumbria as now being in a “profoundly challenged financial position”.

He told the meeting earlier this month that “leveraging the benefits” of closer co-operation forged between different parts of the region’s healthcare system during the Covid crisis could help make it more efficient in the future.

However, he added: “We’re also mindful of the fact that having discussions on service change to become a more cost effective system – at this stage – feels quite uncomfortable, [as] we’re not quite out of Covid.”

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A financial improvement board will be established to explore the scope for longer-term efficiency, structural and service savings – but the deteriorating financial situation has seen a list drawn up of “major efficiency schemes” to help hit the initial £200m target during 2021/22.

Kevin McGee, chief executive of Blackpool Teaching Hospitals NHS Foundation Trust and East Lancashire Hospitals NHS Trust, stressed to fellow board members what “the reality” of the demanded savings might look like.

“We’re going to have to do things…that reduce our reliance on staff – and particularly the use of bank and agency staff – which means that we’re not going to be able to do everything in all locations [and] that we’re not all going to be able to have all the support services that we have had.

“We’re going to need to do some really difficult stuff around consolidation of staff [and] services – and, ultimately, the configuration of what we have now will look very different in the future.

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“It can be better, but it will look different. Unless we get right behind that [and] we are prepared to make some really difficult decisions and have some really difficult conversations…we’re not going to get on top of this,” said Mr. McGee.

As well as revisiting some of the previously-identified savings held back during the current financial year, there will be a focus in 2021/22 on non-clinical support services and a refresh of the estates strategy.

The report presented to members also suggested that agency and locum staff costs could be driven down by as much as £20m if the health system across the region continued the “mutual aid” policy developed during the pandemic. That has seen different NHS organisations within the area supporting each other when one of the others has been under particular pressure – such as with the number of critical care beds available.

Proposals will also be developed to ensure the most efficient use of the region-wide capacity for pre-planned procedures – which could see some work currently outsourced to the private sector “at premium cost” brought back in-house. The money spent on such elective activity overall may nevertheless increase as a result of the need to clear a Covid-related backlog – but this will incorporate any one-off sources of funding provided for that purpose.

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Board members were told that any procedures not officially commissioned in the region – but which were still being provided prior to the pandemic – “must not be reinstated”.

Karen Partington, chief executive of Lancashire Teaching Hospitals NHS Foundation Trust, echoed the comments about the difficulty of the decisions which lie ahead – and said that it was important to have “the right people around the table” when making them. She said that it was vital that the individual trusts’ scrutiny bodies were involved from an early stage – and called for a focus on fixing “inequalities” as part of any Covid recovery programme.

“If we don’t do that at the outset, the cost to the system [will be] much greater the longer we go through this process,” Ms. Partington warned.

University Hospitals of Morecambe Bay chief executive officer Aaron Cummings said that transformation could be built in to the system as it restarted the full suite of services after the pandemic.

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“[There] is never a greater opportunity to do it than while we have stopped things and pared back some things,” he said, adding that there was “lots of opportunity for productivity and efficiency” improvements at the level of individual organisations within the system.

Board members were told that savings targets for different parts of the ICS would be finalised as part of the financial planning process due to start next month – but that they were likely to be applied at the level of smaller integrated care partnership (ICP) areas or sectors rather than left “solely” to organisations to solve.

Geographically, the Central Lancashire ICP was the sub-region making the greatest contribution to the £277m deficit identified this time last year, with a total shortfall of £101m. That was followed by Morecambe Bay (£89m), Fylde Coast (£49m), Pennine Lancashire (£35m) and West Lancashire (£2.1m).

Central Lancashire’s two clinical commissioning groups (CCGs) also had significant deficits in March 2020 of £19m in Greater Preston and £13m in Chorley and South Ribble. Apart from West Lancashire (£2m), the other five CCGs in the region were breaking even or in the black.

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Fylde coast GP Dr. Amanda Doyle – the ICS chief officer who will also chair the planned financial improvement programme – said that the system would not become sustainable “by continuing to look at little bits we can chop off and bits of savings we can make”.

Appealing to organisations not to scramble to defend their “bit of the pie”, she added: “This is a fundamental piece of work to look at how we use the money we have got to deliver the best in clinical outcomes for our patients.”

The finance report stated that any efficiency programmes enabling delivery of “the same or better services for less cost” would likely be the first to be implemented, while any which required changing the services on offer or the way they were accessed would be “more likely to take much longer to achieve, particularly if regulator support/public consultation is required”.

Central Lancashire CCGs’ accountable officer Denis Gizzi said ongoing efforts to improve the health of the population would not realise significant savings in the short timeframe they were needed as a result of the immediate financial challenge.

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Citing a scheme from another part of the country where greater use was being made of digital technology to expand overall capacity by reducing the need for in-person home GP visits out-of-hours, he said:

“That is an example of pure technical efficiency that saves money and provides patients with a better service – and I think we need to look at all those examples to substitute classical ways of doing things that cost a lot of money with…more innovative digital methods”.

However, there were several warnings from members about the achievability of the £200m savings target.

Caroline Donovan, chief executive of mental health provider Lancashire and South Cumbria NHS Foundation Trust, said that there was a need to balance “credibility and ambition”, while Isla Wilson, an ICS non-executive director, cautioned that the proposals ultimately agreed must not just “push pressures from one part of the system to another”.

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Meanwhile, Mike Wedgeworth, non-executive director at East Lancashire Hospitals NHS Trust, simply mused: “How on earth, with all the pressures that we’ve got – Covid, long Covid, mental health – are we going to get anywhere near £200m?” He also warned of the risk of making “arbitrary” savings.

As members approved the target and agreed to develop the proposals presented – and any others which come forward – within the next two months, Gary Raphael said it was important that the region set a figure that it was “going to go for”.

“It could be that one or other of the partners doesn’t get there. But if we have got proper system working, we might be able to compensate for that. So…joint working is fundamentally what this is all about,” he added.


The NHS across Lancashire and South Cumbria spent £215m more on staffing as a result of the pandemic over the last 12 months compared to a year earlier.

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A board meeting of the region’s integrated care system (ICS) heard that this and other Covid-related costs had been covered by the government during 2020/21, with the area receiving an additional £343m in dedicated Covid cash and other additional income.

However, there is uncertainty about exactly when extra government funding will cease – although it is expected to continue at least for the first quarter of the next financial year between April and June.

ICS executive finance director Gary Raphael said that any longer-term increase in the cash supplied to deal with Covid would depend on “whether or not the Treasury will accept that all the new measures that we’ve got for infection control will be with us forever and therefore needs a higher level of funding [indefinitely]”.

The region is forecast to be almost £55m above its “financial envelope” by 31st March.

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Meanwhile, if Lancashire and South Cumbria receives its expected share of an anticipated £1bn pot to help with its post-Covid recovery plan, it will be in line for £35m. However, Mr. Raphael revealed that finance directors across the North West are arguing to receive a greater proportion because the wider region’s experience of Covid “feels like it’s been worse” than many other parts of the country”.

Nationally, £500m is also expected for mental health. Caroline Donovan, chief executive Lancashire and South Cumbria NHS Foundation Trust, which specialises in mental health services, warned that the area was experiencing “extraordinary demand” beyond the nationwide norm.

She said that the additional funding had been intended for growth and new services “rather than responding to existing demand”.

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