'Major service transformation and Epsom Hospital efficiency savings required to recover £11.4m deficit', says CCG boss

In a year-end interview with the Epsom Guardian last Friday, Miles Freeman, SDCCG’s chief officer, spoke about the organisation’s worrying financial position – one which he said will take more than a single year to recover from.

Mr Freeman said he was expecting the CCG to break even or returm a deficit of just under £2m for this financial year, but that it will actually be recording an £11.4m shortfall – just a year after it ended with a £72,000 surplus.

And the experienced NHS bureaucrat said that although he is not planning to make service cuts, there will be a major “transformation” of services – including significant efficiency savings at Epsom Hospital, which accounts for half of the CCG’s budget for acute care.

CCGs were set up by the 2012 Health and Social Care Act as GP organisations responsible for commissioning the majority of an area’s secondary care services. They replaced primary care trusts, which were dissolved last April, and are overseen by NHS England.

SDCCG consists of 33 GP practices across areas including Epsom, Ewell, Ashtead, Banstead and Esher. 

Mr Freeman said the CCG's deficit has been driven by a number of factors, including NHS England cutting £4.7m from its budget last month – a ‘specialised commissioning adjustment’.

He said: “They've gone through a retrospective exercise and decided we got too much funding the first time round.”

The chief officer said the CCG has also been spending increasing amounts on its acute care, particularly in the last two months – something he believes may have been caused by more stringent elective care targets being placed on its hospitals because they are actually meeting the Government’s target of treating all patients requiring elective care within an 18-week time frame.

He said: “We’ve got an increase in our acute spend which has happened really over the last two months which may be driven by the ‘18-week catch up campaign’.

"Everyone who is referred under an 18-week pathway for elective care has to be seen within 18 weeks and there is a guide that you've got to do 92 per cent within 18 weeks.

“We don’t have much of a backlog problem but because some trusts haven't been able to increase their activity quickly enough they have asked some trusts who are performing well to see if they can improve even better to improve the overall position.

“But that's a financial cost for us.

"So instead of people being treated within 18 weeks, they might have to be treated in 14 weeks.”

Alongside this, he said the CCG has seen a big spike in its A&E attendances, and the bill to be paid by SDCCG to NHS Property Services for lease of its buildings has also risen by £1.5m this year.

Mr Freeman, who has worked in NHS commissioning since 2002 and previously worked as a residential social worker with young offenders, said he is very concerned about the deficit - “regardless of whether it’s just a correction – putting us in a place we were supposed to be in”.

He said: “It's clear that we are spending more than we are going to be resourced so we are going to have to put in place plans for us to recover.

“The difficulty is it's happened relatively suddenly and actually gearing up a recovery plan takes longer.

"It's unlikely you're going to be able to recover those types of sums in a single year.

"At the moment, we are trying to negotiate what the speed of our recovery plan needs to be.”

He added: “There are areas where we do spend more than the average.

“Our elective care is far higher than some other areas.

"Some of that may be driven by population demographic. Some of it may be driven just by our providers - we've got an awful lot of providers so there's capacity, you can get in and have your operation, and that may be driving demand so we've got to ensure that doesn't mean thresholds of treatment are slipping.

“Just because you can replace someone's hip doesn't necessarily mean you should.”

Mr Freeman said that “service transformation” will be necessary to recover the CCG’s deficit – and this will need to centre around treating more people in the community and decreasing the cost of this community care.

He said: "We are going to have to do things fairly radically differently if we are going to keep up with our population demographic growth, i.e. the number of over-75s that will be increasing.

“If we tried to broadly treat them through a model of hospital care, followed by community hospital care, followed by long-term nursing care, it's just not going to work.

“We've got to find ways of treating people more effectively in the community and bring down the cost of that community care."

He said that, for example, visits by social workers and nurses to the same house on the same day must be integrated to ensure multiple assessments of patients are not carried out in the community.

Mr Freeman said that as part of efficiency savings, SDCCG may have to reduce the number of sites it offers services from - which he acknowledged, “for a lot of people will be a trade-off between convenience and being able to access the service”.

The chief officer said Epsom Hospital is one of the major areas where efficiency savings will need to be made.

"We need to make sure we are contracting well with Epsom Hospital,” Mr Freeman said.

“There is potentially a driver that it’s been an organisation which has improved its financial position, partially through a savings programme but largely by growing its contract with Surrey Downs and we can't allow that to continue to happen so there will be negotiations with the hospital about how we can jointly make efficiency savings.

"Each time someone goes to hospital we pay whatever's charged by the hospital. So if it finds new ways to charge us of things then we can end up with problems because of that.

"It’s about half of our acute budget so it's an area we can look at but it's also an area where we are one of their main partners so they can work with us to try to make the system more effective.

“We're working with them on what we want the system to look like - how many hospital beds that would need and how community care packages.

“Things would need to change - how you speed up you continuing healthcare assessments so you don’t waste thousands of days in hospital care, how you get social care to respond quicker.

“All these things will mean you can continue with the same hospital bed base or slightly reduce the bed base and still be giving an improved level of care.

"All of these plans will require public consultation and I expect it to be a lively debate."

Mr Freeman said that a number of other CCGs are also in deficit, but that the majority of these are funded at “below their anticipated level” – meaning they get less money from the NHS than expected.

He said SDCCG is funded at its expected level, but the fact that it covers an affluent demographic works against it in the NHS’s “deprivation weighting”.

"There's an argument which certainly Surrey politicians have been putting forward that some of the funding formulas don’t really suit areas such as Surrey as under the NHS formula there's quite a big weighting for deprivation,” he said.

“The issue is that deprivation affects what your requirements are for public health because with deprivation you get more smoking, alcohol and all those sorts of things.

"If you live in areas where people live a long time, you're not going to get funded.”

He continued: "There is a funding forumla which gives you a target allocation of pounds per patient.

"Our target allocation would be somewhere just over £1,000 a patient.

"Other areas in Surrey such as Surrey Heath would have a lower target spend than us as it's got even less deprivation than us but it gets a higher amount of money.

"Some in London - Kensington and Chelsea, Hammersmith and Fulham and Westminster - are massively above, Westminster to the tune of tens of millions so they are recurrently acquiring very large surpluses. So it’s very complex.

"But we don’t have a very good story for getting more funding.”

Although SDCCG ended the last financial year with a £72,000 surplus, Mr Freeman said this figure was forecast to be in the region of £3.3m, and that he believes the CCG was always going to find itself in the red.

He added: "A number of CCGs were set up with deficit positions.

"I think ours was set up with a deficit position it just wasn't apparent for two years.

“Once they worked out what the correct money to take off us would be it exposed the deficit we are in."

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