District general hospitals: The worst of times

They say January and February are among of the most depressing times of the year. The forthcoming months do not look too bright either, particularly if you are a chief executive of a district general hospital (DGH). They face challenging times as a result of the local transfer of activity, and income, away from DGHs into community services and specialised centres.

DGHs will have to adapt in a radical way to avoid a Dickensian scene, with hospital chief executives echoing the moment in Oliver Twist, where their “budgetary deficit bowl” is thrust in front of the secretary of state, for a financial bailout or implementation of an NHS failure regime.

There are two potential policy issues on the horizon that may adversely impact on DGHs: the implementation of the Better Care Fund and the Clause 118 amendment to the Care Bill, which is currently progressing through Parliament.

In 2013, the government announced the creation of a £3.8bn Integration Transformation Fund, subsequently renamed the “Better Care Fund”. This has been described by the government as “a single-pooled budget for health and social care services to work more closely together in local areas”.

Although this new scheme will come into effect in 2015/16, £200m of current funding will be transferred from the NHS to social care in the financial year 2014/15. Overall, £1.9bn will be transferred from Clinical Commissioning Group (CCG) budgets into the Fund, which equates to approximately £10m for each CCG in England. However, this is not new money; in effect it is a “redeployment” of funds and activity from acute hospital health services into the community.

For example, NHS England has dictated that hospitals must reduce their emergency activity by 15%. However, DGHs compared with specialised centres or large acute foundation trusts tend to derive a higher proportion of their income from non-elective work. With the change in focus towards preventative medicine and community service provision, together with the requirement for hospitals to reduce their non-elective or unplanned admissions, this will only add to the financial instability of hard-pressed DGHs.

In addition, there is a policy move to centralise specialist services (attracting a higher specialised payment tariff) away from general DGHs to more specialised trusts, further reducing activity and income. A small number of DGHs are capitalising on this move by becoming increasingly specialised in service delivery, or more specific in terms of disease management. These institutions have moved away from the generalist provision of services traditionally associated with DGHs and are in a minority.

While “disruptive” policy drivers can benefit change in organisations like the NHS that are often described as “sluggish” in developing and implementing new models of care and service delivery - there is a real risk that these two additional burdens may put pressure on acute DGHs already struggling to reduce costs, improve efficiency and productivity, manage their estate and balance the books.

While ‘disruptive’ policy drivers can benefit change in organisations like the NHS that are often described as ‘sluggish’ in developing and implementing new models of care and service delivery - there is a real risk that these two additional burdens may put pressure on acute DGHs already struggling to reduce costs, improve efficiency and productivity, manage their estate and balance the books

Fundamentally, our health system and structures (in line with mostmodern healthcare systems) have been designed to “treat” acute episodes, rather than to “manage” chronic conditions. The system is unable to rapidly respond to the changing epidemiological needs, such as the growth patients with multiple chronic conditions. The focus is now shifting away from the acute hospitals as key providers of care for chronic conditions, towards the development of community hubs with multidisciplinary teams applying case management techniques to myriad of diseases (avoiding any contact with the acute hospitals, wherever that is possible).

This is happening at a time when amendments to the Care Bill are being introduced as the bill passes through the committee stages at Westminster. A controversial amendment to this legislation is the insertion of Clause 118. This clause gives the secretary of state powers to close or downgrade hospitals that fall within the “health economy” of other failing health institutions, irrespective of the quality of clinical services delivered or the hospital’s own balance sheet. Importantly, there is no requirement to take the opinions of local CCGs, or the public, into account.

This amendment effectively addresses the deficiencies in the secretary of state’s powers to reconfigure NHS institutions, as demonstrated in the high-profile failure to downgrade Lewisham Hospital A&E (in order to benefit the neighbouring, financially-troubled South London Healthcare NHS Trust) last year, in the face of fierce local opposition and unfavourable judicial review conclusions.

These new powers, if approved by Parliament and enacted, may cause a few sleepless nights for DGH chief executives. It has the potential for wide-ranging reconfiguration of services across whole areas if one trust has the misfortune to require a financial failure regime, a situation made far more likely if there is wholesale transfer of activity from DGHs to the community, or specialised centres, as a result of the Better Care Fund and other policy initiatives.

Ageing, medical innovation and changes in the burden of disease (for example, the increasing prevalence of chronic illnesses such as diabetes) have all demonstrated that the NHS is not agile enough to modify healthcare delivery or the institutions that provide it. The focus is increasingly on prevention and self-management of chronic ill-health rather than a hospital-centric model. These structural and epidemiological challenges are beginning to emerge in other developed countries and will increasingly look towards the NHS for lessons in the management of these changes..

It is essential that DGHs become leaders in developing new models of provision, integrating their care pathways vertically with community services and horizontally with specialist centres. Hopefully the Competition Commission and regulator Monitor will allow them greater freedom to explore these models. Otherwise DGHs will become to healthcare what Dickensian workhouses were to the poor, memorials of a failure to adapt to changing conditions.

Dr Matthew Williams-Gray is an associate director at Mace and head of strategic healthcare consultancy services