AUHUK & NHS England Improving Value Workshop Slides and Notes - - PowerPoint PPT Presentation

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Improving Value Specialised Commissioning AUHUK & NHS England Improving Value Workshop Slides and Notes from Group Work

7th October 2015

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Contents

• 1. Presentation 1: Shared Agenda, Shared Challenge

3 Peter Huskinson, NHS England

• 2. Presentation 2: Setting Context - Provider Perspective

20 Mike Sexton, UHB

• 3. Presentation 3: Improving Quality, Reducing Variation

31 Wayne Bartlett-Syree, NHS England

• 4. Presentation 4: Service Variation – What do we know?

38 Madi Parmar, UHB

• 5. Presentation 5: Shared Agenda – High cost Drugs & Devices

43 Michael Whitworth, NHS England

• 6. Group Discussion facilitator notes summary

52

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Shared agenda Shared Challenge

Peter Huskinson NHS England

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• WELCOME AND INTRODUCTIONS
• SETTING THE CONTEXT – A SHARED AGENDA & CHALLENGE
• SHARED AGENDA ON EXCLUDED DRUGS & DEVICES
• COST OF SUBOPTIMAL QUALITY IN SPECIALISED CARE
• LUNCH
• CONSTRUCTIVELY ADDRESSING VARIATION
• NEXT STEPS

AGENDA

4

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• Key challenge for today – expend energy on the shared agenda
• The future looks challenging for both providers and commissioners
• Efficiency, CIP and QIPP – do we have shared understanding?
• Tariff Context but not focus
• Range of Treatments
• Looking ahead to 29th – service rationalisation and review

Setting some context

Context 5

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Challenge for today

Addressing real incurred costs

The achievable ‘efficiency ask‘ Pricing, Top ups, Risk Share Contract Terms Not ignored, but not today’s focus Causes / extent

• f 13/14 deficit

(unless linked to solutions)

Context 6

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Source: NHS England corporate finance, board paper

Increasing proportion of spend on Specialised care

7

2013/14 share of allocation 2014/15 share of allocation 2015/16 share of allocation % % % CCGs 69.3% 69.3% 68.8% Primary Care 12.7% 12.8% 12.7% Public Health 1.8% 1.7% 1.7% Specialised 13.8% 14.0% 14.5% Other Direct Commissioning 0.5% 0.5% 0.5% NHS England Internal Budgets 1.9% 1.8% 1.5% Transformation 0.0% 0.0% 0.2% Total 100% 100% 100%

Context

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FYFV Productivity Challenge for Specialised Services

1) NHS England Strategic Finance team.

Context

• It has previously been calculated that the

NHS faces a gap between expected demand and funding of ~£30bn by 2020/21.

• To address this gap we will need to take

action on three fronts: demand, efficiency and funding. Less impact on any one of these will require compensating action on the

• ther two.
• Delivery of the more active demand and

prevention activities outlined in the Forward View would deliver in the short (e.g. prevention of alcohol harm) and medium term (e.g. action on diabetes).

• The long-run efficiency performance of the

NHS has been ~0.8% annually. We have achieved nearer 2% more recently, although this has been based on some actions that are not indefinitely repeatable, e.g. pay restraint.

Five Year forward view productivity challenge

20 8 10 22 6 14 2 16 12 4 18 0.7 10.2 4.8 4.5 7.4 3.8 2.9 2013/14 6.9 3.6 2.4 0.5 7.2% 2019/20 20.2 13.3 Nominal1

Spend on specialised services £bn

Nominal costs on specialised services by the NHS is predicted to increase by 7.2% per annum between 2013/14 and 2019/20.

£bn

Staff Other Excluded Drugs Excluded Devices 4.7 4.5 10.2

8

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Differential impacts across services

9

5 10 15 50 100 150

Projected service spend CAGR 14/15 to 19/20 Number of providers

Paediatric surgery Infectious Diseases Adult Neonatal CC Paeds CC Neurology Tier 4 CAMHS Secure mental health Chemotherapy HIV Complex thoracic surgery Renal Transplant Renal Dialysis Morbid Obesity Surgery Cardiac surgery TAVI £250m total service spend in 2013/14

• 1. Top 5 services by spend and top 10 services by growth (excl. those with <£30m spend)

Source: Future Financial Pressures in Specialised Services ( financial model) Cancer & Blood Internal medicine Women & Children Trauma & Rehabilitation Mental Health

15 specialised services to illustrate variation in spend ,growth and pattern of provision1

Likely funding growth CAGR?

Future Financial Pressures

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Six services account for ~50% cost growth to 2019/20 (Pre HEP C) – is the addressable spend in these areas?

16 22 14 18 20 0.6 0.2

Neurology Neonatal Intensive Care Cardiac - Cardiac surgery

0.2 0.2

Paediatric Intensive Care Secure MH Rare Cancers Other services

0.1

2019/20 spend

20.2 2.5

Infectious Diseases Adult Chemo- therapy

1.7

Renal Dialysis

13.3 0.3

Neurosurgery

0.5 0.3 0.3

2013/14 spend

Note: Chemotherapy growth includes growth in CDF spend, which is assumed to grow inline with growth in non-CDF chemotherapy spend Source: FFP analysis. See model for sources of assumptions

Mental Health Women & Children Trauma & Rehabilitation Internal Medicine Cancer & Blood

Total: £3.6bn 52% of total growth

Total spend on specialised services (nominal) £m

£bn

Future Financial Pressures 10

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6 contributory interventions were recommended from provider/commissioner workshop input

Publish data to reduce variation Reduce incentives for volume Control deployment of new interventions Increase focus on healthcare value Reshape supply Reduce avoidable specialised care

1 2 3 4 5 6 Publish national activity, cost and outcome data by service and provider to provide

• versight of variation between providers

Reduce incentives to increase volume, for example by using contracting tools to incentivise providers to help reduce activity related costs, and by moving towards population-based budgets where appropriate Work with NICE to introduce a national deployment model that assesses all new interventions prior to widespread adoption across the system, and identifies what legacy interventions (and associated costs) the new intervention will replace Enhance the role of CRGs to enable them to improve the value of their respective services, for example by adjusting referral protocols and clinical thresholds to reduce unnecessary care or identifying low-value interventions to de-commission Suspend low volume / low quality services, removing associated spend from these

• providers. Enable new models of supply to emerge that increase value in services (e.g.

lead provider models and consolidation of planned care in higher volume centres) Incentivise early interventions and prevention, especially in services where this can reduce avoidable secondary or tertiary care (e.g. early detection of cancer) Future Financial Pressures 11

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• Two equal and opposite errors:

1. Payment system changes are irrelevant 2. Payment system changes will solve our problems (provider / commissioner)

• Providers and Commissioners engaged in an advisory group chaired by health

economist Anita Charlesworth of the health foundation

• HRG4+/Top ups are being impact assessed
• Marginal tariff /risk-share options are being considered
• Recommendations are likely to be produced by the end of this month
• We understand a programme of engagement such as webinars and links to existing regional

events will take place during November, with NHS providers

• Purely for the purpose of today expect that:
• Prices will better reflect complex care than they do today but imperfectly
• The principle of funding the extra costs for additional patients, some version of shared

gain/pain on excluded items

• Some recognition of the impact on efficiency from changed arrangements
• Overall ‘efficiency ask’ is unlikely to be anything other than stretching for the

foreseeable future.

• Expect allocations for commissioners to be equally challenging

Tariff Context

Context 12

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Efficiency, CIP and QIPP

COST IMPROVEMENT PLANS

Reduce the unit-cost per care-episode delivered (technical efficiency)

QIPP PLANS

Reduce the number of episodes per patient treated (productive efficiency) Reduce the number of people needing to be treated (allocative efficiency)

Affect Provider costs May not affect commissioner expenditure Affect Commissioner expenditure Usually affect provider cost May be + or –

• n provider

profitability

Context 13

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Complimentary Agendas

CIP QIPP

Excess Bed days Spells with complications LOS within Trim Input costs for Nationally priced Episodes Pathway steps / follow ups Readmissions Lower cost & price per episode (locally priced) Price/usage of

• excl. D&D

Gain/risk share Staff productivity

Common Ground?

• 1. Neither COST SHIFTING nor INCOME GENERATION are

efficiency

• 2. MOST Initiatives are a combination of QIPP and

CIP - interdependent

Cannot deliver service within income without it Cannot purchase services patients need without it

Context 14

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Population Health Status & Improvements in health Health Service Outcomes & Service Quality Indicators Service Responsiveness, Access & Patient Experience Equity Efficiency Financial Protection for individuals facing health problems

How would we know change is an improvement? Serving NHS purpose

Consensus of WHO, OECD, EU agencies

e.g. Smith, Papanicolas, Mossialos, Leatherman (2009)

Public values Health outcomes > Responsiveness 2:1 Public values Equity > Average Improvement 1.5:1

Context 15

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What are the solutions to maintaining access given increasing demand?

• 1. How would it be possible (desirable?) to control demand?

(Consider this today)

• 2. What contribution would rationalising services make?

(Consider this in future workshop)

Questions raised by AUKUH Colleagues

16

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The ‘R’ word in context

• Robust approach to the ‘basket of specialised treatments’
• QIPP delivery 8:1
• Nonetheless NICE TA pipeline (e.g. HEP C) pressures
• Which treatments? What health case?

Too much

• f this?

Specifics

• f this?

Challenged

• n this

Context 17

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Deriving value from benchmarking

• 73% organisations engage,

22% self-assess as effective, 5% claim measurable benefits*

• Performance Benchmarking

(cost, price, outcomes) needs Practice Benchmarking

• Learning & goal setting,

grounded in wider change programme

*Howard & Kilmartin 2006, not confined to healthcare

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Addressing real incurred costs

Context

Today’s focus

Local Leadership Regional and National Enablers

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Setting the context Provider perspective

Mike Sexton, UHB

20

2015/16 Funding

• Extra £1.98bn for health was announced in the Autumn

Statement (although £0.7bn is a transfer from elsewhere within DH)

• Taking account of this NHSE had total cash growth of

£3.0bn in 2015/16 above total 2014/15 funding (including non-recurrent monies).

• This equates to a 1.6% increase above the 1.4% GDP

deflator (inflation).

21

2015/16 Commissioner Allocations

• Specialised service budgets increased by £1.14bn (8.4%)

from £13.5bn in 14/15 to £14.6bn in 15/16.

• Of this £0.37bn (2.7%) will fund 14/15 expenditure covered

by non-recurrent sources leaving a real increase of £0.77bn (5.7%) for 15/16.

• CCG allocations will increase by £2.41bn (3.7%) from

£64.38bn in 14/15 to £66.79bn in 15/16, with a further £1.10bn set aside for Better Care Fund Transfers.

• Purchasing power is further increased by 15/16 price cuts.

22

Provider Financial Context

Year Annual Efficiency Cumulative Efficiency 2008/09

• 3.0%
• 3.0%

2009/10

• 2.0%
• 4.9%

2010/11

• 3.5%
• 8.3%

2011/12

• 4.0%
• 11.9%

2012/13

• 4.0%
• 15.5%

2013/14

• 4.0%
• 18.8%

2014/15

• 4.0%
• 22.1%

2015/16

• 3.8%
• 25.0%

National payment system efficiency requirement:

23

Deloitte Report on Efficiency

• Tariff deflator of 3.8% based on report by Deloitte

suggesting potential gains of: – 1.3% frontier shift (new efficiency) – 2.5% catch up (to most efficient in sector)

• This is based on a top down econometric modelling

approach which has acknowledged limitations in accounting for casemix and quality.

• The same report provides an alternative bottom up

approach which suggests a maximum efficiency gain of 2.4% based on a lower catch up of 1.1%

24

Deloitte Report on Efficiency (2)

• The bottom up approach is also imperfect but the findings

are more consistent with the other available evidence: – Reports by McKinsey, the Centre for Health Economics, the Office of National Statistics and the Office for Budgetary Responsibility all suggesting efficiency gains

• f below 2% per annum.

– Current FT sector performance of 2.7% (of which only 2.2% is recurrent) – The initial findings of the Carter Review which suggest savings of up to £5bn pa are possible by 2019/20 (circa 1.7% per annum)

25

FT Sector Context

26

FT Sector Context

27

Forecast 2015/16 year-end financial position

0% 20% 40% 60% 80% 100% CCG (Branch) Trust (Branch) CCG (England) Trust (England)

%age of finance directors

Deficit Break-even Surplus

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Solutions to maintaining access given increasing demand for specialised services. Do we control demand? Do we rationalise services?

• Contract does not allow inhibition of Patient Choice

– Inability to reject first referral – Diagnosis leads to treatment options – Treatment options need to be guided by commissioning policy not provider finances

• to avoid inequity and unethical decision making
• Thus rationing should be at national level?

– “Scope to improve transparency” – Clear rules – Consider ‘untouchables’: NICE v CDF?

29

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Improving Quality and Reducing Variation

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Agenda

31

Context An overview of current work An introduction to the table discussions

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Context - Variation In Services

• Carter 2015 – pricing, productivity, estate
• McGlynn 2003 - landmark study replicated around the world 55%

recommended care, less for more complex treatment plans

• Care setting unmatched to clinical need: 14% on admission, 42%

acute bed days vs EBM

• An ethical challenge to the ‘high bar’
• Spread in unit costs, pathway costs, local priced services
• Convergence at pace to most efficient models remains elusive
• 60% Specialised services are locally priced
• Wide variation in prices for similar patient groups
• Reference cost data shows an annual growth rate of 6.9% for

non-tariff acute services since 2007/8, compared to 4.5% in tariff services.

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Overview of Current Work – Reducing Variation in Local Tariffs

• Strategic design and adoption of currencies that allow robust

comparisons

• Incorporation into pathway currencies in particular (including

some tariffed activity) will facilitate comparisons of overall value for money for patients

• Adoption of national non-mandatory prices
• Local Tariff Project groups draw upon clinical, informatics,

finance and incentives expertise to construct currencies, including Critical Care, Renal Transplantation, HIV, Secure MH, Bone Marrow Transplant, Spinal Cord Injury, Cleft Lip & Palate, Intestinal Failure, Prosthetics Pathway

33

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Overview of Current Work – reducing clinical variation

National standards through policies and service specifications. National development through taskforce findings and Programme of Care plans. National support and governance through the quality assurance & improvement framework, peer review visits, commissioning for value and right care data packs, and Blueteq. National assurance through clinical utilisation review technology, national quality surveillance team, and specialised services quality dashboards.

34

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Overview of Current Work – QIPP Planning

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• Increasing the delivery of transformational

changes will be a key focus for QIPP in specialised commissioning for 16-17 and beyond.

• To enable greater transformational change

we will collate Service Level Data on variation in service economy, efficiency and effectiveness (Commissioning for Value) to identify major opportunities for value

• improvement. The first set of data will be

released during October 2015 focussing on 6 large service areas.

• Our approach will involve an Increasing

focus on Healthcare Value – where are we wasting money on sub-optimal, low value, health care and how do we address that through transformation. How can we reduce avoidable specialised healthcare?

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• 2016-17 QIPP plans will include

a range of local, regional and national projects.

• Transformational change will

be supported by Clinical Leadership through our 6 Programmes of Care.

• Recognised need for greater

provider engagement in this part of our agenda.

36

Improving Value through Specialised Services Commissioning

Some example Schemes in development are:

• Reducing unwarranted variation in

cost and activity associated with complex cardiology devices.

• Piloting enhanced supportive care in

cancer centres.

• Implementing best practice across

the Spinal Surgery Pathway.

• Critical Care - further reducing cost
• f delayed discharges.
• Further extending the use of

decision support systems such as CUR and BlueTeq.

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2015-16 QIPP Plans – Specialised Commissioning

2015-16: 2.4% QIPP challenge of £337.73m. Comparable to CCG challenge, and at upper end of

• achievability. This is one part of

the solution to closing the financial planning gap. Regional QIPP Plans are risk adjusted to recognise delivery

• risks. For 2015-16 plans totalled

£374.75m following risk

• adjustment. A £10.17m shortfall

from target post risk adjustment. 66% of schemes are transactional schemes (i.e. focussed on improving payment accuracy). 10% of schemes are “National Projects” – i.e. projects with multi-region delivery. Examples include Clinical Utilisation Review, Blueteq and reducing delayed discharge in critical care.

REGION BFYE from 2014/15 £m 15/16 Delivery £m 15/16 Total £m Area Team 2.4% Target £m Surplus / (Shortfall) inc of BFYE £m Surplus / (Shortfall) % Risk Adjusted 15/16 Total £m Transact £m Transform £m BFYE into 2016/17 £m Risk adjust from target SUB TOTAL 4.90 77.38 82.28 66.38 15.90 24% 63.56 53.10 29.18 18.41

• 2.82

SUB TOTAL 5.03 88.00 93.02 84.35 8.67 10% 84.47 67.34 25.68 20.19 0.12 SUB TOTAL 6.26 94.98 101.24 97.65 3.59 4% 90.10 76.49 24.75 5.98

• 7.55

SUB TOTAL 9.08 89.13 98.21 89.35 8.86 10% 89.43 52.95 45.26 9.66 0.08 TOTAL 25.25 349.50 374.75 337.73 37.02 11% 327.56 249.89 124.86 54.24

• 10.17

TOTAL LONDON SOUTH MIDLANDS AND EAST NORTH

North and South below target post risk- adjustment £10.17m shortfall post risk-adjustment

Service variation: what do we know?

Madi Parmar UHB

38

Is variation a good thing or a bad thing?

• To examine variation need to be sure of like with like comparison,

but multiple points of difference at service line or even HRG level: – Case-mix

• HRGs remain OPCS ‘buckets’ and % complex v less complex

procedures within will vary between organisations

• Emergency take % (NEL/EL ratio) – affects LoS

– Demographics affecting overall health of patient, impact on complexity, LoS, resource inputs and outcomes/complications

e.g. prior nutrition affects post op recovery time

• Age of patient, Deprivation, social support networks etc

– Clinical pathway across organisation boundaries – Complexity – Co-morbities e.g. congenital conditions (HRG4+ still does not fully

address relativities)

– Treatment modality – Outcomes

39

Need to get the building blocks right before can compare costs?

Agreed clear and transparent currency defining: – Clinical service specification

• Procedures performed (quantified), allowing weighting for casemix?
• Outcomes expected

– Clinical pathway

• Clear entry and exit points

– How activity should be recorded

• Clear coding which differentiates (currently problematic for many

services, e.g. complex head and neck cancer reconstruction, Intestinal Failure etc)

– High quality costing

• Meeting national definitions and standards
• comparable quanta

40

Examples of issues:

• High cost patients: tariff excludes outlier costs (Grubbs):

– Yet (2014/15) just 24 patients cost >£7m (average of £294k pp) in one Trust (validated PLICS data)

• HRGs often not iso-resource

at all e.g. complex IR Neurology major

• Often strong correlation between

cost drivers and complexity e.g. brain tumour surgery

41

Loss Making Services

• Key specialties:
• Average deficit is 50%
• Least profitable 5% spells account for

disproportionate % cost difference

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The Shared Agenda on Excluded Drugs and Devices Michael Whitworth

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Agenda

44

Context An overview of current work An introduction to the table discussions

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BCG identified that Tariff excluded Drugs have a significant Compound Annual Growth Rate

379 545 733 945 645 839 1,009 1,184 615

3,000 2,000 4,000 5,000 2018/1 9 4,506 2019/2 Increase due to price of HCD Increase due to activity in HCD 2013/14 spend on excluded drugs

+11.2%

Total spend on excluded drugs £m

3,401 3,227 3,762 2015/1 6 2016/1 7 2017/1 8 2014/1 5 2,885 2013/1 4 2,378 4,120

Note: Multiple assumptions apply, see FFP model for details. Corrected for compounding error by allocating delta between total and sum of parts across each component Source: Historical spend from Reference costs, and HES data for activity; triangulated with forward-looking estimates from Pharmacor

Context – Drugs Expenditure Growth

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Excluded Devices similarly grow at rates that far exceed available resource growth

34 54 76 101 128 38 60 83 109 136 200 400 600 800

2015/1 6

+7.9%

Spend in 13/14 Increase due to activity Increase due to price 2019/2 717 2018/1 9 663 2017/1 8 613 2016/1 7 568 526 2014/1 5 488 16 18 2013/1 4 454

Total spend on excluded devices £m

Note: Multiple assumptions apply, see FFP model for details. Corrected for compounding error by allocating delta between total and sum of parts across each component Source: Historical spend growth from Procurement Lead for Specialised Services, activity from FFP model

Context – Devices Expenditure Growth

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Variance in pricing applies both between trusts and by the same supplier for the same product

£10,987 £11,762 £8,412 £10,080 £10,731 £11,653 £12,463 £8,000 £6,000 £7,000 £8,000 £9,000 £10,000 £11,000 £12,000 £13,000 Trust 1 Trust 2 Trust 3 Trust 4 Trust 5 Trust 6 Trust 7 Trust 8

DUAL CHAMBER ICD SYSTEM (Exc Vat)

DUAL CHAMBER ICD SYSTEM £11,020 £12,210 £16,289 £13,450 £13,170 £9,594 £8,000 £11,901 £9,250 £12,500 £6,000 £8,000 £10,000 £12,000 £14,000 £16,000 £18,000 Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Max Price Min Price (£)

Not only do the average prices paid by Trusts vary substantially There is wide variation in prices charged by the same supplier to different trusts

Context – Variable Pricing

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Context – Estimated Drugs Growth

Viral Hepatitis (B&C) & Respiratory Syncytial Virus - Hep B/C 67.0 567.3% 380.1 Antiviral drugs - Cytomegalovirus infection 14.0 10.1% 1.4 Other Chemotherapy 512.0 11.1% 56.8 Antibacterial drugs (only dry powder/nebulised drugs for CF only) 15.1 9.4% 1.4 Hormone antagonists (abiraterone and enzalutamide only) 50.0 80.0% 40.0 Corticosteroids and other immunosuppressants 9.5 13.1% 1.2 Immunomodulating drugs - MS 122.0 27.6% 33.7 Drugs used in Neutropenia 23.0 5.4% 1.2 Protein kinase inhibitors 152.0 20.3% 30.9 Mucolytics (see also CF) 12.8 9.4% 1.2 Drugs affecting the Immune response 31.0 68.7% 21.3 Viral Hepatitis (B&C) & Respiratory Syncytial Virus - RSV 11.0 9.4% 1.0 Antineoplastic drugs 153.0 10.7% 16.4 Allergic emergencies 9.0 9.4% 0.8 Immunomodulating drugs - lenalidomide/thalidomide 92.5 16.4% 15.2 Cytokines - anakinra 15.0 5.6% 0.8 Paroxysmal nocturnal haemoglobinuria 27.0 35.1% 9.5 Pulmonary surfactants 6.3 9.4% 0.6 Lysosomal storage disorder drugs 150.0 6.3% 9.4 Pulmonary fibrosis 5.5 10.4% 0.6 Blood related products 138.3 6.4% 8.9 Cytotoxic-induced hyperuricaemia 6.3 5.6% 0.4 Antifungals 86.0 10.1% 8.7 Cinacalcet 3.4 9.4% 0.3 intravenous/subcutaneous human normal immunoglobulins 127.8 6.5% 8.4 Phosphate binders (sevelemer and lanthanum) 2.0 9.4% 0.2 Cytokines - rituximab (chemo only) 144.0 5.4% 7.8 Cytokines - other - paeds 2.0 6.6% 0.1 Ivacaftor 54.6 9.4% 5.1 Drugs used in Metabolic disorders 1.0 10.2% 0.1 Immunusuppresant drugs following transplant 27.2 13.0% 3.5 Cytokines - rituximab (paediatric, renal, respiratory, SLE) 1.0 5.6% 0.1 Vasodilator antihypertensive drugs/ Primary Pulmonary Hypertension 36.5 9.0% 3.3 Bone morphogenetic protein 0.0 5.6% 0.0 Drugs used in hypoplastic, haemolytic, and renal anaemias - iron overload 19.4 15.7% 3.0 Erythropoetins 0.0 9.4% 0.0 Home Parenteral Nutrition 45.2 6.2% 2.8 Hypnotics and anxiolytics (paediatrics only) 0.0 5.6% 0.0 Allergen Immunotherapy 20.0 13.6% 2.7 Lipid regulating drugs 0.0 5.6% 0.0 Neurodegenerative Conditions 2.5 74.9% 1.9 Memo 0.0 0.0% 0.0 Drugs used in hypoplastic, haemolytic, and renal anaemias 15.8 9.4% 1.5 Non-opioid analgesics 0.0 5.6% 0.0 Myelodysplastic syndrome 13.7 10.7% 1.5 Other 0.0 9.4% 0.0 Somatostatin Analogues 17.8 8.1% 1.4 AIDS/HIV antiretrovirals 390.0

• 1.1%
• 4.1

2632.2 21.1% 681.1 Growth Rate % Growth Value £m Total 2015/16 Baseline £m Growth Rate % Growth Value £m Drug Exclusion category Drug Exclusion category 2015/16 Baseline £m

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Context – Estimated Drugs Growth

(note 25% spend unattributed whilst data standard compliance is rolled out)

OTHER DEVICES

102.8 4.1% 4.2 ICD (IMPLANTABLE CARDIOVERTER-DEFIBRILLATOR) 64.6 3.7% 2.4 ENDOVASCULAR STENT GRAFT 24.2 6.3% 1.5 OTHER INVASIVE CARDIOLOGY 32.2 4.1% 1.3 DEEP BRAIN, VAGAL, SACRAL, SPINAL CORD AND OCCIPITAL NERVE STIMULATORS 17.3 6.1% 1.1 ANEURYSM COILS 12.6 6.1% 0.8 ICD WITH CRT (CARDIAC RESYNCHRONISATION THERAPY) CAPABILITY 16.5 3.7% 0.6 3 DIMENSIONAL MAPPING AND LINEAR ABLATION CATHETERS (COMPLEX CARDIAC) 12.8 4.4% 0.6 OTHER NEUROSCIENCE 8.4 4.2% 0.4 RADIOFREQUENCY, CRYOTHERAPY AND MICROWAVE ABLATION PROBES AND CATHETERS 6.2 4.2% 0.3 INTRATHECAL DRUG DELIVERY PUMPS 6.0 4.2% 0.3 OTHER ORTHEOPEDICS 5.9 4.2% 0.2 PERCUTANEOUS VALVE REPLACEMENT AND REPAIR DEVICES 6.2 3.2% 0.2 CAROTID, ILIAC AND RENAL STENTS 2.5 6.3% 0.2 OTHER VASCULAR 3.8 4.1% 0.2 BONE ANCHORED HEARING AIDS 11.2 1.1% 0.1 PERIPHERAL VASCULAR STENTS 1.9 6.3% 0.1 CONSUMABLES FOR ROBOTIC SURGERY 2.6 4.2% 0.1 OCCLUDER VASCULAR AND SEPTAL DEVICES 2.5 4.2% 0.1 BESPOKE ORTHOPAEDIC PROSTHESES 10.6 0.5% 0.1 MAXILLOFACIAL BESPOKE PROSTHESES 1.1 4.2% 0.0 INTRACRANIAL STENTS 0.6 6.1% 0.0 VENTRICULAR ASSIST DEVICES (VAD) AND PROSTHETIC HEARTS 0.7 3.1% 0.0 CIRCULAR EXTERNAL FIXATOR FRAME 3.0 0.5% 0.0 Total 356.4 4.1% 14.7 Device Exclusion category Growth Rate % 2015/16 Baseline £m Growth Value £m 49

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Overview of Current Work

Working together to improve value Reducing Waste Transparency

• Consistent use of

national procurements and greater clinical consistency to aggregate demand

• Standardised

prices across the Country

• Consistent

approach to drugs / devices with limited effect

• Greater clinical

policy coverage

• Lower Prices for the NHS
• Greater competitive

advantage for the NHS

• Reduced expenditure for the

NHS on sub-optimal care

50

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High Cost Devices – Proposition

A single national purchasing and supply chain Working Group & Reference Group Consultation Universal Adoption Aggregated demand Rapid innovation Optional Adoption Risk Share Annual efficiency Maximum reference prices

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Improving Value Morning Session: Group 1A & 1B Drugs and Devices – Best Value Prices

How smart are we being in securing the best possible value from suppliers as the world’s largest purchaser? How can we leverage our combined purchasing power better than we have to date? Volume commitment, transparency, Delivery

7th October 2015

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• Key Feedback Messages
• Clinical buy in essential to success of national procurement design
• Product cycles need to be managed (HTA)
• Implications of revisions (access and costing)
• Discussion Notes
• Provider Engagement
• Essential to get provider buy in to procurement principles
• Significant spend in cardiology devices – suggest Cardiologists representation from 10 major

cardiac centres in working group to benchmark prices and develop device specifications.

• Provider clinical representation on CRGs – policy and service specification design – how do

we ensure influential clinicians not part of CRGs inform this woek?

• Noted that transparent and fully open information sharing key to benchmark data – including

device/drug supplier agreement terms and conditions e.g.prices, “freebies”, consultant time back into suppliers etc and subsequent charging methodology to commissioners through pass through terms

• Existing Provider / Supplier Contracts
• Provider colleagues advised that once national procurement is under way suppliers holding

existing drug/device contracts with providers are highly likely to be happy to renegotiate terms and conditions within contract term to secure market placement following contract end

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Best Prices - 1B

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• Timelines
• If full roll out of national procurement takes up to 2 years may need interim arrangements

such as consortium agreements. These would need to include risk sharing agreements to incentivise providers already securing lowest value prices if impact of consortium arrangements increased lowest prices. Example of current best practice consortium arrangement in London for both drugs and devices.

• Publication of benchmarking data timelines (eg raw data through to final signed off

benchmarked data) would be key to engagement and design of best value prices and usage

• Mandated vs Optional
• Discussed risks to mandated vs optional opt in to national procurement – the optional

approach is not different enough from the current arrangements which suppliers can easily undermine by fragmenting volume through picking off individual trusts for deals, so would undermine single purchaser scale. Recommended approach to ensure objectives are achievable is that national procurement should be mandated “Optional is not an option”.

• All agreed that a whole system approach is more likely to secure best value however the

market management would need to be carefully managed with regard to future markets and pricing eg risk of monopolies etc

• Usage
• Provider colleagues advised that clinicians will state that there is no room for movement on

improving value through usage management ie clinicians only use what is clinically necessary, although there is scant evidence about this currently to create consensus

• New product options need to be carefully considered to manage implementation timelines

and costs

• Whole life costs (e.g. products needing revisions & revision frequency) to be considered

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• Should the scope be limited to excluded drugs or should we be looking to maximise value for all drugs?

There was a feeling that providers gets a good deal on in-tariff drugs, but what assurance is there that this is the case – and could it be even better with greater aggregation of demand?

• Who can get the best price? There was a debate about NHS Supply Chain’s ability to get the best prices:
• It was acknowledged there was a lack of transparency
• Providers had tried to undertake benchmarking but hadn’t been able to make any significant progress

(confidentiality agreements issue). Most Trusts were looking for better deals than they achieved before but there was an acknowledgement that there was little information on how good the previous deals were.

• A number of providers also reported that NHS Supply Chain were not able to get the best prices as

providers held activity back, knowing suppliers will give them a better price than NHS Supply Chain can get – however, for the benefit of the wider NHS there should be greater aggregation of demand

• There is a big issue over what it costs and what is paid both in terms of wider deals covering non-tariff items

and historic gain-share arrangements with commissioners

• What incentives can we put in the system to encourage providers to aggregate demand
• Devices – mandate or optional? The general view was that it should be mandated – however:
• Providers should be involved in the process
• It would help if finance / contracting colleague agreed principles in advance to give a clear national

steer (HFMA had done some work on this)

• Unwinding / tapering historic arrangements will need managing especially in relation to contract level

risk share (to not penalise those who have very effective procurement processes)

• Clinical engagement is important to ensure usage is managed
• We need to ensure that we don’t stifle innovation through national procurements
• It was felt that we could learn from haemophilia procurement re: tackling large scale variation and

gaining clinical support

• VAT is an issue that needs to be recognised (although this doesn’t save UK PLC any money it does benefit

the NHS)

• The risk of monopoly and stifling competition (although it was noted that many suppliers work extremely hard

to maintain their monopoly positions / profit margins)

• Why don’t we look at all procurement? How should the NHS manage its procurement performance?

Should there be national skills training and development to help providers who are not as good as others? There was a general feeling that some providers were very good at procurement and others had difficulties. 55

Best Prices – Additional Notes

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Improving Value Morning Session: Group 2 Drugs and Devices – Best Products, smart usage

How should clinical practice in usage & the range of products used & range of products respond to this agenda? How do we achieve more through switching to more cost effective therapeutics?

7th October 2015

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Key Feedback Messages

• The group felt work should be initiated in in key impact product areas, perhaps

cardiology/ICDs where we explored;

• What are the prices paid by the service.
• Could the products used be rationalised to drive further value.
• Could this then begin to reveal whether there were potentially inappropriate
• interventions. “Are we treating the right patients within describable

protocols”.

• And if this were the case what does it tell us about whether or not certain

hospitals should be delivering the service(s).

• A smaller group could meet to discuss the potential work plan

Detailed Notes

• The group considered what the right tier was for procurement of drugs and devices –
• rganisation; regional/hub; Shelford; national; and how would we evidence which works best

for which product?

• There should be an appetite amongst providers for price sharing to ensure that we were

leveraging the best deal from pharma and device manufacturers.

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Best Usage – Group 2

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• Detailed Notes
• The group recognised scope for product rationalisation within certain categories, and

importance of seeking clinical and procurement support for drawing these potential conclusions.

• In relation to price-sharing need to articulate the rules for how this would work and which

would address the issues of co-design, trust and the required leadership, to ensure the process could cope with the winners and losers which may result. Acting together in purchasing may need to consider regulatory issues (e.g. CMA).

• Underpinning this work it would be helpful to get to consensus view of where there was a

shared belief that we were getting a poor deal on drugs or devices due to our fragmented approach to suppliers; and/or where there was a consensus that the extant provider landscape looked relatively inefficient.

• Securing gain share agreements was acknowledged as sometimes a challenge. Also using

prices provided shared to set maximum prices bluntly it could deter further price sharing collaboration .

• One way to progress this agenda would be to seek a provider lead on different categories of

clinical supply.

• General support was expressed for an expansion of ‘Blueteq’ as a way of standardising

clinical practice but a view that resource implications need considering

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Improving Value Afternoon Session: Group 1A & 1B Understanding & Acting on variation between similar services

Discuss the approach to publishing national activity, cost and outcome data by service and provider to understand variation between providers. How well does current information identify opportunity? What is the consensus about the biggest specific areas of opportunity? How common are they? Which approaches to reducing variance will achieve most?

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• Key Feedback Messages:
• “Tops Tips” from the table regarding Commissioning For Value Packs
• Engage with providers before the packs are published to “kick the tyres” – it was

recognised it has been a difficult 12 months and we need to rebuild trust

• AUKUH can share what Trusts are doing in their own organisations and hopefully this

will be able to help inform / direct NHS England’s national work

• Be clear in advance what we are going to do with the data i.e. if it to help

commissioners and providers identify areas for joint work say that, otherwise the feeling will be that it will be used as a “stick” to hit providers with!

• Where possible link the data to existing wider system / pathway data such as CCG

data packs (post discharge care / readmissions etc are important factors in any benchmarking)

• Have a phased implementation – focussing on 5 areas initially was supported
• The key “prize” was felt to be “Harnessing the energy and experience of providers to

drive improvement”. This will be best achieved through:

• Credible data (as granular as possible. There were clear anti-bodies about HRG

data – diagnosis code was felt to be better)

• Share / test information at an early stage
• Plan how to reach into organisations – this is better through the executive route

rather than individual clinicians

• Overall focus should be on the key drivers of growth in specialised services such as

growing survivor pools, technological advances and drugs and devices.

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Understanding & Addressing Variation - Group 1A

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Additional Notes

• We need to define variation and explore terms such as normal variation,

good variation, unacceptable variation and controllable variation

• It would be helpful to undertake comparisons between similar Trust’s serving

similar populations – Providers already do this through bench marking groups:

• Good work has been done to understand variation e.g. low cost could

be driven through low standard facilities

• Good work has also been done to reduce costs from benchmarking –

there was a view that internal benchmarking between departments and clinicians was initially met with all the issues raised by the group about inter-organisational benchmarking. Some of the lessons learnt are to focus on similar patient groups / clinical indications – this has helped improve internal efficiency i.e. clinicians seeing variable numbers of similar patients

• It might be good to focus on the areas where capitation budgets are being

explored – linking this in with CCG data

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• Key Points Raised:
• Current structures present barriers to reducing clinical variance –solutions

should be better provider networking and collaborative commissioning

• All representatives agreed current data is the only information we have to

review benchmarking however should then be shaped with clinical engagement to ensure more “like for like” comparisons

• Provider engagement essential to develop clinical practice benchmarking and

service redesign where required

Discussion Notes Specifications – Standardisation

• Workforce strategy needs to be careful consideration where specifications mandate staffing
• levels. Considerations to include where there are known national staff shortages and market

management of no. of providers required where limited staffing levels are spread across unnecessary numbers of providers. Provider colleagues advised that Trusts want commissioners to take a view on numbers of providers.

• Whole pathway should be consideration and national specifications should be locally adapted in

response to collaborative commissioning pathway design however where there are recurring local themes nationally eg neuro rehab this should be subject to nationally led redesign with local adaptation/flexibility

• Capacity management key to standardisation therefore networks essential and should be

consideration of standardisation of services ie commissioners should commission capacity intelligently across more than one provider contract. Provider colleagues feel that contracts are currently rolled over and are not based on commissioned levels of care

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Understanding & Addressing Variation - Group 1B

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Local Tariff Service Cost Benchmarking

• Huge scale task therefore should prioritise specific areas for review for benchmarking and

standardisation

• Start with known data but then work with clinicians to shape “like with like” benchmarking
• Utilise current clinical self-benchmarking
• Methodology principles should be agreed for benchmarking to be rolled out across service

variation reviews

• Work on critical care was cited as a good example of involving providers and working on the

data and findings, but recognised this means the workload involved is signficant.

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Improving Value Afternoon Session: Group 2 What makes for an effective redesign programme?

What contribution can commissioners and providers make to designing

• ut waste from service models?

What is our recent track record on the scope of services reviewed per year, the level of improvement & benefits achieved? Are we achieving convergence to most efficient cost delivery models and local prices ? What are the barriers we need to address? How can we ensure redesign is realistic but radical? Would more be achieved through working across several trusts? How should this work?

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• Key Feedback Messages:
• In the group we had a broad discussion considering:
• The importance of both cost and quality benchmarking, and ensuring comparing like with like
• Different ways to prioritise areas to work on – spend, activity, degree of variation, degree of
• pportunity.

.

• There was strong support for the planned session considering consolidation; provider

colleagues felt it needs to be addressed and would support their sustainability, help address variation and provide more cost effective services.

• Effort needed to be focussed on the ‘how’ and overcoming barriers in achieving this.
• The group debated the right balance of top-down / bottom up, with a view that a bottom up

local geography (to be defined) would be the best approach recognising that the national standards and policies would remain in place for specialised commissioning. But the how and the where could be determined more locally

• The group discussed the work in the Northern region to bundle services together for

commissioning and provision. The group did not reach a conclusion but felt that it was important to look at this in more detail.

• The issue of the “arms race” was raised where providers take a competitive approach to

meeting NHS England standards for minimum treatment numbers or staff – it was recognised this has driven up system level costs so action to address it needs to be considered

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Effective Redesign of Services - Group 2