COMMITTEE FOR HEALTH, SOCIAL SERVICES AND PUBLIC SAFETY

Health and Social Care (Reform) Bill

18 September 2008

Members present for all or part of the proceedings:
Mrs Iris Robinson (Chairperson)
Mr Thomas Buchanan
Dr Kieran Deeny
Mr Alex Easton
Mr Tommy Gallagher
Mr Sam Gardiner
Mrs Carmel Hanna
Mr John McCallister
Mrs Claire McGill
Ms Sue Ramsey

Witnesses:

Mr Stephen Hodkinson )
Ms Jacqueline Kennedy ) Central Services Agency
Ms Paula Sheils )

The Chairperson (Mrs I Robinson):

I welcome Stephen Hodkinson, chief executive of the Central Services Agency, Jacqueline Kennedy, director of human resources and corporate services, and Paula Sheils, director of family practitioner services.

I invite you to make a brief presentation, after which I will invite questions from members. You are very welcome indeed.

Mr Stephen Hodkinson (Central Services Agency):

Thank you very much for the invitation and the welcome. You have explained who we are so I will begin.

I intend to use our submission, which I have already sent to members, as the basis for the short presentation. I intend to give you some sense of the Central Services Agency’s work. At the end of the submission, we raise a number of issues, which are relatively minor on the scale of change taking place, but we thought it perhaps useful to draw your attention to those.

The Central Services Agency is a relatively long-standing Health Service organisation. It was established in October 1973 under the Health and Personal Social Services ( Northern Ireland) Order 1972, and its main brief — as defined in the Order — is to provide a range of regional support services for the rest of the Health Service. The agency’s functions are wide-ranging and include legal services and procurement services, which covers sourcing, contracting, procurement and warehousing logistics.

The agency supplies support to family practitioner services, which I will describe in more detail, because the boards also provide such services. The Central Services Agency has a family practitioner services counter-fraud unit and an office of research ethics committees, which is less well known. The research and development office handles the budget for research and development in the Health Service, and the agency provides a range of financial services to support the Health Service and others. There is also a human resources department.

The agency currently provides approximately 90% to 95% of legal services to health and social services, which, in broad terms, is mainly for trusts. On 11 July 2008, as the Committee will be aware, the Minister took the decision to cease the use of private-sector providers. We are now working to bring all legal services to the Central Services Agency. That will ensure that all legal services in the Health Service are provided by the public sector. Our legal service is not profit-motivated; we aim to break even, and, furthermore, we provide services solely to the Health Service.

The submission shows the breakdown of the number of staff that our legal services employ, the size of the budget and the quality of service. There are usually 5,500 to 6,000 cases in operation simultaneously, which cover all areas of law including family law, child law, employment law, a wide range of medical negligence cases and cases that involve trips and falls. That workload will, probably, increase by between 500 and 1,000 cases when we adopt the work currently provided by the private sector.

The agency’s regional supplies service is one of two designated centres of procurement expertise in the Health Service, the second being health estates, which is part of the Department of Health, Social Services and Public Safety. That title indicates that we meet a wide range of standards in our areas of involvement.

The regional supplies service also provides services to the Department of Health, Social Services and Public Safety. It purchases a range of vaccines and various types of medicines for emergency situations for the Department. It has two warehouses in the Province in which those vaccines and medicines are stored.

There are issues about the possible future development of the procurement function. We currently play a small part in the procurement of services that are provided by nursing homes, residential homes and a range of domiciliary services. Those are currently contracted for by individual trusts, and we are working with a group made up from the Department and the trusts to find out whether some general, regionally applicable rules can be put in place so that the procurement process is consistent across the service and recognises the problems that the market faces in supplying the services.

The submission provides the Committee with an overview of the regional supplies service. Members will have gained a sense of its size; it has 300 staff and spends £307 million a year, which is a large amount of public money.

I will outline the role of the family practitioner services, although the fact that the director of that service has accompanied me to the meeting indicates that I am less well equipped to speak on that area. The service does not provide services to patients, but it provides a range of support services to the contracts that general medical practitioners, pharmaceutical practitioners, dentists and ophthalmic practitioners have with the boards.

We provide a range of payment services and support issues concerning the registration of patients, and our organisation issues medical cards. As a result of that process, we produce much information on the use of the services that we provide to the Department, the boards and the practitioners for planning and policy purposes and, to some extent, the monitoring of issues such as fraud.

Family practitioner services comprise a large part of the Central Service Agency’s business; we spend some £700 million a year on it, which is a large amount of money. We have some 180 staff, and the submission provides details of the numbers of practitioners who are contracted to the boards. My staff are in regular contact with those practitioners on various issues.

I have mentioned several issues that are on our agenda, and which have been for some years. The implementation of the electronic prescribing and eligibility system (EPES) is a particularly important issue. The Committee’s earlier business referred to its meeting with the Pharmaceutical Contractors Committee, and the Department and the Central Services Agency are in discussions with that committee on that issue. EPES is an important project for us.

There are other issues around the implementation of new contracts for certain practitioners, which automatically bring about a change in the way in which we operate, how we pay and how we staff. That is a large area of work.

The counter-fraud unit is, in some senses, linked to that, as it currently deals with family practitioner services issues. The unit pursues people who are suspected of having fraudulently claimed exemption from paying for their prescriptions and other charges. There is also a section that deals with contractor fraud, which, along with the boards, undertakes investigations when it is thought that fraudulent practice by practitioners may have taken place. Those are the two main areas of the counter-fraud unit’s work. We expect that the role of the counter-fraud unit will be extended to provide a service to the rest of the Health Service, including the hospital services, instead of simply concentrating on family practitioner services. That would involve a large piece of work.

The issue of free prescriptions has been the subject of some discussion over the years. That would be a significant issue for the Central Services Agency, because it would mean that it would not have to pursue people for non-payment of statutory prescription charges. That is an interesting area of work, to which we would respond if required.

The office of research ethics committees (OREC) manages health and social care’s research ethics approval process. In broad terms, applications to carry out research in the Health Service that may have ethical implications must go through the approval process. That is a statutory arrangement, and although the Central Services Agency houses OREC, appoints members of the committees and handles the process, it has very few powers as an organisation to change that arrangement, because it is part of a UK-wide process. OREC processed 230 applications for research work in 2007-08, which should give members an idea of the large volume of its work. OREC works exceptionally well, particularly in its close relationship with the trusts. The office is based at Haslem’s Lane in Lisburn.

I will now turn to the work of the agency’s research and development office. The Central Services Agency has managerial responsibility for a fund of some £13 million, which is allocated from the Department. That money is used to fund research across the Health Service. Although the present expectation is that all the agency’s services will be transferred to the new regional support services organisation (RSSO), to which reference is made in the Health and Social Care (Reform) Bill, a decision has still to be made about where the research and development office will go. All the other services that I have talked about will transfer to the regional support services organisation. We await that decision.

We have submitted two additional papers that deal with financial services and human resources services. Although it is reasonable to expect that an organisation of this size will have a finance department or a human resources department, the agency provides services to a range of other relatively small Health Service organisations and bodies, some of which are listed in our submission. The agency provides a payroll service, and it pays accounts for other customers. Our service model is an embryo of the shared services approach that is heralded by the regional support services organisation, which offers a wider service, including payroll, accounts and recruitment facilities across the Health Service. The staffing numbers are indicated in our submission.

Similarly, the agency provides human resources to a wide range of Health Service organisations and has been doing so for many years. Part of the human resources director’s brief is to look after equality services, to have responsibility for the implementation of section 75 of the Northern Ireland Act 1998 and to run the corporate services of the organisation such as building works and administrative processes.

The final page of our first submission provides the Committee with a few indicators that summarise the size of the organisation. The Central Services Agency currently has approximately 700 staff. Our operational budget is around £24 million, which is mostly spent on staff.

I have already referred to the large spend of the family practitioner services, while money spent on the regional supplies services is also rather significant. If taken together, those functions would account for around £1 billion of health and personal social services spend that the agency in some way handles. Furthermore, and for your information, I have indicated that we are not only based in Belfast city centre but have a range of offices — primarily for our procurement staff — across the Province. I have mentioned Haslem’s Lane in Lisburn already, but our headquarters, where the vast majority of our services is located, is in Franklin Street in the centre of Belfast.

That concludes my description of the agency. My general observation is that the services that health and social care provides are important and significant in the delivery of other services. Obviously, the agency’s activities mainly concentrate on services that are delivered to patients in hospitals and community-care settings. However, behind all that lies a fairly significant support arrangement that provides very important services such as procurement, payroll and legal services. We view the agency as an important part of the architecture of health and social care. We are very interested in the development of the regional support services organisation as a wider organisation that provides a wider range of services.

I raised four points in our second submission. They, in a sense, relate more directly to the
Health and Social Care (Reform) Bill. We, in our response to the consultation document on the Bill that the Minister issued earlier this year, indicated a support for the development of the RSSO. We believe that the establishment of the RSSO would represent a natural progression from the Central Services Agency, because it will provide a wider range of services than we currently provide. We have no fundamental concerns about the Bill or the creation of the RSSO.

It is very important to establish a wider organisation. Indeed, we have advocated that for some years. The creation of the RSSO will ensure that individual parts of the Health Service provide more functions regionally or centrally, and, for that reason, we support its creation.

I mentioned earlier that, as more services are placed together, the potential for producing a great deal of regional information begins to kick in. Therefore, we need to think of the RSSO not only as a provider of services but as a major provider of information.

My letter of 7 August 2008 to the Committee suggested that the new organisation not be named the RSSO. We feel that the new organisation’s name should be more reflective of the business and business-support functions that we currently provide, and “support services” does not reflect those. Although the RSSO will support the delivery of health and social care, it will also have a status of its own. For example, we currently have a number of professionals working for us who provide financial, human resources, legal and procurement support. We also employ other professionals, such as dentists and pharmacists. We wish to see the name changed to reflect that.

The Chairperson:

Thank you, Stephen, for that detailed presentation. I will now open it up for Committee members to ask questions.

Mr Easton:

First, what functions that will add to your workload will come from the boards and trusts to the new body? Secondly, how much savings do you think that you will be able to make? Thirdly, will there be any job losses among your 700 staff, or do you foresee that an increase in staff will become necessary as a result of more services being transferred from boards and trusts?

Mr Hodkinson:

I expect the RSSO to provide more services than the Central Services Agency does at present. The Department’s superannuation branch, which runs the health and personal social services superannuation scheme — therefore, it is a scheme for the Health Service, not one for the Department — should transfer to the regional support services organisation. That is the current thinking. According to the timetable, that function will probably transfer on 1 April 2009, so that will happen in the relatively short term.

The four health boards perform some payment functions for GPs. Our expectation is that those functions will transfer to the RSSO to complete the package of payment services that we have. Our medium-term expectation is that ICT and IT services provided in the Department will transfer to the new organisation.

In the longer term — two to three years — subject to the investment that is necessary in ICT, we expect financial services such as payroll and “accounts payable”, which is the handling of all invoices, will transfer to the RSSO , and those services will be provided on a regional basis for all the trusts.

Human resources and recruitment is another area. At present, all Health Service organisations recruit for themselves, more or less. There are some arguments, and models, that indicate that some of those recruitment services could be provided regionally for other organisations.

Mr Easton:

What about savings and job losses?

Mr Hodkinson:

The expectation is that savings will be made once the RSSO is in its completed form. Several models of shared services exist across the public sector. Those can be found principally in the United States, Australia and the Far East, where organisations have adopted the shared-services approach. I must stress that, with proper investment in IT and its various support systems, one can make savings and produce a much more cost-effective way of working.

As I said, the agency currently has 700 staff, and it is planned that the RSSO will have anywhere between 2,000 and 2,500 staff. That represents a sea change. Central Services Agency services will not make savings in the first instance, but they could be made as we expand the support services that form part of the RSSO over the next two to three years.

We will remain part of the comprehensive spending review until 2011, and the whole of the support-services area must take its share of savings made.

The Chairperson:

That was a very detailed response.

Dr Deeny:

I welcome Jacqueline, Paula and Stephen. It is nice to see some of the faces behind the Central Services Agency, because, in my role as a GP, I have been in touch with the agency many times down the years. Of course, Stephen, I know your brother well, who works in Omagh as a consultant.

Ms S Ramsey:

Do you need to declare an interest?

Dr Deeny:

I do not. I want to be clear, because I have not looked at the legislation since before the summer recess. Three major agencies are to be established: the regional health and social care board; the regional agency for public health and social well-being; and the common services organisation. I assume that the Central Services Agency, which will be renamed the RSSO, and which you would prefer to see renamed, will lie within the common services organisation. Is that correct?

Mr Hodkinson:

“Common services organisation” was the initial name chosen, before it was changed to “regional support services organisation”. We were even more unhappy with the former, because we did not like the use of the word “common”. We have progressed the issue to “regional support services organisation”, and the next stage, as we see it, should be to change the name again to “regional business services organisation”. However, yes, the agency’s services were originally to lie within the common services organisation.

Dr Deeny:

What else, along with the Central Services Agency, will make up the RSSO?

Mr Hodkinson:

The legislation indicates broad headings of areas in which the RSSO will provide services. However, the kind of work that we are trying to plan for the RSSO indicates that it will include: the Department’s superannuation branch; a large part of the services that the Department’s directorate of information systems currently provides; and some of the financial and human resources services that boards and trusts currently provide. There has also been discussion about moving information services and providing a range of estates services regionally for the entire service, but that is a longer-term objective. Some of the boards’ family practitioner services will also move to the RSSO.

Dr Deeny:

I have some experience of what the agency does, and that includes much good work with GPs. Mr Hodkinson also mentioned that he would like to see other functions added to the agency’s current duties.

Finally, paragraph 4 of your letter states that the acronym RSSO:

“could have an unfortunate and clearly unanticipated sound”.

What is that sound?

Mr Hodkinson:

I have been practising it, Chairperson, and I am not sure how to say it to the Committee.

The Chairperson:

I have that problem all the time.

Mr Hodkinson:

In my case, the problem is possibly down to my age. RSSO, if pronounced as one word — must I say it?

The Chairperson:

Yes, please. I like to laugh at someone. [Laughter.]

Mr Hodkinson:

It sounds like “arso”. [Laughter.] I thought that that might surprise the Committee.

Ms S Ramsey:

It is as well that Jonathan Ross is not here.

Mr Hodkinson:

People are generally mumbling the sound. I was hoping that members would rehearse it in their minds and that I would not have to say it. It is an unfortunate sound, even if it was not intentional.

The Chairperson:

Once it gets out, the name will stick.

Mr Hodkinson:

That is true. It must be dealt with at an early stage, and I am trying to do so with my departmental colleagues.

The Chairperson:

It would be wise to change the name, because you would be the butt end of a joke. [Laughter.]

Mr Hodkinson:

Thank you very much.

Dr Deeny:

You mentioned the agency’s current functions. Are there other functions that you would like to take on?

Mr Hodkinson:

I mentioned the research and development office, which is one of our functions. However, the Department has not as yet told us where that function will go. It may not go to the regional support services organisation but to one of the other two main bodies to which you referred.

Mrs Hanna:

You may be aware that the before it became DEL, the Department for Employment and Learning was almost named DOLE — the Department of Learning and Employment. That had to be changed. [Laughter.] You may have to do the same.

What impact will the Minister’s decision to bring all legal services in-house have on the agency? You mentioned the fact that the agency plays a large role in information and communication services. How will it manage those functions?

Mr Hodkinson:

The agency welcomes the Minister’s decision that the Central Services Agency should provide all legal services for the health and social services internally. We have argued for that for some time.

There will be big changes. First, costs will be saved. As I said earlier, we are not a profit-driven organisation — we charge to cover costs. That means that we build a relationship with our clients. We agree fees with them on hourly rates or block contracts. Our intention is only to recoup the funding that we need, fundamentally to pay our staff. That, in itself, takes us out of going rates in the market for legal services. That is an improvement.

There are other, perhaps less obvious, advantages. Under the arrangements that existed when there were several providers of legal services, it was possible that different advice was being given for the same problem in several places throughout Northern Ireland. For example, a social worker could ring for advice on a child case in Strabane, and another could ring in Newry, Larne or wherever, and they would all receive slightly different advice from different providers. There is potential for us to bring together such advice. We can, therefore, offer advice to someone in Belfast, and if that person’s query emerges as a frequently asked question, we can then inform the rest of our clients — the rest of the Health Service.

We provide a training regime for our professional and support staff, and also for clients, in how to handle matters themselves so that they do not always need to call their solicitors and create an administration process in order to solve a problem. Until now, we have not provided that training for some parts of the service whose legal services are provided by the private sector. Therefore, that will bring about consistency.

We have a system that I have always considered an expensive way in which to do things. If, for example, a medical-negligence case arises that involves three hospitals — say, a patient has gone to his or her local hospital, has been referred to another hospital, and then to a tertiary service in the Royal Victoria Hospital — and the three hospitals belong to trusts that have different legal-service providers, each of those legal-service providers may wish to engage an expert because they each represent a different client. That is expensive. That will not happen — certainly not to the same extent — if all legal services are provided from one source.

Therefore, there are several hidden advantages. However, there are several other matters on which we must begin to work more strategically across the entire service.

Mrs McGill:

My question is on procurement, which Carmel touched on in a previous question. To date, what has been the agency’s relationship with the Central Procurement Directorate (CPD) here? What will it be in future?

Mr Hodkinson:

We have a close relationship with the CPD at a professional, working level. Our colleagues in the regional supplies service work with the CPD. We consult the directorate on a one-to-one level for advice. We also work with the CPD on several groups that the Department of Finance and Personnel (DFP) has put together over the years to ensure that consistent approaches are taken to procurement across the public service. The best example, which I carry round in my head, is that we have vehicles, such as ambulances and trucks. We also have contracts for tyres and tubes. I apologise for reducing the matter to such a basic level. However, it illustrates the point that I am making.

Parts of the public service, such as education and library boards, use more vehicles than we do. Therefore, it makes sense that they should have the contract for tubes and tyres for the entire Province, and that we buy off that contract. Similarly, it makes sense that we should have the contract for laboratory equipment, and schools and universities can buy off our contract. We are developing relationships with the Central Procurement Directorate, the Water Service, the education and library boards, the Housing Executive, and so on, in an attempt to get the best return for the investment that has been made across the public service.

Mrs McGill:

Did the Central Services Agency engage with CPD to provide legal services and advice on the difficulties and the Minister’s subsequent decision?

Mr Hodkinson:

No, CPD secures its own legal advice, presumably from DFP legal services or Government legal services. The Central Services Agency has not advised CPD on legal matters. Indeed, that would have been a conflict of interest, as we would have been a potential competitor to other groups.

Mr Buchanan:

I apologise for being late and missing part of your presentation. When I came into the meeting, you were answering a question that Alex Easton had asked. You stated that substantial investment in IT services is needed if savings are to be made. What level of investment package would IT services need in order for appropriate savings to be made?

Mr Hodkinson:

Three projects are in need of investment. The first of those is family practitioner services, which I will ask Paula Sheils to talk about in a moment. The second is finance and supplies —procurement — and the third is payroll and human resources.

Our payment systems for paying bills are fairly antiquated. We have had them for some 10 to 15 years, and they are not fit for purpose for what we want them to do. Those payment systems pay the bills. However, the turnaround is not fast enough; they do not produce the necessary information; and they are not compatible with the supply services, which, because of the large number of suppliers that we have to pay within a certain timescale, are closely linked to paying bills.

It is generally accepted that investment is needed for new systems in finance and supplies and in payroll and human resources. Our payroll system is very old — information and communications people would call it a legacy system. The system pays people — we do not receive complaints on that front generally — but its sharing of information with human resources is antiquated. Human resources information is used in payroll calculations. An investment of around £12 million is needed in order to improve those systems.

Ms Paula Sheils (Central Services Agency):

The payment systems that we use in family practitioner services pay general practitioners, dentists, optometrists and pharmacists. Like the systems that Stephen has just described, they were fit for purpose 20 years ago, but the nature of the contracts with the independent contractors has changed over time. The systems were originally built to cope with items of service claims — someone did one thing and was paid for doing that one thing. However, contracts are moving to the provision of a service with practice-based payments.

Many of our payments must be calculated offline before being entered into the payment system. We cannot calculate those payments on the system. Therefore, we must change the systems not only to ensure that they are sufficiently up to date to meet the demands of the current contracts but to ensure that they are flexible enough to be amended easily in order to adapt to future changes.

To make a change to the current systems is extremely expensive, because the programmes were written in an old language, the common business oriented language (COBOL), expertise in which is disappearing. People are no longer being trained to maintain that system. Therefore, we must change the system for family practitioner services payments. The system is fine for making payments, but we look forward to the day when any necessary changes can be made more cheaply.

Mr Gallagher:

The agency seems to have approximately 700 staff employed in delivering services. The overall exercise is one of rationalisation, so how many people do you expect to employ after restructuring the organisation?

Mr Hodkinson:

If the regional support services organisation were not being introduced, and we were implementing the computer systems that we need, we would be reducing staff numbers from 700. It is difficult to give an exact figure, but it would probably reduce to approximately 600.

If we transfer the 700 employees to an organisation that employs between 2,000 and 2,500 staff from other boards and trusts, there are potential savings to be made in areas such as payroll and finance, which are currently distributed around the system. Therefore, to bring them together in one or two places, or into one process, will produce savings. Overall, the Minister expects us to cut 1,700 administrative staff across the review of public administration, thereby saving £53 million. That £53 million is funding freed from support services and administrative services for release into direct patient and client-care services.

The Chairperson:

Everyone who wanted to ask a question has done so. Thank you for that detailed and interesting presentation, Stephen, Jacqueline and Paula. We appreciate your coming today. Thank you for your time.