Cost savings - Liverpool Waves of Hope

Cost savings – focus on the short or longer term?

Cost savings – focus on the short or longer term? Key message: not all public services can fit neatly into a linear cost reduction model, and without a longer-term outlook, the risk is that services will continue to address the symptoms of issues, rather than underlying causes and drivers. Social – and therefore economic – costs will continue to escalate if decisions are taken based only on short-term funding cycles which are not conducive to joined up approaches. Introduction The pressure to demonstrate savings across projects within the public sector has intensified to unprecedented levels in the last 6-7 years. In an era of ever tightening budgets, particularly within local government and the health sector, cost effectiveness and return on investment is ever more important. This is, to a large degree understandable, with a tightening system where access to funding requires evidence-based business models and a clear demonstration of a shift away from dependency across a swathe of services. But should this equate to services at every level, particularly those dealing with some of the most complex and vulnerable people in society? What does the evidence show us thus far, and should there be a shift in the narrative – particularly within the field of multiple and complex needs – away from a focus on shortterm savings towards investing in the lives of individuals? This short briefing focuses upon findings from the Liverpool Waves of Hope (LWoH) Year 2 evaluation report to help explore this. What the evidence tells us The LWoH evaluation (being undertaken by Ipsos MORI) has in part been focusing upon cost effectiveness, utilising in-depth evidence from twelve case studies. Whilst not necessarily a representative sample, it nevertheless provides a valuable indication of the commonalities in terms of the types of costs associated with providing this level of support and how these change over time. The Year 2 evaluation examined the costs associated with providing support to service users and comparing these to pre-LWoH service use and

estimation of costs developed during the Year 1 evaluation.1 On the surface, the findings from the evaluation suggest that there is not necessarily a simple relationship of costs decreasing as service users are provided with support from within the programme (see Table 1, extracted from the Year 2 evaluation report). Four of the twelve individuals who participated in the research, had required support that became less costly over the time they were involved, whilst eight people required support that became increasingly resource-intensive. This immediately illustrates that it is not a simple case of savings over the short-term. However, it is at this point where an important distinction needs to be made between the types of costs involved. Increasingly, economic research, including Cost Benefit Analysis (CBA), takes into account two different costings, outlined below. Reactive/acute costs, which place pressure upon core/specialist services. These frequently relate to the crisis services and pressure points which LWoH is aiming to lower – A&E attendance and arrests for instance. For many of the twelve individuals within Table 1, there has been significant reduction in usage of such services, addressing cost savings and associated stress on stretched areas of the public sector. This trend, also reflected more widely across the LWoH cohort (see below) is important, as the original project plan for LWoH had a significant focus on reducing the usage of crisis services.  As at June 2017, 80% of service users involved in the programme reported a reduction in their attendance at A&E, and 80% reported a reduction in the number of arrests.  According to the New Economy Cost Benefit Analysis Database 1

For detail around the methodology employed to determine cost effectiveness, refer to the evaluation report. https://liverpoolwavesofhope.org.uk//app/uploads/2017/03/LWoHYear-2-Local-Evaluation-Report-May-2017.pdf

(http://www.neweconomymanchester.com/ou r-work/research-evaluation-cost-benefitanalysis/cost-benefit-analysis), the cost of arrests is estimated in the region of £600 per incident and A&E estimated at around £120 per visit. Given the high levels of representation for individuals with multiple and complex needs, this could constitute significant savings. Proactive/planned costs, such as being connected to other services (e.g. planned hospital treatment, detox, counselling, housing), which whilst in the short-term increase demand on services, could in theory be considered as a positive, as they are more likely to prevent increases in acute service use and lead to reduced overall costs over time. Personalised support due to involvement on the programme means that service users are now being connected to mainstream support services that they were previously not accessing, and improving their quality of life as a result. A third dynamic is that the progress made by people with complex needs is rarely straightforward or linear. A number of people, as highlighted in the table and detailed within the evaluation’s case studies, are likely to progress to a certain point and regress, before improving again, with a commensurate increase in costs. For this group of people, therefore, there basic cost-benefit analysis does not fully capture real costs, or always yield the shorter term gains that policy makers and practitioners would often prefer. The findings here are not unique to Liverpool. They are reflected elsewhere across other Fulfilling Lives programmes, and indeed are familiar across other social interventions. There needs to be an understanding amongst policy makers of the upfront costs involved as people are belatedly accessing mainstream or specific support programmes – in particular health costs which are amongst the highest expense, considering that people with multiple and complex needs frequently experience acute health issues for years or decades. Trend towards medium and longer-term cost savings The findings from the case studies (and from similar projects elsewhere) do show that cost

savings tend to be become more apparent at a later stage. Within LWoH, the costs of providing services to individuals in the second year are almost always lower than the costs in the first year (ten of the eleven cases where the person had been on the programme for over a year). The evaluation notes that if costs were to remain at this level for the duration of the project, six of the case study individuals would create a saving for public services when comparing against their previous service use. Although further evidence is required over the remainder of the programme, from the findings it can be suggested that accessing the support can lead to changes in individual’s lives which results in less dependency, and therefore cost, for public services. There are wider questions around sustainability of outcomes post-programme involvement, together with attribution, but these trends nevertheless indicate that the greatest gains may be over the longer-term and therefore the focus of cost savings needs to extend beyond an individual’s time on the programme. A shift required in the narrative around cost savings? The evidence that is now beginning to emerge from the local evaluation will help to frame an understanding of both the shorter and longerterm impact of LWoH, and how key messages are communicated to stakeholders. Ideally, modelling how the values may change over time would help in determining the long-term savings; however, with the complexity of the cases and lack of evidence as yet around sustainability, this cannot be robustly achieved as it would involve too much uncertain conjecture. Yet from what is known, established thinking around cost savings may require some adjustment. LWoH and similar interventions could be viewed as ‘invest to save’ models. It would be a mistake to expect large-scale, short term savings/quick wins, as the people involved have such a range of complex circumstances. Instead, there needs to be a consistent message of investing in the future of

individuals, as a platform for future cost avoidance. For example, the local evaluation cites research that states that some individuals with multiple and complex needs have incurred almost £1 million of costs over their lifetime. Furthermore, given that this and other research2 states that many of those with multiple needs have children, they may also be impacted by their lifestyles. Therefore support for individuals may also prevent wider familial issues, both now and in future. Longer-term theory of change is all important. Following on from the above, it is crucially important to view working with this cohort a process for long-term change. Whilst some level of demand may increase in the short-term, over the medium to long-term this will, as a whole, decrease with the right support in place. In the immediacy of frontline service delivery, it is important that the longer-term approach underpinning LWoH is conveyed and understood. This can be a difficult message to communicate to agencies and decision makers. The lack of evidence that this and other projects can provide around cashable savings and how these can be garnered in the short-term, is challenging. In order to achieve this, it requires working with stakeholders to develop a wider appreciation of how this complex group requires different approaches, through a longer term outlook based on an understanding of a model that works – working towards meaningful system change. Not all public services can fit neatly into a linear cost reduction model, and without a longer-term outlook the risk is that services will continue to address the symptoms of issues, rather than underlying causes and drivers. Social – and therefore economic – costs will continue to escalate if decisions are taken based only on short-term funding cycles which are not conducive to joined up approaches. The focus of the programme’s messaging, therefore, needs to be consistent and two-fold:

2

Lankelly Chase (2015) http://lankellychase.org.uk/wpcontent/uploads/2015/07/Hard-Edges-Mapping-SMD-2015.pdf

1. On the shorter-term savings around the crisis services which have been generated and evidenced up to now, relieving key pressure points. Despite the focus in this paper around longerterm cost reduction, the short-term decrease in use of acute services should not be ignored. These can be too easily masked by the overall increase in costs as individuals access mainstream services. 2. On the overarching medium to longer-term savings which will emerge from integrated models such as LWoH. These are the most meaningful changes which will only result from systemic change across service design, commissioning and delivery. Otherwise pressure and costs will be continually recycled across the acute crisis services and future interventions will always be seeking to address the same challenges.

Adrian Nolan, Policy and Strategy Manager, Liverpool Waves of Hope [email protected]

Table 1: Illustration of estimated cost differences for service users that have been part of the programme

Service user

Average annual saving (negative numbers represent increased cost)

Description

Difference in cost between first and second year on the project (negative numbers represent increased cost)

Amy

£31,600

Costs have reduced for Amy; this is because she is no longer in prison and has reduced her offending.

£500

Gemma

£21,800

Costs have reduced for Gemma as she is no longer in inpatient psychiatric care. She is also receiving less support from her CPN and is no longer involved with offending.

£10,600

Darren

£14,500

Costs have reduced for Darren partly due to his receiving extensive hospital treatment in the year before he joined LWoH. Darren is also attending A&E less often and offending less often. In his second year on the programme Darren disengaged with health services which has reduced costs, though this may not be a positive outcome for him.

£6,700

Tom

£12,600

Costs have reduced for Tom; this is because he has reduced his offending behaviour and his use of A&E since joining the project. Data around Tom's use of other medical services in the year prior to joining the project is missing. This means that savings may be higher than those estimated here.

£10,900

Owen

-£2,000

Costs have increased for Owen since he is now receiving the benefits he is entitled to, and because he has been evicted from hostels multiple times.

n/a (Owen moved on after less than one year)

Hannah

-£4,800

Costs have increased for Hannah; in year two she was sectioned and is now in a psychiatric unit. This, plus the costs of the support she is now receiving from LWoH, means that the cost of her support has increased overall.

-£1,100

Daniel

-£7,400

Costs have increased for Daniel because of the additional support he received in year one for his mental health and substance misuse problems. Daniel also continued to offend in year one. Costs were lower in year two as Daniel's needs reduced.

£11,200

Laura

-£11,300

Costs have increased for Laura due to the additional support her caseworkers have helped her to access, including detox and counselling, and the benefits for which she is eligible.

-£3,900

Dave

-£14,400

Costs have increased for Dave as he is now accessing health treatment for his medical problems and is receiving the benefits he is entitled to.

£4,700

Bill

-£21,800

Costs have increased for Bill due to the cost of rehab and detox programmes and since Bill is now claiming the benefits to which he is eligible. Bill also spent some time in prison during the first year after being referred to LWoH.

£5,300

Brian

-£43,700

Costs have increased for Brian due to him having many spells in hospital while on the first year of the programme. The cost of Brian's accommodation at the ABS is also significant.

£45,700

Stephen

-£48,300

Costs have increased for Stephen due to his receiving hospital treatment in his first year on the project. Stephen used few services in the second year of the project, although some data is missing.

£40,600