NHS faces funding challenge
In recent months the debate about the NHS has intensified as all three political parties begin to outline their plans for the health service in greater detail. While each party continues to argue why they are best placed to run the country's health system, all three acknowledge the NHS is facing the most severe funding challenge in its history.
By Steve Barnett, Chief Eecutive, NHS Confederation
Conservative leader David Cameron has launched his party’s health manifesto with a pledge to protect NHS funding and November’s pre-budget report announced that NHS spending will rise in line with inflation after 2011. But while this means the NHS will be relatively protected from some of the severe cuts facing other public sector services, it should not distract NHS managers from making the very necessary preparations now for the challenges that lie ahead.
In 2009, the NHS Confederation published two reports looking at how the NHS will have to deal with restricted finances in the coming years. Dealing with the Downturn and Commissioning in a Cold Climate outlined the challenges the NHS in England faces after 2011 and since those reports were published last summer, NHS chief executive Sir David Nicholson has repeatedly conveyed the message that the health service will have to find £20 billion of savings by 2013/2014 by integrating services and reducing administrative costs. This stark message follows a sustained period of spending growth for the NHS averaging 5.7 per cent each year in the ten years from 1998 to 2008 and a 5.5 per cent revenue growth for the next year which has brought the NHS spending as a percentage of GDP close to the European average of nearly nine per cent.
The savings required come at a time when demand on NHS service continues to grow. England’s ageing population and improved survival and fertility rates, along with the negative effects of a recession, ranging from a rise in mental health conditions to dependency on alcohol, has already put pressure on expenditure.
In addition to the overall pressures of serving the population’s health needs, there are issues with staffing costs for the NHS. From 2011, the NHS is presented with the increase in National Insurance contributions for many of its 1.6 million staff. Although a proposed pay freeze in 2010-2011 for senior groups including NHS managers, consultant doctors and GPs and a one per cent cap across public sector pay settlements announced in the pre-budget report will help to bring about savings in the system, they will need to be carefully managed if a shortage of trained staff or a disruption of services is to be avoided.
These measures reflect the beginnings of a long-term view to tackle the challenges, dealing with immediate budget shortfalls and designing a workforce and health services fit for the future. There are already some good examples of trusts making changes to how care pathways are designed but these need to become systemic throughout the NHS before finances are pressed further in the 2011 Comprehensive Spending Review.
The next two years in particular will require some difficult decisions if the founding principles of the NHS are to survive. Having the knowledge of what has not worked in the past and using that to manage efficiencies and value while not jeopardising quality will be essential for both management and staff. In the past, efficiency savings have mainly been achieved by doing the same thing, only cheaper, but a return to slash and burn short term savings which shift work between organisations and departments is not a silver bullet and will make the end goal difficult to achieve.
What is required of the service and its staff is an increase in efficiency and productivity to help drive down costs. Considering and adopting innovative, evidence-based practices which prompt a redesign of services and more streamlined, improved care pathways for patients should always be a top priority for NHS trusts. But constrained budgets should act as another catalyst for change and an opportunity to improve services that may not currently be producing best results. The NHS historically has a poor reputation in promoting innovation in clinical practice and management but commissioners and providers alike will now be looking at new ways of adopting services which are beneficial to both patients and service costs.
Reducing patient stays in hospital and moving more care into community settings is already underway and has proved beneficial to both the service and its patients. Assessing whether certain services are still providing value for users, providers and commissioners will be vital. Utilising community services wisely has driven down demand for more intensive and costly services which can often require lengthy and sometimes unnecessary hospital stays. This could include looking at certain day and minimal invasive surgery as well as moving services which treat certain long-term conditions to community settings and away from acute services.
All of this planning requires the engagement of senior clinical staff and there is strong evidence to show that organisations that combine clinical and managerial expertise in leadership deliver higher quality care and respond to change more effectively.
We are at a stage where radical thinking needs to be incorporated into the everyday mindset of managers and clinicians if the NHS is to emerge leaner, fitter and stronger in the years ahead. Strong leadership and courageous decisions will play a key role in navigating the NHS through the greatest challenges it is ever likely to face.
