The NHS Funding Future is Greek

The NHS funding crisis is going Greek— insolvency not just liquidity. In the short term the obvious threat is from cash flow and there is the long term problem of whether the old service model can deliver quality and solvency.

The NHS from 2000-2010 did not just get large injections of cash—it got addicted to them and built its whole service model around them. It is a high cost model based on big capital projects and highly paid staff. The NHS used to run on limited staffing and obsolete capital. Now that option is no longer possible. The aims of quality, access and innovation are widely shared but they cannot be met simply by reducing costs on the old system. The Nicholson challenge is the wrong way round --- a strategy for redesign has to drive savings. Without redesign, the smaller system will simply deliver lower productivity, lower quality and longer waiting times.  

There is a strong consensus that admissions can be reduced –for example in cancer services there are 100,000 unnecessary admissions of late stage cancer patients. There could be more options for end of life care at home and we do not have the staff to give quality of care to elderly patients with medical admissions. Reducing or at least containing admissions is essential to quality: it is also a condition for solvency in the local health economy as consortia cannot afford to pay for an ever increasing number of admissions.

There is an alternative model out there for the making.  Key stages are prevention, early detection, ambulatory treatment and care programmes. This is what the much abused term integration is really about. Where this has been tried, as in the NSF for Coronary Heart Disease, the model has produced results which have both raised outcome and lowered total costs. The model depends on improved communication with patients the right side of the digital divide and on the willingness of GPs and clinicians to take responsibility for care programmes not just for care fragments.

The Nicholson challenge has to be seen as the start of a five year strategy for making sure that patients can get improved service from the new model. It can contain costs but only if we offer a better service to the Pareto group --the 20 per cent of patients which generate 80 per cent of the costs. We also have to raise quality by concentrating high cost services on fewer hubs.

There is already some progress to the new model but this tends to be in areas like Cumbria and Nene where there are few large hospitals. It is going to be very tough to get any forward movement in the cities especially after the loss of the London strategy. The next eighteen months are the time for a new sense of direction.

The final clue on solvency comes from the long term outlook for public spending. The UK is running out of younger tax payers and there are expensive commitments to improving pensions. Indexation of pensions to earnings is likely to double the cost of price indexation. The Treasury has made very definite commitments to the IMF to reduce the debt. There is no room for any special treatment for the NHS within these IMF commitments. The NHS now has political priority far beyond its fiscal priority.

Service redesign is the key to a service that can live within its means. The NHS now has vast guaranteed funding—can it use it better? 

By Nick Bosanquet

The full version of  this article was published in the Health Service Journal, 14 July 2011.