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Baumann: NHS needs 'heroic' savings to pay for integration fund

Government plans to create a £3.8bn pooled fund for health and social care commissioning will take the level of savings needed by the health service in 2015-16 to at least 6 or 7 per cent, NHS England’s chief financial officer has warned.

Paul Baumann told NHS England’s board meeting this morning that attempting savings on that level would be “a heroic undertaking”.

The planned “integration” fund – which was unveiled in the government’s latest spending review – will mean a huge increase in the proportion of NHS budgets earmarked for social care spending.

Mr Baumann explained that there was already £1.7bn of health funding being used “in one form or another” to support local authority funded social care. But he added: “There is an additional £2.1bn – a little bit next year and then a lot in 2015-16 – which needs to be found from existing sources through savings to make that fund a reality.”

He told the board two questions needed to be urgently addressed: “The first of those is what are we going to do with a fund of £3.8bn that will really make a difference in local health economies? How are we going to get this integration concept moving for the maximum benefit for patients, and dare I say it, the maximum efficiency for the taxpayer?”

He continued: “Equally important, if not more important though, is you can’t spend money that you haven’t got. There’s a rather thornier question we need to address which is, how do you generate savings of £2bn on top of all the savings we already have to generate on an annual basis in order to keep going?

“The efficiency level in the system at the moment – the ask on the system – is around 4-5 per cent… That trips up to at least 6-7 per cent when you put an additional ask of £2bn into the system…

“That’s a non-trivial ask. It’s not just a small adjustment to the percentage savings that need to be done, that takes it into a whole different category of the stretch that is required. It’s quite a heroic undertaking.”

He added: “You can’t do that by business as usual. You can’t do it by salami slicing. You can’t do it by incremental gains of one kind or another…

“If you want to invest cash you’ve got to generate it, and that means effectively disinvesting in other activities of one sort or another, and we mustn’t avoid that, in the discussions that we have. We can’t pretend we just generate the money without making changes.”

He suggested this additional financial pressure brought forward the need for the NHS to begin making major service changes, to address what NHS England last week suggested could be a £30bn funding gap by 2020.

“We talked about [NHS England’s] ‘call to action’ being a five to 10 year challenge, possibly longer, in its vision,” he said. “This brings it very much to a 90 week challenge. And I think we’ve just got to square up to that quite quickly.”

Readers' comments (13)

  • where does it say the money is for socail care? it is for integrated care nad there is a diference. perhaps a more fundamental question to ask is, if this money is for social care does tyhat mean they will be getting rid of means testing with health and social care free to all. Alternatively does it mean that health care will be baling out struggling local authroities who will spend the non ringfenced social care monies on other LA stuff and prop up the social care deficit from health with what outcome for the people who need the care and support

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  • Local government and the social services see this money to fund their deficit and not integration. So the challenge and risk of increased unscheduled care and frail elderly will get even worse.
    Difficult to understand how some of the thought processes for policy making work. Is this a Tory idea of trying to neutralise the Burnham plan for integration?

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  • This is the straw that will break the camels back. Mark my words. LHEs will collapse under overspends the likes of which we have never seen before

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  • Well done to Paul for articulating this. His 90 week challenge is very real.

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  • It is obvious where this will come from - providers being set 6-7% tariff efficiencies whilst CCGs continue to spend money like it's going out of fashion on useless "self-care" initiatives...

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  • I agree with 6.31am - it is a politically motivated attempt to address the "Burnham Plan".
    The only place that savings of this magnitude can be realised is in secondary care through reduction of beds (which have been full for past 18 months).
    I can't see widespread political support for bed closures in local hospitals as we approach the election so leaves the system open to the overspends articulated in 7.55am post.
    We need some real new non-recurrent funding to transform primary and community services over 12 months through "double running costs" to enable the savings that Paul talks about to be realised.

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  • The way to develop coherent community-based services and integrated care is to invest in them BEFORE the money is taken out of secondary care. In that way, there is no risk to patients. In that respect, a huge opportunity was missed in the first decade of this century, when Labour increased the NHS budget. Now that money's not there, this is going to end in tears. 6-7% is not achievable with the system as it is. There will either have to be wholesale closures (politically unpalatable) or lots of hospital trusts in financial meltdown. Neither is a happy prospect.

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  • Why can we find money to bail out the banks, fund HS2, fight wars, but we have to pull the NHS down on its knees. This message is politically motivated to do something, just not sure what yet.

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  • Be clear, Local Authority Treasurers have already to a man and woman, banked this sum to offset social service revenue cuts previously announced. There will be little if any scope for new spending initiatives to contain growing demand (let alone pump priming change).

    More positively, full credit to Paul Baumann for clearly setting out the unpleasant truth. He puts his fellow Commissioner leaders to shame for pretending that hacking 5% per annum off providers will magic the problem away.

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  • Does anyone have any hard data or information on the position and approach in Scotland?

    All debate and the resultant panic seems to focus exclusively on England.

    Come on HSJ let's have some Health of the Nation comparisons across the UK and Europe to see what we can learn from each other.

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  • I attended London's Regional Emergency Care Event yesterday, and there was a workshop led by the Director of Adult Social Care for one London Borough. On a number of her slides the phrase 'NHS funding for social care' was used. When they put them up the website, you'll be able to see for yourselves. I took from that exactly what Anon 11.24 has said.

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  • Can anyone clarify why it is assumed by NHS England's Board papers that this will be an additional efficiency saving for CCGs alone ?

    Are other part of the NHS e.g. the NHS E direct commissioning functions not going to have make their contribution and, if not, why not ?

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  • I agree with anonymous at 2:57pm. NHS England should provide 25% of the funding in line with their share of the local health spend.
    The current plan that the CCGs should fund all of it will hit health provision badly with little benefit to the patients. specially as the spend will be used to offset SS cuts.
    However when the CCGs make the money available for integrated services they will also transfer their existing costs of community provision. That could mean that the budget transfer of 3%++ is already committed. That wil make the local authorities wince!

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