Weak spending pledges mean more rationing and tighter control

Until recently the public conversation about NHS finances has been conducted within clearly defined and heavily policed boundaries.

Since the 2009 launch of the quality, innovation, productivity and prevention programme, it has been acceptable for service leaders and politicians to be frank about the herculean scale of the savings the health service needs to deliver. It has not been acceptable to talk about what happens if the NHS cannot make those savings.

‘It may not be possible to close that gap with more productivity or new models of care’

Because at that point the options are limited: quality and access will deteriorate, or services will be more tightly rationed, or health spending will have to increase. Debating these unpalatable options appealed to few policymakers and influencers.

But now the boundaries of this debate are buckling and cracking under the weight of the NHS’s financial problems.

Political symbolism

The Liberal Democrats have become the third of the major parties to commit to above inflation NHS spending growth.

‘The DH and system managers it has worked through over the past decade have to varying degrees been complicit in “leakage”’

This is interesting mainly for its political symbolism. As HSJ argued when Labour made a similar commitment, the additional sums being discussed are too small to have much impact on the NHS’s projected £30bn funding gap by 2021.

Meanwhile, there are many more senior NHS figures these days willing to admit that it may not be possible to close that gap with more productivity or new models of care.

Learning about the loopholes

In this context, it is unsurprising that rationing also refuses to stay out of the newly liberated debate.

HSJ’s report on the controversial measures being considered to restrict access to a groundbreaking, but expensive, cure for hepatitis C starkly illustrates the harsh choices that would come with another half-decade of austerity.

‘Post-election, some trusts may find themselves more exposed to the realities of a continued financial squeeze’

With little fat left in the system, it is no wonder that the national stewards of health finances now say there must be a clampdown on the loopholes some providers have found to protect their bottom lines without improving efficiency.

NHS England and Monitor admit there is a lot they still do not understand about these loopholes, known collectively by the euphemism “leakage”.

But they have said the methods used are likely to include bailouts from commissioners, disproportionately generous funding for specialist services and those with locally negotiated prices, and provider cuts on estates and training.

The Department of Health and the various system managers it has worked through over the past decade have to varying degrees been complicit with these practices. This is now being acknowledged and, again to varying degrees, reversed.

Expensive compromise

Pressing down on the reportedly large surpluses some providers make from off-tariff specialist care will clearly be a priority for NHS England, which is grappling with a structural deficit and “unsustainable” spending growth in specialised commissioning.

But some of the measures it has now proposed to contain that growth – such as pushing most specialist services on to contracts that pay only marginal rates for increased activity – could put NHS England on a collision course with some of the NHS’s most high profile hospital trusts.

More broadly, it is worth remembering that a clampdown on leakage does not, by itself, make the NHS more efficient. It might act as a lever to force providers to become more so – but it might also force a few more into financial crisis. The reason leakage has been tolerated in the past is that “leaks” help to maintain a little stability in a system under pressure.

This may in future be deemed a compromise we can no longer afford. If so, post-election, some trusts and health economies that have until now remained solvent may find themselves more exposed to the realities of a continued financial squeeze.