As the news broke last week that a provider revolt had shot down pricing proposals for 2015-16, the NHS lunged into a messy struggle for control of the story, writes Crispin Dowler

At the centre NHS England spinners stressed the line that while the objectors accounted for three-quarters of all NHS services by turnover, they made up just 37 per cent of providers.


The organisation warned that changes to the tariff now would just mean “less investment in other hospitals, mental health, or GP and community services”.

In response, NHS Providers accused the national body of trying to portray objectors as a “few big greedy trusts”, and of disregarding the view of a wide range of providers that continued price cuts will mean they can no longer guarantee “sustainable and safe care”.

In truth, neither argument tells the whole story.

Heartfelt opposition

On one hand, HSJ understands that nearly all teaching hospitals and specialist trusts objected – a clearly higher proportion of objectors than was seen across the provider sector as a whole.

This likely reflects the heartfelt opposition of this group to the proposed 50 per cent cap on payments for specialist care activity above 2014-15 levels. That cap, while deeply controversial among the trusts affected, is not a threat to every provider.

On the other hand, there is a very widespread view among NHS providers that they cannot continue to shoulder year on year real terms price cuts of 4 per cent as HSJ reveals that even the NHS Trust Development Authority thinks the 3.8 per cent proposed for next year is excessive.

The record number of nurses recruited in October gives weight to the argument made by tariff objectors that the full costs of the health service’s Francis inquiry response are still feeding through the system.

Numerous deficits across the acute sector, despite some rather opaque bailouts, suggest financial risk is not balanced evenly between these providers and their commissioners.

‘The argument over 2015-16 prices threatens to undermine the cooperation needed’

And given the narrow window in which trusts could object, the number of objections lodged does not seem insignificant. The consultation was only a month long and finished after many would have left for Christmas holidays, yet nearly half the foundation trust sector objected, and a similar proportion of non-FTs.

But fixating on the details of this row risks missing a wider point. Stepping back, the dispute illustrates how the credibility of the tariff – like other artefacts of the current system, such as a narrow regulatory focus on the performance of individual organisations – has been stretched to breaking point by prolonged NHS austerity.

The sad thing is that the argument over 2015-16 prices threatens to undermine the cooperation needed if the health service is to reverse engineer those aspects of the system that are no longer appropriate to the pressures it faces.

No chance of new prices

There is now no chance that new prices will be agreed before the start of 2015-16, yet NHS organisations have been told to continue working to the normal financial planning timetable.

The obvious risk is that, without nationally agreed rules, commissioners and providers will end up in conflict over short term finances, and energy will drain away from cooperative working on the new care models endorsed in the NHS Five Year Forward View. The tariff row must also have put some strain on relationships between the TDA, Monitor and NHS England - organisations which must work more closely together if the forward view proposals are to be realised.

‘It could cast doubt on the NHS’s ability to use new money to genuinely reform care’

Furthermore, the success of those proposals depends on persuading an incoming government to commit significant new investment.

It is possible an atmosphere of generalised financial strife would persuade that new government the NHS urgently needed a funding hike. But it is also possible that a health service riven with transactional disputes would cast doubt on its ability to use new money to genuinely reform care.