Timely as they are, the Commons health committee’s warnings about the NHS’s approach to saving £20bn are nothing new.
Tariff reductions in the acute sector are forcing annual savings targets well above 4 per cent. Commissioners are making unsophisticated attempts to reduce costs and the emphasis is on short term savings. The NHS is once again “salami slicing” rather than fundamentally redesigning.
Much has been made of the committee’s abrasive critique of the Health Bill and its impact. But the committee’s sustained and cogent criticism of the tariff also offers considerable food for thought. It’s become the practice, when setting the annual tariff, for the department to topslice a percentage point or more to reduce costs. Tempting, of course – but tariff reductions, the committee argues, should really be used as a tool to promote necessary service reconfiguration.
Respected contributors highlight the perverse effects of cuts in the tariff. John Appleby of the King’s Fund sees the very viability of high cost services being called into question. Mike Farrar of the NHS Confederation considers the tariff a “crude mechanism” for driving efficiency at an aggregate level. Indeed, if the NHS is into salami slicing, tariff reductions have, in effect, become the blunt knife for doing it.
But Jo Webber of the NHS Confederation arguably makes the most telling point – about the importance of rising demand in services not actually covered by the tariff. “If our demand is due to long term conditions and an ageing population,” Jo argues, “then [the tariff] does not cover, except for very precise episodes, the vast majority of where the demand is increasing.”
Precisely. And the secretary of state’s riposte – that tariffs are being extended into community services – seems somewhat lame. The fact is they’re not. Community services face competition under “any willing provider”, which requires some kind of currency, but we’re a long way from having a national price list for, say, community nursing and the therapies.
From Richmond House it must be so tempting to believe the tariff is a magical lever. Unfortunately, it’s a lever that is not actually connected to well over half of NHS expenditure.