What NHS England isn’t telling you, and more indispensable weekly insight for commissioners, by Dave West.

Since the beginning of the decade, the ubiquitous presentation slide for waking people up to the NHS financial squeeze has been one or other iteration of the “scissors of doom” – a top blade illustrating cost pressures growing inexorably over time; the bottom showing flatlining funding. So notorious is this chart that it has earned a parody by top health economists.

Now though, as we travel through the second five years of NHS austerity, the image that better conveys the challenge is the U-bend.

This piece of plumbing describes the graph of the government’s planned health spending growth through this Parliament. It begins with 2016-17’s year of plenty (I hope you’re enjoying it), plunging in 2017-18, dipping to a low point in 2018-19, picking up slightly in 2019-20, and a little more in 2020-21.

Sustainability and transformation plans’ task was to map a route through this period, and their finance and efficiency templates detail what they think it means for the fundamentals of the NHS’s operating equation: spending, staff and activity.

Analysis of the 11 STP templates shared with HSJ shows the U-bend running through each:

It won’t escape anyone’s notice that reducing emergency admissions, at least in a single year straight off the current trajectory, is not very likely; many will say reducing workforce and controlling acute spending growth are unlikely too.

Confidence in STPs’ progress generally is low, some numbers in the templates have already been set aside in the 2017-19 contracting round, and national leaders have distanced themselves from some of the forecasts they’ve been sent. Indeed, this is the first time I’ve seen one of my stories seemingly questioned in Parliament, before it has been published (Simon Stevens said in last week’s triumphant Commons public accounts committee outing: “Some of the staffing projections within individual STPs will now need to be refined. To nip one potential future controversy in the bud… Anybody who looks at some kind of Excel spreadsheet and infers, ‘oh blimey, there is about to be big reduction’ is wrong.”)

Trade offs

So why take any notice of these numbers?

First, they are the only attempt we have and, while some parts will fail, or take much longer than planned, the templates give useful insight about the direction the service will seek to take. Those drawing up STPs have said it is useful to compare - it’s a shame NHS England has not made fuller figures available.

More importantly, and presumably the reason for the sensitivity, the templates are a clear reminder of some of the ugly choices and trade offs the NHS faces as it goes through the U-bend.

Take emergency admissions, something everyone agrees it would be nice to reduce. What does it mean if they are not, as seems likely?

With less savings from avoided acute activity, even more of the challenge is loaded on to efficiency improvements. Cost cutting becomes harder.

In part this has played out in the recent contracting round – many providers have signed block deals, which leave them with big cost improvement gaps.

Some believe there are still big efficiency gains to be made. But two thirds of provider costs are in pay, and around a third of provider staff are registered nurses. The STPs assume returns from attacking agency spend will diminish sharply after a huge reduction in 2016-17. A combination of care quality, workforce supply and politics may mean cutting the nursing establishment is out of bounds – although, while undesirable, it has occasionally happened before and is not unthinkable.  

To avoid it, the heat can only be turned up under other cost targets: commissioner overheads, standardising and centralising clinical service lines, spending on drugs and supplies. It will surely mean more pain for other big staff groups, notably non-clinical support, along with the associated mergers, restructures and outsourcing.

Squeezed middle

Those who must make navigating the U-bend look achievable will revisit the argument that the NHS only needs to do more with the same resources – not more with less resources. This would be more helpful were it not for the unavoidable new and rising cost drains, as well as the need to shift funding between sectors.

High end specialised services will gobble up more than 4 per cent annual growth even with optimistic efficiencies, driven by expensive new treatments, while there’s a strategic desire to rapidly grow primary and community spend.

This makes general acute care the squeezed middle, pencilled in for real terms reductions until the other end of the U-bend; while mental health is forecast only to maintain its share of total spend, not to grow as the rhetoric of parity suggests.

NHS England claims the 2017-19 contracting process has corrected this, so mental health’s share will increase. But if this is the case, or the severe restrictions on acute spend don’t stick, then which other sectors will pay?

Some of national NHS leaders’ recent comments about STPs suggest they know of solutions, or perhaps have new plans, which will mean the most difficult of these trade offs can be avoided. These have yet to be shared.