HSJ’s weekly email briefing on NHS finances, savings and efforts to get the health service back in the black

May day

In her few public statements on the NHS so far, Theresa May has been pretty strident in her response to questions about funding.

She has simply repeated the (discredited) claim of the previous regime, that “we gave the NHS what it asked for”, and has apparently has told Simon Stevens there will be no extra money in next month’s autumn statement.

But with winter coming, performance already falling down a cliff, and a raft of service closures and reconfigurations set to be unveiled through the sustainability and transformation plans, starving the service of more money could quickly become an untenable position.

The state of the NHS inherited by the new prime minister amounts to a horrible hospital pass from her predecessor.

Three or four ugly challenges are heading her way, and the more palatable options for dealing with them have already been exhausted.

Headcount reductions

Clamping down on “rip off” agency firms last year was a no brainer for regulators and the Department of Health. Not only would pay caps help cut costs, they would even produce some positive headlines.

And they have cut costs, but not to the extent that was hoped for.

The total agency bill is now around £250m A month, down from an average of about £300m in 2015-16, although this is still eye wateringly high compared to previous years and winter is still to come.

What really has to happen for the NHS to live within its current means is for trusts to reduce their headcount, and we are now starting to see trusts beginning this conversation.

The latest is St George’s University Hospitals Foundation Trust, one of those on the cusp of financial special measures, which has said it wants to cut its pay bill by 10 per cent over the next six months, despite already having a significant number of vacancies.

Protests are coming

More trusts will follow, under the pressure of regulators, which could soon bring a crescendo of protests across the country, not to mention the negative impact on residual staff who will have to pick up yet more work.

Whatever the rights and wrongs of the junior doctors’ contract dispute, it showed that many frontline staff have reached a point where they do not feel like they can cope.

This is surely part of the reason why the agency caps have not been more successful in persuading staff to return to substantive roles – they are simply not willing to work under increasing levels of pressure for the money that is currently offered.

Things could get very messy by the end of 2016-17, and trusts which don’t have the regulators breathing down their neck will simply wait for the government to blink first.

For those wanting to get their head around the knotty world of NHS finance, the Healthcare Financial Management Association publishes a good introductory guide.

A new edition (12th) edition was released in September, using accessible language to explain how funding flows to and around the NHS, looking at how organisations that make up the NHS fit together, explaining what they do, how they are governed and who they are accountable to. More info here