HSJ’s expert briefing on NHS finances, savings and efforts to get the health service back in the black. Contact me in confidence here.
The short sell
After several years of working to fantasy plans, there is now a feasible funding settlement with which the NHS can start to address its financial problems.
For providers especially, the new funding and emerging financial rules look far more positive and realistic than what’s gone before.
The 3.4 per cent average annual uplift to NHS England’s budget means the efficiency challenge is around half that of the Five Year Forward View period, and there now seems to be a much clearer focus on supporting areas with huge structural deficits.
As HSJ revealed before Christmas, there will be a “financial recovery fund” to support trusts in deficit from 2019-20, with the 30 trusts in the deepest holes also put into an “accelerated turnaround process” (it’s unclear exactly what this will involve, or how it will be different to the existing special measures or financial improvement programmes).
The new FRF is likely to be worth in the region of £1bn, with some of that coming from the existing sustainability fund and some from the overall funding uplift. Essentially, it should mean that more money is going to those areas in the most trouble, rather than large chunks of additional cash being doled out to the relatively comfortable.
Trusts wanting to access the funding will need to deliver extra efficiencies of 0.5 per cent - a far more realistic expectation than what they have been used to. The prospect of successful delivery could bring fresh impetus and ambition, though regulators will need to ensure efficiencies are genuinely cash releasing and recurrent.
If we also consider the scaling back of the CQUIN programme, NHS Improvement will be pretty happy with its lobbying efforts on behalf of providers.
Long term questions
The short-term financial objectives - to progressively get the provider sector back into balance after two years, and all NHS organisations in balance by 2023-24 – appear to be far more achievable than previous expectations.
But despite the title of the document published today, huge questions remain over longer term financial sustainability, and the extent of improvement that can be delivered (there are no clear targets for the elective waits or four-hour standard, for example).
The number of people over 85 is projected to increase from 1.3 million to 2 million (53 per cent) over the next decade, while the national debt is projected to rise to 282 per cent of GDP over the next 50 years unless additional savings or extra income are found (it’s currently 85 per cent).
The NHS’s 3.4 per cent annual uplift is below the average 3.7 per cent rise since 1948, and we still don’t know what support will be given to key non-NHS England budgets, such as public health, capital, training and social care.
All these areas remain a major concern, as they will be crucial to preventing expensive hospital admissions and preventing the NHS being held to ransom by locums and agency workers. There is not even a date in the diary for this year’s government spending review, and hopes for a happy resolution to these issues are not particularly high.
While the NHS “long term” plan sets out an admirable vision, and a more realistic starting point, there’s much work to be done to fill in the detail and set out a longer term path.