After decades of underinvestment, the NHS required the turbocharging provided by the 2002 Budget. The resulting flow of funds did much good. However, with the benefit of 20/20 hindsight many would argue the money could have been spent more efficiently – although there would be considerable dispute about what should have been done differently.
One of the failures was that the investment was not viewed as a one-off injection after which growth was bound to slow significantly. That would have focused minds on driving the NHS towards a more sustainable model by 2010.
It is in the hope that we do not make the same mistake again that HSJ publishes opinion pieces from King’s Fund chief economist John Appleby and Audit Commission managing director for health Andy McKeon.
The thrust of Professor Appleby’s analysis is the “not unrealistic” chance that the NHS “faces a near real freeze in its budget for some years beyond 2015”. Even a more optimistic projection shows the NHS significantly adrift from the target set out in Sir Derek Wanless’s review of future healthcare funding.
In other words, it is very unlikely to be a case of battling through to 2015, saving £20bn and then relaxing as investment reverts back to the long term growth trend of 3-4 per cent.
Of course, at some point during the next 10 years we could see government reaching the conclusion that the NHS needs another step-change in funding, as in 2002. That could involve a significant re-engineering of another area of public expenditure to pay for it or the much more unlikely prospect of exploring a co-payment/social insurance approach. It would be unwise to plan for either.
The chances are the NHS is in for a decade of historically low investment growth and needs to plan for it in a more clear minded way than it managed to do during the recent period of largesse.
Yes, there will be bailouts – at both local and national level. NHS chief executive Sir David Nicholson was last week assuring influential figures within the ever growing coalition health reform emergency response team that finances were under control. He did so safe in the knowledge he has topsliced primary care trust allocations for what some are calling, a trifle unfairly, the “inefficient hospitals fund”.
Few would also be surprised if chancellor George Osborne finds some “extra” money for the NHS in 2014 to smooth out any particularly painful reconfigurations.
Relying on bailouts is a very hard habit to break – being the NHS modus operandi for as long as most can remember. But it is also a very dangerous strategy during such a prolonged period of stringency. Better to treat any financial boost as a bonus.
In any case, as Professor McKeon stresses, after years of restraint the first call on any extra cash will be pay. With masterful understatement he points out that “it will be hard to know where to go in 2015” in the search for further efficiencies – although he does manage to identify some areas worthy of exploration.
The likelihood of a decade in the economic freezer makes it essential that decisions taken now have the long term in mind. Time will not be the cure for measures which only patch over problems. Unfortunately, HSJ hears reports that – for understandable reasons – too many trusts are adopting a strategy of hitting the “easy” targets (mental and public health, etc) and/or putting forward savings plans they know have little chance of being achieved (and will therefore need rapid revision within the short term).
It is bad enough if care quality suffers through savings, but it would be unforgivable if those measures also failed to place the NHS on a more sustainable footing.