Happy New Year. Or is it? With so much talk of recession and economic gloom, it's easy to forget the NHS's benign position, compared with - say - the car industry, retail, or financial services.
Certainly the NHS has to take thoughtful action now to prepare for a coming slowdown in spending growth. But primary care trust funding increases (yes, increases) of at least 10.6 per cent over the next two years are hardly comparable to seeing your budgets slashed by 30 per cent, plus pay cuts and mass layoffs - all of which are increasingly common across the rest of the British economy. So, yes, the NHS has lots to be thankful for.
But the present economic crisis is not without risk to the NHS. As investor Warren Buffet famously put it, when the tide goes out, you see who's been swimming naked. So what could cause NHS bathing costumes to come off?
The first answer is usually that the recession will increase demand for NHS care. Mental health services are singled out for mention, although most of the extra psychiatric morbidity will presumably be experienced in primary care. Home repossessions will bring their own problems, as will the heightened financial strain on pensioners whose savings are under threat. For example, Help the Aged has warned as many as half of pensioners will not be able to heat more than one room this winter, increasing the incidence of respiratory conditions presenting to GPs and at accident and emergency. Dentistry, with its high consumer charges, may take a hit. And pressures on the labour market in the South East will mean lower rates of employer-provided supplementary private health insurance, so some PCTs could face more elective demand.
But all that said, overall volume pressures are probably not the biggest recession-related NHS risk.
Nor, to state the obvious, is inflation. The NHS should now face much lower input costs, if it can - and is allowed to - take advantage of them. Many suppliers will be anxious to do deals on good terms. Recruitment will be easier and retention stickier.
And NHS bodies don't have to worry too much about their own liquidity or capital structure. But that's not true of their suppliers or some of their customers - so so-called "counterparty risk" will increase. Ensuring those you depend on for services or income are strong enough to deliver their end of the bargain is now a critical priority. Left unchecked, the natural result could be a flight to safety as organisations choose large, well capitalised partners that are more likely to be around to pay their bills or deliver on their performance guarantees. Despite business secretary Lord Mandelson's exhortation that the NHS pay suppliers promptly, small businesses and voluntary organisations are vulnerable.
However, the biggest recession-related threat to the NHS status quo arguably lies in the parlous state of the public finances. For conventional Keynesian reasons, the government has not cut planned NHS spending totals over the next 24 months. In one sense, it has not needed to; the 3 per cent efficiency savings target embedded in the tariff uplift is a potent device for extracting value.
Nor, thank goodness, has it crassly undone the painstaking political and policy work that created the new foundation trust financial regime, which allows trusts to retain surpluses for subsequent reinvestment. That is despite the fact that foundation trust accumulated cash surpluses were a tempting£2.3bn at the end of the last financial year. Touching that would send a terrible signal to hospital clinicians about the pointlessness of making efficiencies now for later reinvestment and growth.
Instead, what should really have people thinking hard is a statement issued a few weeks before Christmas in the 2009-10 operating framework: "In the current economic climate it is appropriate that the NHS… goes further and deeper in making efficiencies to contribute to returning the economy to balance…"
Accept the challenge
How, then, should thoughtful NHS managers respond to this challenge?
Game plan A would see NHS organisations doing what just about every other economic actor is doing - battening down the hatches. For whether you are a company, a charity or a local authority, there are precautionary actions you are probably now immersed in.
First and foremost, you are rigorously controlling the things you can control - starting with your operating costs. Tight headcount controls, appropriate use of third party vendors and capital spending stripped down to the bare minimum is the menu du jour. You are reviewing your budgets, minimising counterparty risk and ensuring you have plenty of cash on hand. You would also be well advised to have a pretty hardnosed contingency plan in your desk drawer that answers the question: "What will I do if come the spring the wheels are coming off and I need to close a large budget gap?"
Game plan B has key elements of A but does not stop there. Instead, it takes the economic downturn with all its ramifications as exactly the sort of spur to action that could provide the momentum to really get serious about transformational clinical service redesign. This would be supported by a new cadre of wanting-to-prove-they-are-world-class commissioners who have been given licence to really shake things up.
So at this difficult time, NHS managers will divide into two camps. There will be those who, quite understandably, opt to stick with A: head down, just make it through. They are the group who will have Rudyard Kipling's If standing on their desks.
But for a second group of NHS leaders who actively seek out plan B, their inspiration will be different. These are the people who will take as their motto new White House chief of staff Rahm Emanuel's dictum that "a crisis is too important a thing to waste".