Existing NHS systems will not cope with the financial crisis enveloping the public sector.

NHS chief executive David Nicholson makes plain in this week’s HSJ that “all bets are off”. Major changes are looming.

The Department of Health recognises that the culture of the NHS must change from one built for growth to one that can meet increasing demand with decreasing cash. It is difficult to imagine a bigger challenge for such a vast, complex organisation with a poor record of managing demand.

The implications of this are profound for managers and clinicians, hospitals and primary care trusts.

The catch is that there is no point in the DH opening its mind unless managers are prepared to do the same

To have a hope of squaring the circle of more demand and less money, the department has to open its mind to radical system reform. Mr Nicholson claims that is exactly what it is doing, citing payment by results as one financial mechanism up for scrutiny. Even the operation of foundation trusts is not off limits - which raises the spectre of local autonomy being chipped away.

The department has no choice but to be open minded. The NHS has had a few lean years in the past but it has never faced a sustained contraction of its funding base on the scale which now threatens. The old answers will not suffice.

The depth of the funding pain means decisions made by clinicians will increasingly be judged in terms of their financial efficacy. NHS medical director Sir Bruce Keogh argues forcefully that, in a time of scarcity, clinicians must consider the impact of each intervention on the rest of the service. As if ramming this point home, the national clinical directors are moving the emphasis of their work from capacity building to providing better quality for lower cost.

For all but the very best PCTs, hopes of more autonomy look likely to be dashed.

In the rush to get the NHS ready for the financial storm, David Nicholson makes clear that some basic actions to save money will be imposed on all but the best. With the top PCTs being offered support to run faster, there is a possibility of a PCT premier league developing.

But these changes will not be the big wins the NHS needs to get it through this financial storm. The best ideas are already out there in the service; they need to be harnessed.

For managers this is a big opportunity - but there is a catch. The opportunity is the chance to bring to bear on government policy a vast wealth of experience from running frontline services - providing solutions which maintain the impetus away from central control. The catch is that there is no point in the DH opening its mind unless managers are prepared to do the same. Radical reform cannot stop at the front doors of the DH’s Richmond House headquarters.

One big idea whose time has come must surely be shifting substantial amounts of care out of hospitals. This has potential to save money, improve quality and transform lives - giving patients more dignity and independence in managing long-term conditions.

There must also be a frank debate about the number of unnecessary operations carried out each year, wasting money and capacity while putting patients at risk for little gain.

Managers must exploit David Nicholson’s pitch for reform to the full, testing the limits of the NHS leadership’s willingness to engage. While there is, of course, no guarantee that all painful cuts can be avoided, there are countless ideas in the service which can improve quality and streamline spending. The DH doesn’t have all the answers, but NHS staff probably do.