Can the NHS cope with the coming austerity?
After the feast comes the famine. Everyone now seems agreed that the good years are coming to an end in the NHS and, following two more years of healthy increases, the prospects from 2011 onwards are grim.
In fact the closer you look, the grimmer those prospects appear to get. Although the government's projections suggest 0.7% annual growth in the public sector beyond April 2011, research body the Institute for Fiscal Studies predicts this will become a 2.3% reduction once unavoidable commitments such as benefits payments and debt obligations are taken into account. And of course all this is based on forecasts that many see as hugely optimistic.
When you add into the equation the £15bn-£20bn of "efficiency savings" that NHS chief executive David Nicholson has committed the service to between 2011 and 2014, and the possibility of £10.9bn of private finance initiative (PFI) debts being added on to the accounts, the scale of the retrenchment becomes painfully clear. Although both main political parties have made noises about protecting the NHS from the worst of the cuts, it's difficult to see how it can escape, given that health accounts for a fifth of all public spending.
But if that's the bad news, there is one sliver of good. Unlike previous recessions, managers know what is coming and have two years to prepare for it.
"Services must start planning now and make the investments while they still have the funding," says NHS Confederation chief executive Steve Barnett. Above all, he argues, they must avoid the mistake of previous downturns of "salami slicing" - pruning across the board to balance the books. "That's the wrong approach. This must be clinically led and must be really strongly focused on quality and innovation."
A time for preparation
In the view of Michael O'Higgins, chair of the Audit Commission, "scenario planning" is going to be one of the keys to survival. The question that both commissioners and providers should be asking themselves, he says, is: if we had 18 months' notice of major cuts, what would we do? "Anybody who doesn't plan for some very difficult financial numbers now is being irresponsible."
For many, the key to weathering the coming storm is redesign - that is, a complete re-imagining of how services are delivered, rather than simply cutting or trimming. The result, believes Barnett, could actually be a better and cheaper service. "It's a fallacy to think that quality costs more. All the evidence indicates that better quality actually costs less."
To achieve that will involve frontline clinicians working closely with managers and patient groups to agree priorities and then streamlining services to make them more efficient. If this were done across the service, he says he is "confident that the NHS could do an awful lot to minimise the impact of the financial downturn." Even staffing - which accounts for 70% of all NHS costs - could remain largely unscathed in this analysis, he predicts.
"A sizeable, well-trained and well-motivated workforce will be even more critical to delivering services in the future," argues Barnett.
Many believe the leaner times ahead could actually accelerate the process of redesign by concentrating minds and forcing managers to recognise there is no real alternative. And it's certainly an appealing theory that higher productivity and "smarter" services can by themselves keep the NHS on track.
But it is a view that would seem to be based more on hope than experience. According to Michael Dixon, chair of the NHS Alliance primary care umbrella group, some trusts have cut waiting times by redesigning their systems, but others have got by "by paying double time at weekends". He cautions: "These will be the areas that, if they don't make radical adjustments very quickly, will be cutting services and providing less with the reduced money."
Another problem is reconfiguration. Much redesign will depend on major restructuring, with acute services being relocated in the community and some hospitals being closed or merged. The Darzi review last year strongly backed this shift, but so far the pace of reform has been desperately slow - largely because any hospital redesignation hits so much public opposition.
"In the NHS it's almost impossible to reconfigure or close a garden shed, let alone a service," says Barnett. "All too often politicians at local or national level find it difficult to rubber-stamp these changes. It needs a bit more political bravery. These are issues that won't go away and that have to be addressed at some point."
Clearly, the new economic reality will be the acid test of what has been achieved over the past decade. "We're going to find out how well the market and competitive forces injected in recent years have really worked," says O'Higgins. "Commissioners should now be looking at scenarios based on spending being flat or, say, being cut by 5% and considering what the priorities should be and how to protect them.
"I think some providers are going to have to be merged or otherwise go out of competition. And providers need to consider what strategy to follow: should they cooperate with others, for example, or should they be providing better or different patient services?" Commissioners, meanwhile, will have to be much tougher in their approach. "Commissioners haven't yet really challenged providers," he says.
There can be little doubt that however much trusts prepare for the downturn, there will be casualties. Could it even be that the 18-week waiting time limit will come under threat?
Dixon thinks the political capital poured into achieving this target will probably ensure it remains sacrosanct. But he suspects waiting times will not reduce much further - "partly because it becomes a law of diminishing returns the lower you get and partly because it may not be the most important issue".
His bigger fear is that the NHS will "revert to type" and start axing less visible services such as public health, care of older people and mental health - at precisely the time when these services could be most needed. "That would be really short-term thinking. It could crush practice-based commissioning if GPs felt they were more like decommissioners, having to dance to some tune set by organisations higher up than them," Dixon says.
One of the most vulnerable areas, in O'Higgins's view, could be social care. "If the NHS retreats into itself and decides to cooperate less with local authorities because it's looking after its own priorities, social services will suffer and we could have a major scandal further down the road," he warns.
Despite everything, though, there remains a surprising degree of optimism within the service. The investment of the past decade means the NHS is well-placed to withstand the downturn. Indeed, many back Nicholson in believing the only response to the forthcoming downturn is to go "further and faster" with reform.
But as O'Higgins observes, the stakes are high. "The last 10 years have seen an attempt to say the problems of the NHS can be solved by more money," he says. "It isn't clear whether that's been successful, or that the public believes it's been successful.
"So there's a threat that if the public doesn't believe money is the answer, then the concept of the NHS itself may come under pressure. The NHS has to prove the money that has gone in has been an investment which, properly used, will yield benefits."