NHS can’t stand further £20bn ‘savings’

Two dire warnings about the financial state of the NHS have been issued ahead of the annual NHS Confederation conference in Manchester today.

Writing in the BMJ, respected King’s Fund economist John Appleby has warned that the health service could not stand a second ‘Nicholson Challenge’ when the present demand for £20 billion of efficiency savings runs out in 2015-16.

At the same time, a survey of senior NHS managers, conducted by the NHS Confederation, has warned that the health service is already under pressure.

More than half (53%) of the 252 chairs and chief executives from 200 healthcare organisations said the financial pressures facing their organisation were "worse or significantly worse" than 12 months ago, and just 11% thought they had improved.

Almost all (85%) thought things would get worse over the next 12 months. Sir David Nicholson, the chief executive of the NHS, warned before the last general election that the NHS would have to find up to £12 billion of efficiency savings over the coming four years to bridge the gap between flat finances and growing demand and costs.

In response, he issued a ‘challenge’ to the NHS to find the money using quality, innovation, productivity and prevention measures, to avoid the ‘salami slicing’ cuts, rationing and rising waiting lists of past contractions.

However, in response to today’s survey, Mike Farrar, the chief executive of the NHS Confederation, warned that the health service was cutting costs in the short term, and that this was impacting on patient care.

In his keynote speech this afternoon, he is expected to urge ministers to support managers in making radical but potentially unpopular changes, such as the merger of popular local hospitals and services.

"Frankly, without action on the way we provide health and social care, the NHS looks like a super-tanker heading for an iceberg," he will say. "We know what needs to happen, but can we take evasive action in time?"

In his BMJ article, Appleby says senior NHS managers are already warning that further lean years could follow those of the Nicholson challenge.

However, he says there is little chance of the health service being able to rise to these demands, since they would require "unprecedented" efficiency savings of 5% a year for another five years. New Labour injected massive amounts of cash into the NHS to bring spending up to European levels.

In this time, productivity fell, as the NHS made quality improvements by creating new buildings and employing more staff. In previous contractions, it has never managed to achieve productivity improvements of more than 1% through cut-backs.

"There should be no let-up in finding new ways of using finite budgets to do good things for people who use the NHS. But perhaps it is time for some realism," he writes.

"Even if the NHS achieves half the challenge over the next eight years it will have produced something quite unprecedented. Perhaps that is the best that can be hoped for."