Comment / Deficits, timescales and realism

There is nothing particularly new in Deficits in the NHS 2016 – the HFMA’s own recent NHS financial temperature check provides a similar analysis of the current financial position and reveals concerns about meeting control total conditions. But the report is undeniably well articulated and its conclusion is equally unambiguous. The NHS should ‘revisit the feasibility of the commitment to seven-day services’ and may need to review waiting time targets. ‘There must be realism about what the NHS can achieve with the funding allocated to it and there should be an honest debate with the public about this,’ it said.

Anyone attending the HFMA’s provider conference at the beginning of July might have drawn a similar conclusion. There was no shortage of enthusiasm and commitment among finance managers, but it was hard to find people confident of meeting the services short and medium term financial challenges.

The size of this challenge has been estimated as saving £30bn by 2020/21 – not actually cuts but the additional costs of meeting demand increases if no further real increases in funding were received. With the government already having awarded an additional £8bn in real terms by 2020/21, this leaves the oft-quoted £22bn savings target for the NHS.

But as one senior leader said at the conference: ‘I see no evidence that we are going to find the £22bn in the required timescales.’ In fact the recent Brexit decision could yet exacerbate the problem. One report has already suggested that the fall in the value of the pound could add £900m to the service’s supplies bill – neatly turning the £22bn into a £23bn challenge.

A breakdown of where the £22bn will come from puts £8.6bn at the door of providers, delivered through a 2% productivity improvement each year. Lord Carter’s work has suggested that his proposals – covering everything from improving procurement and use of estates to eliminating waste and clinical variation – could provide £5bn of this.

But managers at the conference suggested the Carter work was taking a long time to kick in. There are no arguments with the approach. The data revolution he describes will provide the foundations for sound decision making to improve service quality and value. But it is around the specific numbers and, perhaps in particular, the timescales where the consensus falls off.

The reality is that making progress with Carter means tackling numerous programmes all at the same time – while also managing the day-to-day delivery of services. There is no slack in the system and no-one can afford to take their eye off current financial and operational performance.

The recent letter from NHS Improvement to providers calling for rapid progress on sharing back office services has also produced looks of consternation among some finance practitioners. ​They wonder – particularly in a sceptical provider finance community – about the specific evidence for this delivering benefits at scale, especially when finance practitioners’ attention is needed elsewhere as part of wider improvement work.

The conference did provide a platform to show-off some of the great work being done in the 50 vanguard sites looking to test new models of care. Much of the work simply makes sense – eliminating unwarranted variation in orthopaedics for example, or targeting earlier detection and treatment of cancer. For many of these new models of care, the fact that they could reduce overall system costs is an added bonus to doing the right things for patients. But some of this work will lead to an initial spike in costs before delivering both better outcomes and reduced costs over the medium to long term.

In the short term, the sustainability and transformation fund could have a major role to play here if it can be targeted at these transition costs. But with the provider sector currently forecasting a £500m overshoot to its required balance position in 2016/17, next year’s transformation funding could yet see itself being rebadged as further deficit support.

The NHS may well be on the right course to deliver more sustainable services over time. The danger is that without the realism called for by the King’s Fund – particularly around timescales – much of this good work will be overshadowed by the service’s ‘failure’ to stay within budget.