Comment / Time to focus on transformation

The announcement of increased funding for the NHS is a relief for a service under major pressure. It will make a difference. But my gut reaction to the promised £20.5bn NHS England budget boost by 2023/24 is that it falls short of what is needed

It was a point well-made by numerous NHS commentators including HFMA chief executive Mark Knight. ‘The extra cash will help address current shortfalls, but it is unlikely to be sufficient to meet ever-increasing demand, support the transformation and integration of services, and improve services such as cancer and mental health,’ he said.

As always, the devil is in the detail and it is worth examining what we do and don’t know about the promised new settlement.

At 3.4%, the increase is less than the average 3.7% increase the service has received since its inception and less than the 4% average real terms growth seen as essential to modernise services by an Institute For Fiscal Studies report.

Perhaps the first thing to recognise is that the increase only relates to NHS England’s budget, not the wider Department of Health budget. Spread the promised funding across the whole Department and it is nearer to 3% - moving it further away from the 3.7% average and the 4% modernisation estimate.

There have been some suggestions that these additional areas outside the NHS England budget – staff training and public health for example – could be offered some protection or addressed in November’s Budget, when the overall financial envelope should be set for the 2019 spending review. The Department has said it will consider a multi-year funding plan for clinical training to support its long-term workforce plan, when it is published alongside the overall long-term NHS plan at the end of this year. And there have been similar rumblings about capital.

All eyes will also be on the crucial social care budget and any funding commitments to support the promised green paper.

The £800m cost of this year’s pay increases as part of the three-year deal has been added to the 2018/19 baseline, leaving the service to pick up subsequent years’ additional pay deal costs from within the announced growth figures. And £1.25bn is also being provided in each of the next five years to cover increased employer pension contributions.

There would have been a time in the not too distant past when the service would have been expected to meet such a significant pressure out of the headline increase. It is good news the government resisted the temptation to do this and the transparency is to be welcomed.

Of course, there would always be a case for more funding – especially given the ambition to better meet demand for mental health services and restore overall access standards. But we cannot see the proposed settlement out of the context of the ongoing restricted funding and funding cuts for other public services.

The focus now has to be on agreeing a 10-year plan that is achievable with assumptions that don’t set the service up to fail.

Health secretary Jeremy Hunt, said the NHS needed to meet five financial tests:

• improve productivity and efficiency
• eliminate provider deficits
• reduce unwarranted variation
• improve demand management
• make more effective use of capital investment

These have already been at the heart of what the NHS has been pursuing as part of transformation efforts – providers have in fact been outperforming the wider economy on productivity. But the government is now clearly looking for activities in this area to step up.

Few argue against the existence of opportunities to improve – disagreement tends to focus on what represents a realistic timescale and the availability of pump-priming, double-running or capital funds to enable improvements to be achieved.

The chances of success in this area are arguably increased by the availability of increasing amounts of comparative data – think Model Hospital, Getting it right first time, RightCare and patient-level cost data. These are already being used in many areas to help identify improvement opportunities and support proposals for change.

The focus on immediate pressures – unprecedented emergency demand, access standards and meeting demanding control totals – has inevitably hindered progress. What is more, transformation programmes can be undermined if clinicians think the prime purpose is to reduce costs rather than improve care and deliver value more broadly.

With an improvement in the financial context, NHS bodies now need to find a way to accelerate these initiatives and raise their eyes to the horizon when planning for the five years covered by the settlement and beyond. That means teams having the time to think ‘what if’ as well as ‘what now’.

It’s a huge ask. But the funding settlement does put the NHS in a better position to meet its current and future challenges. It is an opportunity that needs to be taken.