Comment / Under starter’s orders

The sprint to the polls may be on, but NHS reform and productivity improvement is a long-distance event, says Paul Assinder.

Sports fans will mark the arrival of spring by the Cheltenham Festival , the Grand National and the first Grand Prix of the season. But by the time you read this the prime minister may have dropped the starter’s flag on the biggest race of all – the UK general election.  

In reality, electioneering started in earnest several months ago and the NHS has been sighted by party tacticians as the fertile battle ground it always is. This time, in the absence of a ‘Jennifer’s ear’ or an irate cancer sufferer’s partner confronting the prime minister on the steps of a major teaching hospital, a competition has developed between the parties to cut spending in the light of a tightening fiscal situation.

For NHS finance staff the election is inevitably a mixed blessing.  First, in the inimitable words of Bill Clinton, ‘it’s the economy, stupid’ that will be the biggest preoccupation of the parties, commentators and a recession-battered electorate.  The cold, hard logic of the public sector’s lack of immunity to the culling of costs in the private sector is helping hard-pressed boards struggling to agree budgets next year.

However, the traditional official period of pre-election purdah, when no controversial announcements or policy initiatives can be publically announced, is distinctly unhelpful. Finance directors will be eternally grateful to NHS chief executive David Nicholson for going public last year on the NHS’s need to realise savings of £15bn-£20bn (15%-20%) over four years.

 This figure has since been substantiated by the Institute for Fiscal Studies and King’s Fund and was the only public pronouncement of how cold the future will be for the NHS in England until the recent Budget. In Northern Ireland, Wales and Scotland the climate shows every likelihood of being even more arctic and national government elections in 2010 will be even more stifling for some local finance leaders.

Meanwhile, below the radar of public pronouncement, the mood in the service appears to be one of acute anxiety. Commissioning authorities, who have experienced the last year of growth for the foreseeable future – in England a headline 5.5% distilled to around 2% real headroom and with a 30% reduction to management costs looming – are men and women in a real hurry. In today’s contracting round, intentions of unprecedented ambition underpin many commissioners spending plans.  

For providers the stakes appear even higher. In England, technical changes to the tariff and a zero inflation uplift, coupled with the huge ramping up of the quality agenda post-Mid Staffs, is resulting in cost improvement programmes of more than 10% in 2010/11 in some organisations.  It is of interest that the 128 foundation trusts, the most efficient and best managed providers in England, have generally only managed to realise savings of 3%-3.5% a year. Going at least as far again in many less well performing organisations in 2010/11 – and without the political ‘air cover’ provided by a consolidated government machinery – will be an almighty challenge.

It may be that the financial regimes that have previously operated in each of our four home nations in a decade of sustained growth need to be adapted to these more challenging times. This may be the only opportunity to avoid a ‘slash and burn’ response in favour of engaging clinicians in establishing a more considered response to financial consolidation. This particular race is more marathon than sprint.