Vice president, HFMA
A recent BBC news report noted that most key NHS targets have been missed for the last seven years across the UK – an indicator of the unprecedented challenges facing the service. As we enter another planning round for 2024/25, do we need to reconsider what is achievable for the NHS within the available funding?
There is a lot to do to deliver improvement and further integrate health and care services. But first we need to understand why the NHS is currently struggling and what might be achievable in the short and medium term.
Funding clearly plays a part in how we got here. The King’s Fund has contrasted the improvements delivered between 2000 and 2010 with subsequent decline. It clearly links the improvements in that first decade with multi-year funding increases and a series of reforms. And it compares this with the lower funding increases, limited capital and neglect of workforce planning that characterised the years after 2010. It also highlights constraints on social care spending and repeated failures to reform social care.
And the Institute for Fiscal Studies has further spotlighted the 31% fall in per person spending on long-term care for the over 65 population between 2009/10 and 2017/18 and a huge variation in spend reduction across upper tier authorities. These cuts led to ‘substantially increased use of emergency department visits by patients in this age group’. It is not clear that in the NHS we fully understand the differential impact of these reductions across the 42 integrated care systems (ICSs).
Taking the reduced funding increases in the NHS and the long-term care cuts together, and adding in continuing impact of the Covid-19 pandemic, the challenges facing the NHS become more understandable.
Compounding these issues is a failure to fully recognise the real rates of health services inflation, (in 2023/24 and 2024/25). However, the upshot is that some systems may be in the position of trying to make ends meet, and spending increasingly hypothecated funding, while not being able to afford the underlying costs of core services. In some systems difficult choices are possibly needed around service cessation.
‘Gripping and controlling’ unsustainable budgets will not give us all the answers to delivering balance. We need to:
• understand our allocations and our financial improvement trajectories and how they are set
• recognise how difficult the 2024/25 settlement is going to be and adopt a different sort of planning process in response
• develop a different medium-term financial planning process
• get clarity around the rules of engagement in 2024/25 planning and the affordability of particular elements of what we are being asked to deliver.
We certainly need to understand how workforce and activity have changed between 2019/20 and 2023/24 and the differences between integrated care systems. Systems need to be able to better explain these changes.
In the immediate term, there are a number of questions that we need to think about nationally, regionally and at system level to deliver the best financial performance we can for the remainder of this year and for 2024/25:
• How do we deliver national policies, despite a core funding gap?
• How do we achieve the right balance between operational quality and finance objectives?
• How do we take account of the different starting points, including balance sheet headroom, in each ICS?
• How do we continue to increase investment in mental health, primary care network team expansion, health inequalities and elective recovery with just 1.8% growth?
If we are going to have a fighting chance in 2024/25, we need real clarity on the funding growth and a collective understanding of what this means for spending across systems. Providers and systems need to really understand how workforce numbers and efficiency have changed since 2019/20 and identify any further opportunities for improvement. Then this should be represented by a single system-wide figure or financial gap that is everyone’s responsibility to address.
Following initial discussions (summarised in ICB resource allocation: national and local developments), the HFMA is developing work with the University of Manchester looking at the overall funding environment since 2010 and the differential impact on each of the ICSs. This work will also look at the extent to which these core differences are impacting on the health and wellbeing of the populations we serve and how tools to improve the allocation process can be developed to drive equitable and efficient service integration. This work won’t land before 2024/25 planning, but it will pose some key questions on how we operate and what we can do to improve.
Lee Outhwaite is chief finance officer of South Yorkshire Integrated Care Board
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