News / Question time

Is the Five-year forward view achievable?

The Five-year forward view set out a vision for how the health service could and should look in future and how it should respond to the pressures of a growing and ageing population with a higher prevalence of long-term conditions in the context of reduced levels of funding growth.

Next steps on the NHS five-year forward view – summarises progress and focuses on what can be delivered in the two years from April 2017. It remains ambitious, but provides a welcome recognition of the continuing severe pressures facing the NHS. In clarifying the immediate priorities – accident and emergency, GP services, cancer and mental health – and accepting that elective waiting times will grow, NHS England is demonstrating a pragmatic approach. But, even with this change, the plan amounts to an unprecedented challenge for the service. 

What has become clear is that we need to regularly review what is achievable over what timescale. The environment we operate in – the general economy, funding of other services such as social care, demand, availability of staff – has a direct impact on our ability to meet the targets set out in the Forward view. It sets the right direction of travel and the right level of ambition.However, we need to
acknowledge that the context has changed and will continue to change.

Does the NHS need additional resources?

Overall funding of the health service is a political issue. Clinicians and managers have to deliver the highest possible quality services within the set funding envelope. However, the consistent message we hear back from finance directors through our regular NHS financial temperature check is that the service is under extreme pressure. The provider side in particular is clearly living beyond its means, and has been doing so for a number of years. This simply cannot continue.

Three-quarters of the way through the year, providers were forecasting a year-end deficit of £873m. While this was a significant improvement compared with their overall £2.5bn deficit in 2015/16, it relies on £1.8bn of sustainability and transformation funding. It was some £293m worse than plan and, with three months of the year left, it was by no means a done deal that it would be achieved. 

Delivering this position or close to it would be a significant achievement in the current climate. Time will tell.

There continues to be a major focus on the £30bn funding gap identified in the original Forward view. This was the gap assuming demand trends continued, the NHS received flat real terms funding and no further efficiencies were delivered. The subsequent spending review settlement, giving the NHS an £8bn real terms increase over five years, left the NHS with an ambitious £22bn efficiency requirement. But even this assumed a ‘radical upgrade’ of prevention and support for wider public health measures, continued availability of capital and that social care would not add further pressures.

The £30bn and £22bn were never actual sums of money to be released. If demand can be reduced – or met in better and more cost-effective ways – the trend lines bend downwards and the cost gap narrows. But the figures remain useful illustrations of the size of the challenge the service faces. The key issue is around timing. How quickly can the service transform patient pathways, improve productivity and address clinical variation – especially while continuing to deliver existing services to meet demand? 

And there is still uncertainty about the financial impacts of some transformation programmes. Moving services to support patients in the community and avoid conditions worsening to the point of needing inpatient treatment is the right thing to do, and could lead to lower overall costs. But we need to understand more about the financial impact of these changes.

The NHS spends less on health as a proportion of gross domestic product than many major European countries including Germany and France. However, despite this, there is still a significant opportunity to improve value. The Carter review highlighted a number of areas where productivity could be improved. However addressing unwarranted clinical variation arguably offers the greatest potential. Initiatives such as RightCare, Getting it right first time, the Model Hospital and patient-level costing are a good start in using data and evidence to drive this agenda. We need to prioritise the collection of robust data and start to use this information in earnest to drive improvement. 

Can the sustainability and transformation plans deliver?

The NHS will only meet its current challenges if it faces them as systems. In our Temperature check, finance directors give us a clear message that STPs are a good idea and provide a valuable platform for discussing ideas. Many say that they have been instrumental in improving relations between providers and commissioners. But they are not without their challenges. We absolutely need to improve long-term planning – at a national level (a point made recently in the report from the Lords Select Committee on the Long-term Sustainability of the NHS) and at a local health system level. But STP plans will need capital and political support where the right solution involves major changes to how services are delivered locally.

STP governance is an area where finance directors have particular concerns. They highlight a lack of clarity around the authority of the STP and how this relates to the statutory duties of NHS boards and how financial control totals work in an STP context. As a result, nearly two-thirds of finance directors say they would continue to prioritise their own organisations’ objectives above those of the STP.

In everything the NHS does, there has to be a focus on value (measured in terms of quality and costs) rather than simply costs. This value increasingly has to be viewed across whole systems. STPs provide an opportunity to take this agenda forward. Providers may need to give up some services and their income, if services would be better provided elsewhere or provided in a different way earlier in the pathway.

Similarly, commissioners need to understand the impact of commissioning decisions on providers and on the overall value delivered by the system.

What is finance’s role in transformation?

Finance staff have a huge role to play in meeting the service’s current challenges. While all staff have a duty to be aware of the financial implications of their actions, finance staff clearly have a central role in achieving control totals and producing accurate financial reports that reflect performance. 

But finance staff will also be key to the success of transformation activities, which will benefit from their analytical and project management skills and evidence-based approach. 

Finance staff will also have a specific role in collecting and analysing much of the data needed to drive initiatives such as the Model Hospital. Robust costing data in particular will be needed to identify opportunities for improving value. The Costing Transformation Programme is ambitious but will give the NHS in England a sound foundation of cost and patient-level activity data on which to take informed decisions. 

But it will need greater investment in the costing function and feeder systems at a time when the service is under extreme financial pressure. Finance practitioners will also need to sit alongside clinicians helping them to interpret this financial and patient-level data alongside outcome information. 

We will also need sound business cases for proposed new pathways so that the service understands the financial implications of new approaches. 

The finance function should not be immune to improvement work. It needs to challenge its own working practices and ensure it is offering the best value for money possible. However, there are concerns about pressure to reduce corporate costs. The focus, as in other areas, needs to be on value. If higher than average finance function costs lead to better productivity and effectiveness overall, that should be a good result. 

What impact will June’s general election have on the NHS?

Clearly in the short-term, the election has the potential to hamper progress with the transformation agenda as it distracts current ministers’ attention away from the NHS. It may also postpone local consultation on plans for changing services. History suggests that decisions tend to get delayed and momentum to get lost. 

However, the HFMA has been consistent in calling for a wider debate about how the health and social care systems meet their current financial challenges and address long-term sustainability issues. 

June’s election may provide an opportunity for this debate. There’s a consensus around the need for transformation and the potential for productivity improvement. But if this can’t close the estimated funding gap in the time available, we need an open discussion with the public and patients about the options. 

Increased funding would need to come from higher taxation, reprioritisation of existing government programmes or by introducing some form of co-payments, although finance directors are clear they do not support this co-payment approach. 

The Lords sustainability committee’s call for an Office of Budget Responsibility type body has a lot of appeal in taking a more balanced view on how we match funding and demand. 

If increased funding is not an option, we need to explore the appetite for restricting the range of services on offer. The recent delays in elective treatment are effectively a form of unplanned service rationing. The election campaign may offer an opportunity for issues around NHS sustainability to be discussed more openly.