Focus on the right challenge

The argument about whether the NHS needs additional funding may have been won with the government promising a long-term settlement for the NHS. But the size and phasing of that settlement will be crucial. The right amount and the NHS has a serious chance of establishing sustainable services – perhaps even showing other health economies around the world how to move towards more integrated services built around greater levels of prevention.

Too little, and the service will continue to focus on crisis management – leaving little time or energy for pathway redesign and potentially taking short-term decisions that actually hamper long-term transformation.

NHS Improvement’s Q4 report, published at the end of May, provided a good summary of just how difficult the last year has proved to be for the NHS. Providers ended the year with a £960m deficit – not much increased from the Q3 forecast but £464m more than its ambitious plan for the year. The oversight body rightly recognised that this outturn position was only achieved as a result of hard work by providers to tightly manage their finances in the last quarter.

But performance has also been hit in the face of record demand for services. Providers’ A&E four-hour performance, for example, fell further behind target in the quarter. Clinical commissioning groups were also overspent, even after the application of this year’s risk reserve – requiring underspends in other commissioning budgets to deliver an overall commissioning underspend that can help offset the provider deficit.

The Institute for Fiscal Studies has pinned its colours to the mast. An average 3.3% increase over 15 years would deliver the status quo, it argues – describing this as a ‘low bar’. It would take 4% a year in real terms on average to deliver a modernised NHS, with 5% increases in the early years.

The public knows the NHS needs more money, but it cannot be expected to understand exactly how much. These figures from the IFS provide a clear benchmark against which any final settlement can be judged. While the numbers seem large, there is a real opportunity to reset the NHS on the right course.

Even with the right level of funding in place, the service will still face major challenges. New models of care may be the right approach – more multidisciplinary teams working to support patients to manage their own care and avoid unnecessary acute care downstream. But establishing them will place significant demands on services and NHS staff – and the financial impacts of pursuing these right models is still not completely understood.

Productivity improvement will remain an ongoing challenge under any realistic funding scenario. Lord Carter has thrown a spotlight on opportunities within the community and mental health service sectors.

Delivery of these opportunities in all sectors – supported by Model Hospital data and the Getting it right first time initiative – will demand that clinicians and support staff work together. This won’t happen if they are constantly trying to deliver impossible efficiency requirements and control totals.

Staffing challenges also won’t be solved by simply increasing funding. NHS Improvement’s Q4 report highlighted 100,000 vacancies across the provider community. This can only be addressed through long-term training of the right numbers of staff, as well as some changes to staff roles – along with some thinking around how to address particular geographical problem areas.

And even if the global NHS budget is right, the service also needs to pay attention to how the money flows through the system so that it gets to the right places and incentivises the new care models.

So there’s a huge agenda ahead. The right level of funding won’t solve all the health service’s problems. But it might at least enable the service to apply itself properly to the task.