News / Bennett predicts ‘crunch year’ for 2015/16

The NHS faces a ‘crunch year’ in 2015/16 as it seeks to deal with the cumulative effect of shortfalls in year-on-year efficiencies and the introduction of the integration transformation fund (ITF), Monitor chair and chief executive David Bennett told the conference.

The foundation trust sector was showing some signs of strain, with more in deficit, but it was not in crisis, he said.

‘The crunch year will be 2015/16,’ he said. He also highlighted the increasing challenge of meeting demanding efficiency requiprements – typically around 4%. ‘They have been written into the tariff for several years, but they haven’t been achieved in the technical sense. In provider organisations it looks more like a 2% gain so there’s a gap of 2%. A question for 2014/15 is whether the gain will correspond to the efficiency in the tariff.’

The ITF would be an additional pressure, though he acknowledged that if it works it could reduce pressure on providers. But he added: ‘If it is going to take £2bn out of the acute sector there is a question about whether we are going to get costs down fast enough.’

Looking further ahead – to 2020/21 – the funding gap between resources and demand would be £30bn, assuming NHS budgets grow at the rate of GDP. Closing this gap would be a challenge. Monitor had looked at potential savings – for example the NHS would save around £12bn if all providers became as efficient as the current top quartile and £5bn from the current wage freeze, though this assumes there would be no ‘bounce back’ in wages. It was difficult to put a figure on providing services in different ways.

He added that shifting more funding into illness prevention and early diagnosis had enormous potential for savings.

But none of this would happen overnight. ‘It’s not going to happen for 2015/16 and it will be difficult by 2020/21 and 2022,’ he said.

He was asked if payment by results would support transformation. ‘There are lots of ways that PBR doesn't work as well as it should. We are trying to address some of this but it is going to take a while. There’s lots to be done but we are looking carefully because when making changes we don't want any unintended consequences.’