Volume of services delivered by NHS will shrink, warns think tank

BMJ 2010; 341 doi: (Published 05 November 2010) Cite this as: BMJ 2010;341:c6277
  1. Adrian O’Dowd
  1. 1London

Services that the NHS will be able to provide over the next few years may shrink without a firm grip on pay and price inflation, reports an expert think tank.

In its analysis of October’s spending review and the government’s health white paper the Nuffield Trust has warned that the NHS will be forced to become smarter at controlling costs.

The trust said the NHS was facing an “unprecedented challenge” in that it was being expected to deliver far reaching reforms to patient care at the same time as increasing demand and what was effectively a real terms reduction in its funding over the next four years.

The analysis, which draws on UK and international research evidence, says it supports the general direction of NHS reform outlined by the government and welcomes the decision to protect health spending relative to other areas of the public sector.

However, unless the NHS keeps a tight grip on pay and price inflation it will mean inevitable reductions each year in the volume of healthcare services the NHS can deliver.

The NHS will receive 0.4% real terms growth over the next four years to 2014-15 (BMJ 2010; 341:c5952 doi: 10.1136/bmj.c5952). This compares with an average annual real terms increase of 5.7% from 1997-98 to 2009-10.

The spending review announced that £1bn (€1.2bn; $1.6bn) a year of NHS funding will be transferred to social care. The Nuffield analysis says the real terms change in health funding, taking that into account, will represent a reduction of 0.5% over the next four years.

In addition, the spending review announced a major change to the rules governing underspends across government, which will impact on health, said the Trust.

The NHS had underspent £5.5bn at the start of this financial year and a further underspend of around £1bn is planned for 2010-11.

The spending review changes, however, mean that none of this money will be returned to the NHS, which is in effect a retrospective cut in spending plans.

Plans in the white paper to give GPs greater responsibility over budgets could be successful, says the analysis, if they help the NHS to live within tighter resources, while continuing to improve quality and health outcomes.

It believes that GP commissioning will work only with adequate time and management resource—something proved by previous less radical but similar policies such as GP fundholding, total purchasing, and practice based commissioning.

Although indicators showing health outcomes after care were important, the trust argued that the government should consider introducing a set of national indicators as measures of quality, such as avoidable hospitalisations and access to care.

Jennifer Dixon, director of the Nuffield Trust, said: “There is much to support in the government’s approach, and the spending review has left the NHS in a privileged position compared with other public services. But make no mistake—the NHS has never faced a challenge like this.

“The biggest question now is whether the NHS can meet the £15bn-£20bn of efficiency savings that are required at the same time as coping with a major reorganisation and a 45% cut in management costs.”


Cite this as: BMJ 2010;341:c6277


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