Financial crisis is inevitable in the NHS by 2015-16, King’s Fund saysBMJ 2014; 348 doi: https://doi.org/10.1136/bmj.g3048 (Published 01 May 2014) Cite this as: BMJ 2014;348:g3048
All rapid responses
The King's Fund report draws several interesting ideas for savings from its six analysed Trusts but I am astonished that it fails to address one of the largest areas of non-productive expenditure - the Private Finance Initiative (PFI) burden. My own estimate is that the cumulative PFI debt is not far off the £20bn of savings that it is suggested is required now. Small gains by such measures as voice-recognition dictation (which even now is not accurate enough to be safe) will do no more than nibble at the edges of the financial problems. As the report correctly says, there is a limit to how far staff cuts can go without becoming dangerous, or interfering with legitimate targets such as waiting times. Selling hospital land, whether for housing or commercial development, usually produces a one-off gain which is rapidly consumed as costs spiral above income.
There has never been any sensible analysis of how much may be saved (or not) by diverting funds from secondary care to "the community". If, like medicine, health service management should be evidence-based then we fall well short of producing any. Neither has there been any credible analysis of the gains from privatisation of parts of the service, not least because the money that fails to be reinvested (shareholders' profits as dividends) has not been properly quantified. There should be a moratorium on switching funds until we have proof of value and a full and transparent exposition of the cost-benefit ratio for privatisation.
I have little doubt that hospital rationalisation should, if judged in clinical terms, require the closure of some PFI hospitals. However this is currently impossible as the PFI contracts appear to be set in stone, and repayments would have to continue for the decades remaining on them (and the evidence is that local interests can subvert the wider interest).
So PFI repayments, whether as capital or as revenue management contracts, need to have their exact costs spelled out. The interest rates charged must be transparent. Any excessive rates (and indeed that will be most of them, judged against a base rate of less then one per cent at present) should be pegged back or renegotiated; it has been done and must be done again. Land sales should stop, and be replaced by land lease so that the health service derives a continuing revenue stream from rents, without selling the family silver.
Any proposals less than such a full-scale, root and branch (choose your phrase) shake-up of PFI will be no better than fiddling while Rome burns.
Competing interests: No competing interests