Is the NHS sustainable?

19 September 2016

A big fortnight on the NHS for me. I gave oral evidence to the House of Lords committee on the long-term sustainability of the NHS last week, and will speak to the HSJ Commissioning Conference on Friday. The questions remain: how fast is NHS reform proceeding? And, should it receive more funding, perhaps a lot more?

Some reflections:

  • Nick Black also argued that the lack of productivity growth in the NHS is, in part, due to the decision-making at Board level in NHS organisations. I added that the Rose Review of NHS leadership found that NHS managers simply don’t have time to think strategically, due to the need to respond to requests for information and follow new guidance. In his words, the NHS is “drowning in bureaucracy”.

 

  •  The NHS productivity numbers may not be the cause for celebration that some say. Also giving evidence to the Lords, Professor Andrew Street pointed that the NHS has shown positive productivity in recent years. Responding, Lord (Norman) Warner pointed out that much of the reason for that is unusual levels of pay restraint. That can’t last forever and, more importantly, is not the same as changing the way people work in order to make them more productive. NHS workforce levels have remained constant for many years, which hints that the service is not working in new ways.
  • Professor Nick Black pointed out that in a piece of his recent research, he discovered that the costs of providing a particular service varied by as much as 1700 per cent in different parts of the country. He argued that while it is important to focus on outcomes, it is also crucial to consider the costs needed to produce those outcomes. The 2015 Spending Review said that the Treasury would make new efforts to establish the actual costs of public services, including the establishment of a “Costing Unit” (extract below).
  • The Committee will inevitably come under pressure to recommend an increase in health expenditure. It should consider the wider public finance position and also the opportunity costs of any increased spending.  Public sector net debt is at its highest level for decades and is still rising. No major public spending increase is easy in those circumstances. Increasing NHS spending by £4 billion a year (say) represents an increase of around 4 per cent for that service. If that sum was taken from the police budget, for example, it would cut the budget by a third.
  • The Committee was very happy to discuss the need to improve NHS productivity and was willing to ask very challenging questions on the future of the NHS, even at the level of how it should be funded. The Lords Committee may be able to produce clearer recommendations than its counterpart in the Commons, since the debate among elected representatives can remain stuck on issues of workforce size, budget and “privatisation” (see last week’s Opposition Day Debate as an example).

In last week’s debate, the Opposition sought to present as “secret” the current discussions to drive forward change in the NHS (“Sustainability and Transformation Plans”).  The STPs are not secret but inevitably they are being worked up by NHS leaders first, before taking them out for consultation. Government Ministers would do well to prepare voters for the scale of the change that the STPs will propose, if they are any good. It would be a great waste of effort if the STPs were ditched simply because of a sense of surprise on their publication.

Extract, 2015 Spending Review

1.307 The government will continue to drive up the quality of financial management and the capability of the government finance function to deliver its fiscal plan. This will be underpinned by:

• launching a new Finance Academy to provide a learning and development offer for those working in government finance

• sharing finance expertise between departments through new Centres of Excellence

• establishing a new Costing Unit to build a more forensic understanding of the cost of public services and drive productivity across the public sector.

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