NHS inevitably facing real terms cuts without significant increases in productivity

Commenting in response to the publication of the Department of Health report, NHS 2010-2015: from good to great, Nuffield Trust Director Dr Jennifer Dixon said:

‘The NHS is entering a period of unprecedented financial uncertainty and the scale of the challenge will be intense following today’s announcement that managements costs will be cut by almost a third and the tariff for paying hospitals will be frozen for four years. Without significant increases in productivity – the likes of which have not been achieved in the past – the health service will inevitably face real terms cuts in its budgets from 2011 onwards.

‘While the financial challenge is high, the direction of travel outlined by the government for the NHS is the right one. The NHS is at a pivotal moment but the financial ‘crisis’ must be used to accelerate needed change rather than setting it back to the 1980s. The government is right that the NHS must transform the way care is delivered to patients in the future so that there is much greater integration between general practice, community care and hospitals, as well as between health and social care.

‘The areas for savings targeted by the government are generally the right ones but there is not enough evidence yet to suggest how shifting more care out of hospitals and into the community will generate the £2.7 billion of savings per year suggested. In addition, the clampdown on the tariff for paying hospitals will encourage every NHS trust to scrutinse their efficiency. But this is a very blunt instrument and there may be better financial incentives for hospitals to encourage them to shift care into the community that it is more appropriate to devise locally.

‘The challenge for government is about getting the balance between central direction and local autonomy, which is not yet right. Ultimately, the centre should set out broad objectives that are enshrined in the NHS Constitution and local commissioners and providers of NHS care should be left to work out how to carry them out and be held firmly to account. The move towards defining more rights through the Constitution is a good one, and this may inevitably lead to the NHS setting out what is, in effect, a more defined national health insurance policy for citizens in England.’

Dr Dixon added: ‘The challenge facing the NHS will be immense and it will be crucial that clinicians, in particular doctors, are engaged in reform. They must be handed real budgets and made more accountable for the health outcomes of their local communities – in part through better peer review of the information that is now widely available on patient care. Today’s report could go further in boosting the progress needed in this vital area.’

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Notes to Editors

• For media enquiries please contact Chris Rogers at the Nuffield Trust Press Office, Telephone 020 7932 1879 or email: chris.rogers@uk.grayling.com
• The Nuffield Trust is a charitable trust carrying out research and health policy analysis on health services. Our focus is on the reform of health services to improve the efficiency, effectiveness, equity and responsiveness of care. Key current work themes include new forms of care provision, commissioning, efficiency, national/international comparisons and competition policy. For more information on our work programme and to sign up to receive our regular e-newsletter, visit www.nuffieldtrust.org.uk
• To help the NHS respond to the financial challenges ahead, the Nuffield Trust is conducting a major new programme of research and policy analysis – New Frontiers in NHS Efficiency. The programme will set out practical recommendations for managers, clinicians and policy-makers on how the NHS can improve its productivity and deliver more value for less. A series of reports will be published in the spring, culminating in a final report in Summer 2010. For further information please visit: www.nuffieldtrust.org.uk