How can commissioners respond to the NHS financial crunch?

Our recent briefing, Feeling the crunch, showed how the financial pinch currently felt by NHS providers would soon fall on commissioning bodies. John Wilderspin offers a commissioner's perspective on the numbers.

Blog post

Published: 20/09/2016

I’m currently supporting the development of a Sustainability and Transformation Plan (STP), which has given me a privileged insight into the perspective of the key players in the STP process – NHS commissioners, NHS providers and the local authorities. Like every other part of NHS England, we are currently working through the options for 'closing the gap' in 2020/21, and we are wrestling with all the challenges that Sally Gainsbury sets out in her analysis, Feeling the crunch: NHS finances to 2020.

As Sally points out, at the heart of the NHS financial challenge is the steady increase in demand for health care without a similar increase in funding. Add to this equation the parallel increase in demand for social care, but with a real-terms decrease in local government funding, the combined effect may be even more challenging.

It's significant that some senior NHS figures are suggesting that, in the first instance, any new money for the NHS might actually be better going to social care. While social care leaders have done very well to mitigate their substantial budgetary pressures over the last six years, the knock-on effects are already beginning to show. Four more years of the same, combined with the growing pressures in the NHS, adds up to a pretty bleak picture.

Viewed purely through the lens of the current internal market, you could see the STP process as a multi-dimensional version of the 'prisoner's dilemma' (the game used to get negotiators to think about the benefits of 'win–win' or 'win–lose' approaches). It quickly becomes apparent that there are very few scenarios where one party actually wins; much better to try to work out the scenario where the organisations (and, far more importantly, local citizens) get the best collective outcome in very difficult circumstances. But with the current rules in play, which are heavily geared towards regulating and performance managing individual organisations, the pressure is on leaders to try to find a scenario where their organisation might just win, or at the very least, not lose as much as they otherwise might…

So how might commissioners best respond to these difficult circumstances? 

Sally's analysis says that “sustainable balance can only be brought into the system by 2020–21 if NHS commissioners also manage to curb the rate at which NHS activity is growing by a third.” From my experience, handing the sole responsibility to manage demand to commissioners ascribes them with magic powers that they will never have. Managing demand can never be achieved by commissioners alone. It is the single biggest challenge facing public services, and can only ever be achieved by commissioners, providers, local government and, most importantly, service users and the public being collectively engaged.

Having said that, it is still reasonable to expect commissioners to take the lead in this area, but the (so-far limited) evidence of successful demand management in this country shows that it will require a fundamental change in service delivery if it is to be successful.

There are some examples of 'true' demand management – for instance, by avoiding the need for expensive treatment by providing more cost-effective alternatives, or reducing the level of treatments of limited (or no) value. The Right Care programme is designed to support this approach, and commissioners need to actively support it on both clinical and cost grounds. Successful public health initiatives can also prevent demand for treatment or care occurring in the first place. But a lot of what is described as 'demand management' is not actually about 'managing' demand, but about responding to it in a very different way.

National policy for at least the last decade has exhorted the NHS to work with local government, and more latterly with service users and the wider public, to provide services in a way that better responds to the health and care demands of the 21st century. Meeting demand now and in the future will need to focus on how best to support the many people with at least one long-term condition (including people with a combination of physical and mental health conditions), the growing numbers of frail older people, and the increased prevalence of so-called 'lifestyle' diseases. Local government will be a key partner in meeting this demand, and can fortunately bring previous experience of, for example, personal budgets and the engagement of citizens and service users in service change.

The NHS has struggled to make the fundamental changes in the way services are delivered that are required to meet these radical changes in demand. With some notable exceptions – such as in mental health – the predominant service model still looks very similar to when I joined the NHS in 1983. The Five Year Forward View, the associated New Models of Care programme and the STP process are all designed to accelerate the transformation process.

An opportunity

What is the contribution of commissioners to deliver the required level of change? It is becoming clear that the 'micro-commissioning' of detailed changes in service provision (which might better be described as service re-design) will increasingly shift to the emerging Accountable Care Organisations. 

This provides commissioners with a great opportunity to develop more of a strategic role – across public services and not just the NHS, working with providers to radically re-shape services, and ensuring that service users and the public can be active participants in their own health and wellbeing.

But commissioners will need to be explicit about where they are adding value. They will have to show that they are investing public money in ways that bring the best return in outcomes, high standards of service delivery, and the best use of scarce resources, particularly staff. It’s certainly not a job for the faint-hearted...

Please note that John has authored this blog in a personal capacity and not in relation to his work on Sustainability and Transformation Plans. All guest blogs published on the Nuffield Trust's website are the authors' own and do not represent the views of the Nuffield Trust.

Suggested citation

Wilderspin J (2016) ‘How can commissioners respond to the NHS financial crunch?’. Nuffield Trust comment, 20 September 2016.