Securing future NHS funding: is a productivity boost enough?

Blog post

Published: 04/07/2012

Most developed countries have problems with the percentage of their gross domestic product (GDP) spent on health, so our problems are not unique.

The theory goes that in order to meet the challenge of future health care demand due to changing demography, lifestyle and new technology innovation, resources must shift into more community, home-based and self-service provision.

There appears to be consensus at the policy level that it is in the interest of patients and service users that a more integrated approach should be developed. Underpinning this is an assumption that transformed services will be cheaper.

If the service transition can be achieved, costs can be taken out of more expensive hospital care, but in order for it all to work there has to be investment in alternative services to get the demand out of hospitals.

The problem is that currently, alternative investment does not appear to be working.

In a recent survey of Foundation Trust Network (FTN) members, 70 per cent of acute providers had seen no decrease in emergency demand. This is despite the fact that a punitive penalties regime exists around emergency activity over 2008/09 levels paid for at marginal pricing and around re-admissions: where there is Department of Health recognition that less than 20 per cent are the fault of the hospital itself.

In other words, there’s plenty of push on hospitals to get demand out but little pull in alternative provision. In effect, the Nicholson challenge is a save to invest scheme for service transition across the NHS.

Whilst much of this is anecdotal, what some of our members tell us is that the impact of existing cuts in social care budgets is beginning to tell on the level of admission of frail elderly people via emergency admission into hospitals.

Some go so far as to say that the private sector care homes are off-loading the nursing costs of the elderly frail dying from their own budgets onto the NHS.

Foundation trusts with their freedoms to innovate will develop new business models, but without the prospect of income streams to support them there will be no success. The key policy deficit is an answer to the funding problems of social care for the elderly and the Government looks set to duck the issues raised in the Dilnot report.

Putting all this in the context of the Institute for Fiscal Studies report, funded by the Nuffield Trust, of tight public spending limits for the NHS until the end of the decade and the subsequent requirement for fast-paced productivity savings, attention should shift to where the money is in the system, where it is being spent and how effective that spend is proving to be in getting the demand flow going in the right direction.

The key question in the report is whether the NHS can make the necessary productivity improvements to remain entirely free at the point of use without additional taxation or rationing or even the unmentioned spectre of the introduction of co-payment?

The jury is out.

Clearly, maximum productivity delivery requires some radical solutions, joining whole patient pathways. Even if there is the political will and cover to enable this to be delivered: will it be enough?

Sue Slipman is Chief Executive of the Foundation Trust Network. Please note that the views expressed in guest blogs on the Nuffield Trust website are the authors' own.

This article also appears on The Guardian Healthcare Network's website.

Suggested citation

Slipman S (2012) ‘Securing future NHS funding: is a productivity boost enough?’. Nuffield Trust comment, 4 July 2012.