If the next two years look tough for NHS Wales finances, the long-term could be dire – and not just for the health service.
The NHS in Wales has become a catspaw in Westminster knock-about, but the Nuffield Trust study: A decade of austerity for Wales? reveals a much deeper question about the long-term financial sustainability of the NHS, echoing the debate which is already gathering pace in England.
Unless resolved, the choice between funding health pressures and funding all other public services in Wales will be increasingly stark.
The report calculates that real terms spending on health in Wales would need to increase by about 3.2 per cent every year to cope with population and morbidity pressures. Since austerity began to bite in Wales, NHS funding has fallen in real-terms with a potential funding gap for the NHS in Wales in 2016 of around £1.2 billion (roughly equivalent to 20 per cent of the current spend).
Unless resolved, the choice between funding health pressures and funding all other public services in Wales will be increasingly stark
But the immediate position may be more hopeful. The Nuffield Trust estimate that this gap might be reduced to around £220 million principally due to falls in the unit cost of individual prescription items, emerging efficiencies in acute services and chronic conditions management, as well as the impact of the current climate of pay restraint. Responding to this narrower gap might require painful choices but you can see how the circle might be squared.
So much for the good news. The picture beyond 2016 looks increasingly bleak and it is difficult to see how the NHS as we know it can be sustained without significant change in public spending policy or the approach to its financing.
The long-term scenarios explored by the Nuffield Trust have similar messages to those emerging from the Wales Public Services 2025 Programme. This has found that continued public spending austerity through the next Parliament, even assuming a recovery after that, could result in a funding gap across Welsh public services of between £2.6 and £4.6 billion by 2025. This is supported by the Nuffield Trust’s scenarios which range for an NHS funding gap of £1.1 billion in 2025 (the most optimistic) to £3.6 billion (most pessimistic – and untenable within the current system).
There is wide recognition that services have to be delivered in different ways. For example, the Health Minister is promoting the implementation of the Prudent Healthcare framework, developed by the Bevan Commission, to achieve better public value by organising care around patients, reshaping services and clinical practice to secure similar or better outcomes more efficiently, eliminate waste and make better use of capacity. Such a change programme needs to be a crucial part of the mix but alone will not be enough.
If its financing is not put on a more sustainable long-term footing, mitigating the pressures on the NHS will pose increasingly stark choices between its funding and funding for other public services – with potentially perverse consequences not least for social care, preventative activity and early intervention.
The public is still largely unaware of the scale of the challenge ahead – the Nuffield Trust’s report needs to trigger the kind of debate about the resourcing the NHS in Wales which is happening in England. We have to move beyond the knock about.
Alison Ward is chair of the Wales Public Services 2025 Programme and Chief Executive of Torfaen County Borough Council. Please note that the views expressed in guest blogs on the Nuffield Trust website are the authors’ own.
Ward A (2014) ‘The £billion question: funding the Welsh NHS for the future’. Nuffield Trust comment, 17 June 2014. https://www.nuffieldtrust.org.uk/news-item/the-billion-question-funding-the-welsh-nhs-for-the-future