Minding that gap: the NHS funding challenge

The best estimate to date of the funding gap that the NHS must fill in 2021/22 is from the Nuffield Trust. Main message: £44bn at the very least. The best estimate to date of where efficiencies might come from is in Monitor’s Closing the Funding Gap report. Main message: no one place, but within the hospital walls may be the biggest single place to look.

We thought Monitor’s analysis deserved more attention, so last month invited a group of notables to mull over the findings. Did anyone quibble with the analysis of the extent of the gap? Not really. Did anyone suggest that the four main areas for efficiency savings (improving productivity within existing services; delivering the right care in the right setting; delivering new ways of delivering care; and allocating spending more rationally) were the wrong ones? No. But there were four main messages.

First, that there was a mountain to climb in the next two years. In this ‘phase 1’, some bold decisions (national and local) need to be made swiftly, and the process to make these decisions made leaner (and clearer).

At the national level, bold decisions included (unsurprisingly) those about service reconfiguration, mergers, service swaps and failure (and greater consistency may be needed in the criteria to allow these). But also more transparent decisions were needed about ‘bail outs’ for trusts. Some subsidy may be rational given the current (in)accuracy of hospital costings which form the basis of the tariff, but not to reduce incentives to good financial management. And while the centre will need ‘grip’ over the next two years, the nature of that grip could be strong support and permissiveness (with intelligent surveillance as to impact), rather than just control.

At the local level, there were lots of suggestions. One issue that bothers at the moment is, given the creaking of emergency care, why don’t more trusts use ‘flow’ or ‘lean’ methods to help improve the pathway? There are now national initiatives along these lines in Wales and Scotland, but how could an effective bottom-up approach in England be developed consistently with our local autonomy zeitgeist?

The second main message was that there was a medium-term agenda (phase 2) to help the NHS offer better value and reach sustainability nirvana by 2021. The elements of this have been repeated ad nauseum for the last decade at least: better population health; supported self-management (including psychotherapeutic support); shared decision-making; use of telehealth and telecare and other remote technologies; boosted out-of-hospital care, such as integrated care, scaling up or federating general practice and so on. The question is not the what, but the how – how to accelerate these developments?

As the integrated care pioneers are finding, there is no one answer to ‘how’. There are a mix of barriers internal and external to the localities trying to make change, which need attention.

External (system) factors are unsurprising, and include:

• payment currencies and pricing
• contracting
• information governance
• IT developments
• regulation (particularly of mergers etc)
• workforce contracts
• the impact of nationally commissioned services on trusts, relative to locally commissioned services.

Internal (to local providers) barriers are many, but the biggest was local ‘culture’ – fear of change, lack of confidence in making decisions, lack of delegation to frontline staff (where answers could more be found), unmotivated or miserable staff and a host of other factors that have well been documented (we’ll be publishing more on this next month).

These external and internal factors are surely the most important to tend to over the medium term. Leaders and staff acclimatised to particular cultures need time and a range of responses to change outlook and behaviours. Short-term innovations may help, such as data providing new insights onto quality and costs of care and variations, and new payment currencies may help speed up needed alliances to change care.

These developments may be slow. And they won’t be easily assessed using gold plated methods like randomised control trials which are more suited to static interventions like pharmaceuticals, than complex adaptive service change (now there’s a challenge to the academic community: to suggest a better assessment).

The third main message: that the short-term bold decisions and behaviours needed in phase 1 should be consistent with the development needed in phase 2. In particular, don’t cut community services in the short term (even if data on productivity and impact is relatively sparse).

And the fourth: to develop the conversation with the public about the need for change to improve quality and what this will mean. The place to start will not be in the abstract, but on concrete, well-argued and evidenced examples of service changes that are needed.

Okay, all very difficult. But our meeting ended on an upbeat note: large consensus on the what and the how, and agreement that there was enough talent and mission around to get through the next few years. We might like to ponder the main messages from our recent trip to India to understand the impressive energy there in pursuit of healthcare innovations in some centres: make efficiency a noble purpose; harness all available assets; embed continuous quality improvement and listen to service users. The main source of motivation? Mission.

To be continued...

Jennifer is Chief Executive of the Health Foundation, www.twitter.com/JenniferTHF