There is not enough money in health care – at least to do what we are doing. From Whitehall to hospital ward this is an increasingly recognised fact. We talk about efficiency savings – but as the Public Accounts Committee reported recently there are no convincing plans for making them.

In the long term savings could potentially come through service transformation or reducing demand through prevention. However when faced with a short term imperative to spend less, essentially we have four options:

  1. Find more public money, either through paying more tax, increasing government borrowing, or diverting more of current public spending towards health care
  2. Find more private money through introducing new, or increasing existing, user charges (effectively taxing the sick at point of need)
  3. Reduce the cost of inputs: staff costs (wages or skill mix) or equipment costs (e.g. paying less for medicines, estates, or equipment, for instance as recommended by Carter)
  4. Provide fewer outputs: reduce the range of services available, or the people the services are available to.

All options are unpalatable. Rationing of health care is a controversial topic, and rightly so. Cutting pay or changing skill mix is equally controversial – not popular with established structures and interests – and also not fair where people work so hard to create good services.

There are no good choices here. Leaders need to look for the ‘least worst’ things to do. Currently this is manifesting as big deficits in the NHS – with local leaders gambling that more money will be found.

And the evidence doesn’t help.

Ideally a formula could be constructed – with the total sum available on one side, and the optimal distribution of interventions providing the most health gain for a population on the other. However we don’t know the cost effectiveness of many routine health care interventions (let alone social care), there is huge variation in the cost of doing the same thing in different places, and health care is organised around pathways: you can’t half treat someone because some of the treatment is less cost effective.

As one of the major challenges facing health policy makers today, the lack of evidence is concerning. Building the evidence base is also no easy task; at the Health Foundation we have commissioned a study examining how maternity services have reacted to changes in population with a fixed budget, and are also sponsoring a session at Priorities 2016. But other than relatively marginal (although still valuable!) work, we were unable to commission anything more substantial without a major research programme understanding the cost effectiveness of a broader set of interventions.

That’s not to say decision makers are flying blind – we do know the cost effectiveness of many interventions, and we can examine costs and outcomes at a high level. This leads to some familiar ideas: underinvestment in mental health and early intervention (particularly in young people), too much spend on treatment at the end of life – when a different type of support would be more appreciated.

Perhaps pretending the decisions are evidence-based is probably not the right place to start. The choices are political and moral – IVF comes into the firing line because it is a ‘choice’ rather than a need (although having witnessed the distress that not being able to have a baby can cause, I’m not sure I’d agree it was less worthy than the next thing – it’s also more cost effective than many cancer treatments). Recently CCGs in the Midlands have outlined a number of areas for cost saving including ‘non-essential treatments’ – which read to me as moral and service – rather than economic decisions.

And, scarily, the discussions we have on rationing – IVF or no IVF, denying surgery for obese patients, stopping low efficacy treatments on the infamous ‘Croydon’ list – barely scratch the service in terms of the savings that need to be made.

Part of the issue is not being transparent about the problem – it’s too scary to contemplate explicitly cutting core services, so we talk about reducing waste, low value treatment and agency spend. The same answers we’ve been talking about for years – while only being able to make limited progress on them. And while the national debate is on improving quality and reducing cost locally people make decisions about cutting services.

This lack of debate and discussion is damaging. In other health systems (we looked at six in our evidence scan) responses to austerity were more likely to be successful when they included strong central leadership and constructive dialogue with stakeholders. However all struggled to make structural reform rather than short term cuts, and worryingly all did little to evaluate the impact of the changes they made.

Absent national debate and sparse evidence leaves local leaders with little to help them in very difficult decisions. The NHS needs an open and realistic debate covering what is reasonable to expect for the funding available, and what should be protected and what sacrificed when making difficult decisions about services. Surely this can’t be beyond the collective ability of the health and care community?


Felicity is Senior Policy Fellow at the Health Foundation. You can follow her on Twitter at