Hospitals face stark choice between balancing the books and safe staffing levels Seems exactly what NHSreality predicted in “about” 3 years ago. History tells us that once the juggernaut is going it cannot be stopped without great damage …
The NHS is facing the biggest financial crisis in its history. Hospitals are likely to be in deficit by around £2 billion at the end of this financial year largely because of the extra staff they hired. They did so in the wake of the failures of care at Mid Staffordshire NHS Foundation Trust exposed by the Francis Inquiry and because of increasing demand for care. Alarm bells are ringing loudly in Whitehall as the government seeks to control a crisis that risks spiralling out of control.
Jeremy Hunt and other ministers in effect turned a blind eye to overspending before the general election because of the priority attached to ensuring safe staffing on hospital wards. They did so to move debate on from Andrew Lansley’s controversial and technocratic market reforms, enshrined in the Health and Social Care Act 2012, and to emphasise the importance of improving patient care.
Hunt’s mission to improve patient safety was remarkably successful in neutralising the NHS as an election issue. Less than a year later, the high costs of doing so are transparent. Most hospitals are unable to balance their books and some are forecasting deficits running into tens of millions of pounds. With NHS hospitals unable to go bankrupt, money has to be found to pay staff and ensure patients are treated.
Health ministers are now emphasising the need to restore financial control. This inevitably involves reviewing staffing levels when such a high proportion of NHS spending goes on the workforce. NHS leaders are doing so in the context of a financial settlement which, although generous compared to some other areas of spending, leaves the NHS in the grip of the biggest sustained funding squeeze it has ever faced.
National NHS bodies acting on behalf of ministers have intervened to take control of decision making. Their actions include giving every provider a spending limit and restricting the freedoms of foundation trusts to use their cash reserves. With a recent letter from health regulators stating that they are meeting “challenged” hospitals to agree staffing reductions, the implications are clear.
Financial support plans for hospitals in deficit have to be signed off by the Treasury as well as the Department of Health and national NHS bodies. Hospitals receiving support are required to deliver key national targets for patient care. Micro-management from Whitehall is the order of the day.
These actions signal anxiety about the ability of the Department of Health to manage within its spending limits. It also brings to an abrupt end the post-Francis Inquiry era when leaders of NHS organisations saw failure to ensure safe staffing as more serious than failure to balance budgets. For now at least, financial control is king.
One of the consequences is that Andrew Lansley’s ambitions to liberate the NHS by devolving responsibility for decision making have been abandoned in favour of central control. Many of the provisions of his Health and Social Care Act are being ignored as the sense of NHS crisis grows. The emphasis on choice and competition at the core of the Act — and which generated so much political heat at the time — has been quietly dropped.
A major risk is that the failures that occurred at Mid Staffordshire will be repeated in other parts of the NHS. These failures resulted from decisions by hospital leaders to improve financial performance by cutting staff in order to achieve foundation trust status. Patient care took a back seat with predictable but tragic consequences. If the lessons of history are forgotten, this could easily happen again.
There are, of course, many opportunities for the NHS to use its budget more efficiently, and these should be pursued vigorously. Smarter procurement, better use of the estate, and more effective rostering of staff can all contribute, but they will not produce savings quickly. The NHS needs time and support to realise these opportunities and yet they are in short supply.
The challenges facing the NHS need to be seen in the context of international comparisons showing that the UK is not a high spender on health care. The share of national income devoted to the NHS is set to decline as a result of the spending review just as demands for care continue to increase. Overspending from the government’s perspective feels much more like underfunding from within the NHS, with all the ingredients of a major conflict between NHS leaders and the government.
Ministers have argued that the NHS has been treated generously and that they have met the request of Simon Stevens, chief executive of NHS England, for the additional funding he sought to implement his five-year plan for the NHS. Thus far the unlikely alliance between a former Labour special adviser and a Conservative chancellor has held firm but the current crisis will test their relationship to the limits if hospital deficits persist.
Ultimately, the government will have to decide whether to find further funding or be honest with the public about the slow but certain decline of the NHS. There are no easy choices.
Chris Ham is chief executive of The King’s Fund (Thinking about rationing)