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Balancing the NHS books

Last week, I went to the launch of the Nuffield Trust.

The current administration's commitment to austerity set the tone for the presentation, which explored three scenarios for health spending from the beginning of the next parliament in 2015 until 2022, along with the implications for healthcare provision.

The scenarios were: a continuing real-terms spending freeze; matching real GDP growth of 2.4%; and restoring the long-term average spending of 4%. There was pretty much a consensus that anything less than equal pain for the NHS was a non-starter, as was restoring the long-term trend. This left the NHS adapting to real growth of around half of that to which it has become accustomed as the only plausible scenario. The question then was how this could be made to work.

The Nuffield Trust’s chief economist Anita Charlesworth chaired a panel of the great and the good from various think-tanks and stakeholders to tackle this issue.

The increased demand that the aging population will place on the NHS - the Office for Budget Responsibility estimates demographically induced demand will rise by 2.9% — was a key point of debate. Even under the scenario matching economic growth, the shortfall against this would be around £4 billion.

There was also much talk of solutions for meeting demand pressures. A wide-range of interventions were suggested, including the usual suspects — introduction of co-payments, rationing, dramatic improvements in productivity and efficiency, increased taxation, service redesign and demand management.

A consensus of sorts emerged around a longer-term objective of reducing hospital admissions by improvements in out-of-hospital care including — of course — the holy grail of integrated healthcare. Looking at health and social care together was also a given, and the presentation covered, albeit briefly, the additional pressures likely to be imposed by the increased demand for social care.

Two largely unconnected thoughts occurred to me on my way back to the office.

First, this was an England-only discussion, albeit placed in a UK fiscal context. These trade-offs are already being faced by the devolved nations without the additional issue of major organisational change.

Secondly, I was struck by the difficulty of translating productivity gains in the NHS into additional resources. Productivity gains are likely to be seen as better quality healthcare or as improved outcomes for patients; they will not necessarily deliver savings to be spent elsewhere. There is also the danger that some productivity gains will simply be swallowed up as profit accruing to external providers.

These are deeply entrenched dilemmas and the clock is ticking for us to find a way forward that has real buy-in from the public, the health professions, managers and politicians. Otherwise, we face a return to the time before the funding increases — long waiting-lists will only be one part of this unappealing prospect.

Jon Ford, head of the BMA health policy and economic research unit

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