By Tash Shifrin
12th June 2009
The NHS’s payments and incentive systems are ‘not fit for purpose’ as it faces cuts of £15bn to £20bn over the five years from 2011, the NHS Confederation has claimed.
The NHS’s payments and incentive systems are ‘not fit for purpose’ as it faces cuts of £15bn to £20bn over the five years from 2011, the NHS Confederation has claimed.The warning followed publication of a report at the confederation’s annual conference on June 10, outlining the grim financial climate facing the health service following the public spending squeeze signalled in the Budget.
It said the NHS would need to plan for funding to fall by between 2.5% and 3% a year from 2011/12 – equivalent to £8bn to £10bn over the next Comprehensive Spending Review and up to £15bn over five years.
The report, Dealing with the downturn, also cited NHS chief executive David Nicholson’s warning that the health service might be required to save up to £20bn over the CSR period.
But report author and confederation policy director Nigel Edwards told Public Finance that the NHS would ‘need to redesign some of the payment systems and incentives systems’ to deal with the new situation.
The systems had been introduced during the years of growth in NHS funding and were ‘often designed to incentivise additional activity’, Edwards said. As the NHS heads into years of funding cuts, these systems were ‘not fit for purpose’.
Edwards also told PF that it was time to consider restraints on decisions made by the National Institute for Health and Clinical Excellence – the government agency that assesses the clinical- and cost-effectiveness of new treatments.
Nice ‘ought to think about a total budget for pharmaceutical innovation and maybe look at what the cost-effectiveness threshold is’, he said.
Edwards also said that NHS managers might have to adapt to cuts as early as next year.
NHS chief executive David Nicholson had ‘dropped a heavy hint that we won’t get the whole 5.5% uplift’ for primary care trusts set out for 2010/11, Edwards said. The Conservatives have indicated that they would bring public spending cuts forward to fill the hole in the public finances if they win the general election.
The Tories’ position was clouded when shadow health secretary Andrew Lansley told the BBC Today programme that his party would boost spending on health, schools and international aid after 2011, through ‘a 10% reduction’ in other Whitehall budgets. But a Conservative spokesman later said Lansley had been referring to ‘Labour’s cuts’.
Edwards said that bringing savings plans forward to 2010/11 would ‘be an issue’.
He added: ‘Some of the easier, low-hanging fruit that was available in the past is no longer available. It’s tough – but not as tough as it’s going to be from 2011 onwards.’
