The period from 2011 to 2014 is likely to be the most challenging ever faced by the NHS. The new Operating Framework requires primary care trusts to hold 2 per cent of their allocations with SHAs. Allowing for this, the Nuffield Trust calculates that the recurrent resource available to PCTs to spend in 2011/12 will fall by 2.3 per cent on average in real terms, with a minimum cut of 0.3 per cent for some PCTs and as much as 2.5 per cent for others.
Meanwhile, providers face the challenge of making a 4 per cent overall efficiency saving at the same time as they experience changes to their payment systems.
Specifically, from April there will be zero payment to providers for readmissions within 30 days of discharge after an elective procedure. Placed alongside the new marginal tariff for emergency admissions it becomes clear that hospitals will need to start doing the much needed work with GP commissioners to develop new forms of urgent care, community support and re-ablement if they are to survive financially.
However, doing so at a time of considerable upheaval on the commissioning side will be a challenge over the next three years.
Our new report NHS reforms in England: managing the transition identifies the ways in which the risks that are likely during this time of major change might be mitigated. We focus on three main areas; maintaining and improving the quality of services, retaining financial control and meeting the QIPP challenge, and making progress on the transition towards the structures outlined in the NHS White Paper. In respect of financial control, the report makes several observations.
First, primary care needs to become a greater focus for the QIPP agenda, with more clarity lent to the arrangements for performance management of primary care during the transition to GP commissioning. Presently the Operating Framework says very little about productivity in primary care despite it comprising the second largest area of PCT spend (20 per cent in 2009/10). This is a concern.
Theoretically it is possible to meet the 4 per cent efficiency target from productivity concessions and management cost savings within the acute and more general secondary health care settings alone. However the task would be made easier if we were to ask the primary care sector to deliver a proportionate share of the savings.
Second, if PCT clusters and GP-led consortia are to ‘keep a grip’ in the context of the reduced financial allocations they will need to accelerate the QIPP agenda and ensure that providers deliver their cost improvement plans. The scale of this should not be underestimated - at the end of September 2010 Monitor reported that 63 per cent of foundation trusts were behind on the delivery of their cost improvement plans.
A critical question to be posed is the extent to which management cost savings will (or in fact could) actually be extracted in the long run. The range of responsibilities ascribed to PCT clusters will make them significant organisations, and it is hard to see how they will be dissolved in two years when they will presumably be playing a critical role in supporting GP consortia, undertaking core statutory functions and acting as an intermediary between the NHS Commissioning Board and possibly over 500 GP consortia.
Finally, the Operating Framework understandably places significant emphasis on the financial and organisational aspects of reform and performance. It is however critical that human resource and organisational development factors are also emphasised in policy and practice, and that managers are given time, space and the resources to do this.
Anita Charlesworth is chief economist at the Nuffield Trust
