The day of reckoning

6 Feb 14
One year on from the Francis report on the Mid Staffs scandal, the NHS faces a huge challenge. How to reconcile the radical quality improvements it calls for with the severe financial pressures facing trusts?

By Andy McKeon | 6 February 2014 

One year on from the Francis report on the Mid Staffs scandal, the NHS faces a huge challenge. How to reconcile the radical quality improvements it calls for with the severe financial pressures facing trusts?


If you followed England’s abject performance in the Ashes test cricket in Australia over the winter you probably heard a familiar Yorkshire accented refrain of: ‘I just don’t know what’s happening out there.’

As someone brought up in Manchester, it pains me to think I am slipping into Geoffrey Boycott’s habits and idioms, and Fred Trueman’s before him. But it is true. I just don’t know what’s happening out there.

Take the recent Department of Health response to the Francis report. The department has set out the key policy changes and replied to each of the 290 recommendations in the report of the Mid Staffordshire NHS Foundation Trust Public Inquiry chaired by Robert Francis QC. There is lots to support in the response but what the department has not done is cost it. ‘Not enough time,’ it said. It isn’t the approach one expects from a cash-strapped department and NHS.

Interpreted narrowly, the response may have little cost. Requiring acute trusts to post information about ward staffing on a website is not necessarily expensive. But it is clear that the impact of the report will be to increase the number of nurses on wards. Several trusts have already done this after Care Quality Commission inspections or reviews by Sir Bruce Keogh, the medical director of NHS England. Health Secretary Jeremy Hunt says that acute trusts have already employed 4,000 extra nurses this year.

Transparency may increase costs. As trusts post their ward staffing levels from April, who will want to be in the bottom quartile? Some acute trusts are already playing safe and not waiting for guidance from the National Institute for Health and Care Excellence due this summer on how to calculate staffing levels, but simply adopting the Royal College of Nursing standard. 

Then there is the move to ‘seven-day services’, to be achieved over the next three years. Here, the Healthcare Financial Management Association has done some costings based on eight volunteer foundation trusts. The main cost was in recruiting consultants. The HFMA, and NHS England, considered it hard to extrapolate national costs from this sample, but gave a rough estimate of 1.5%-2% of total patient income for acute trusts. That’s £1bn at the top end of the range. 

There has always been a tension for trust boards and chief executives between providing the highest quality care and keeping within budget. Success came in managing both. That should still be the case but there is a sense that the ground has shifted. If faced with threats from CQC that staffing needs to be increased and similar threats from regulator Monitor not to increase spending, boards and chief executives will opt for the former. It will be the same in terms of seven-day services or breaking even. 

There is a sense that overspending to meet higher quality standards is somehow acceptable. When the NHS last fell into overall deficit in 2004/05, the health department put the blame on trusts recruiting staff they could not afford. ‘Turn Around’ teams were despatched to financially failing trusts. Keeping within budget became a top priority and failure to do so a sackable offence. Now quality has trumped money.

This is good news for patients. Better quality of care is needed. Who wants to be on a ward with too few nurses, or to run the risk of dying at the weekend when you might have lived if only your accident had happened earlier in the week?

But as with a credit card bill, there will have to be a reckoning. It is delusional to think that we can carry on improving the quality of the NHS without paying for it. It isn’t just these initiatives, which will mainly impact on the future, but a host of other demands as well. Half of all non-foundation acute trusts were forecasting a deficit for this year and many foundation trusts are struggling to reach the sound financial levels expected. 

It is possible the reckoning can be put off until after the general election. A national strategy of raising quality and letting the money drift, with the occasional bung to help the really struggling, has obvious attractions. What matters to the public is not whether their local trust is in deficit but how long they must wait, if a bed will be available in an emergency, and the care and compassion they receive in hospital.

The NHS leadership believes that the service will remain solvent and raise quality, while treating rising numbers of frail older people and patients with long-term conditions. It will apparently do it by becoming more efficient, reconfiguring services, particularly for emergency care, integrating with social services and inspiring more people to manage their own care and adopt healthier lifestyles. A generous helping of telehealth and telecare will also smooth the path.

Ministers have been less forthcoming about reconfiguration but enthusiastically endorsed the other elements, arguing that technology and the Better Care Fund of £3.8bn in 2015/16 will have profound effects on care and money. The Opposition may share this view. It is easier to put forward a vision of an affordable and sustainable high quality NHS based on these principles than it is to address the alternative of whether the NHS needs more money and where it should come from. 

The trouble is, the evidence and progress to date is far from encouraging about the impact of greater integration with social care, new technology and ways of reducing demand for emergency care. Also, changing public and patient attitudes is a long haul, if smoking is anything to go by. 

We are not alone in facing these problems. All developed countries confront much the same set of issues. All want to tackle the pressure on health and social care from rising levels of chronic disease and the pressure of frail elderly people on health services. Both are big themes at international conferences, but nobody could be said to be on top of the problems.

NHS efficiency could improve. Much is expected of hospitals. But the UK does not have a large hospital sector compared with the EU 15 (only two of the member states before expansion in May 2004 have fewer acute care beds per 1,000 population – Ireland and Sweden). Our levels of bed occupancy are very high by international standards, although average length of stay is slightly above average. 

It is against this kind of background that the vision for the NHS to remain solvent and improve quality must be placed. To make ends meet, it will be required to become a world leader for efficiency, chronic disease management and use of hospitals. This is a great ambition. I expect Roy Hodgson has similar ambitions for England’s footballers in Brazil this summer. But it isn’t a plan.

So we face an NHS funding crisis. The reckoning will happen. For a time extra staff and higher quality services in hospitals can be paid for by squeezing investment in less visible general practice and in the community. But where does that leave the aim of shifting care out of hospitals? Clearly, it isn’t a long-term solution.

When the crisis will surface isn’t clear. Next winter seems possible, although at the HFMA conference in December, 75% of the 1,000-plus finance people there said their organisation expected to achieve financial balance in 2014/15. Even if it isn’t next winter, 2015/16 is widely recognised as likely to be a very, very financially stressful year. NHS England’s planning guidance for clinical commissioning groups simply asserts that hospital emergency activity must fall by 15% to balance the books, although it has been rising inexorably for several years. It will coincide with the post-–election spending round. At that point some longer-term resolution of NHS funding will be required.  

The OECD’s latest figures show that health spending in Europe has been growing despite the economic malaise, except for obvious reasons in countries such as Greece, Spain and Ireland. By 2015 the UK economy should be going from strength to strength, according to the chancellor’s Autumn Statement. For health spending to keep pace with predicted GDP growth of about 2.5% in real terms in each of 2016, 2017 and 2018 would not seem unreasonable. Something similar, or more, will also be needed for social care. 

But the size of the NHS makes funding that kind of growth, or indeed any growth, near impossible given other commitments and the cuts that would be required to other public services. Raising taxes specifically for the NHS also has obvious problems – 2% for the NHS is roughly equivalent to 1p on the basic rate of tax. It is no wonder that so much faith is being put in the integration of health and social care and in the NHS becoming a world leader in key areas, however shaky the foundations and lack of progress so far.

Andy McKeon is acting chief executive of the Nuffield Trust and former managing director of health at the Audit Commission. The Nuffield Trust has just published The Francis Report: one year on

This opinion piece was first published in the January/February edition of Public Finance magazine


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