NHS must be ‘match-fit’ to cope with funding squeeze, warns finance chief

11 Dec 08
The NHS must ‘do efficiency like never before’ to cope with the coming funding squeeze, the Department of Health’s director general of NHS finance, performance and operations has warned

12 December 2008

By Tash Shifrin The NHS must ‘do efficiency like never before’ to cope with the coming funding squeeze, the Department of Health’s director general of NHS finance, performance and operations has warned. Finance would get ‘very, very tight’ from April 2011, as the squeeze on public spending announced in the Pre-Budget Report set in, David Flory told the Healthcare Financial Management Association conference on December 4. The NHS faced new risks since the last period of tightly constrained funding, he warned. It had lost most of the experienced finance chiefs who had brought the service through hard times in the wake of the previous recession, he noted. Last time NHS resources had been squeezed, ‘the thing that gave was waiting [lists]’, Flory said. But that ‘safety valve’ would not be available this time because of the 18-week waiting limit. This meant there was ‘a real risk… that the only obvious safety valve we can see, the release valve is the financial position’, Flory said. But he added: ‘We are not collectively going to let that go.’ Over the next two years, NHS finance leaders must ‘make sure we’re as match0fit as we can be’ to face the squeeze, he urged. ‘We will really need to do efficiency like we’ve never done it before, we will need to do productivity like we’ve never done it before,’ Flory said. He added that it was ‘indefensible’ to claim that the NHS had already made all the efficiencies possible. ‘There isn’t compelling evidence… that all parts of the system are as efficient as they can be,’ he said. He also urged finance chiefs to keep a tight grip on the financial position, to act together as ‘system players’ across local health economies and – with one eye on the uneven impact of the forthcoming new treatments tariff – to ‘be a part of the solution, not a critic or a commentator stood on the sidelines’. Bill Moyes, head of foundation trust watchdog Monitor, also highlighted the spending squeeze. There was a £4.8bn gap between the funding level recommended for the NHS in the 2002 Wanless review and the 2007 Comprehensive Spending Review allocations, he said. The PBR squeeze on future public spending growth meant ‘the gap will be £13bn by 2013’. This meant a ‘huge difference in the level of productivity improvement needed’, he argued. But Moyes told the conference: ‘Don’t think about sacrificing quality to meet financial constraints.’ The Patient Choice regime meant people would pick hospitals that they felt would offer better quality treatment – and this would ‘have a financial impact’ on trusts.

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