NHS needs ‘radical change’ to ensure sustainability, say MPs

3 Feb 15
Radical change is needed to make the NHS financially sustainable, the Public Accounts Committee said today.

PAC chair Margaret Hodge said that, of all the committee’s work across government, the financial health of NHS bodies caused her most concern, with more trusts and foundation trusts now in deficit.

‘NHS England, Monitor and the NHS Trust Development Authority recognise that radical change is needed to the way services are provided and that extra resources are required if the NHS is to become financially sustainable. This includes making better use of community and primary care services to reduce pressure on hospitals,’ she said.

‘Making this change will require significant upfront investment, but the money available for this is reducing as the number of organisations in deficit increase.’

Hodge noted that a 48% increase in the number of emergency admissions over the past 15 years and the tariff arrangements for paying for them did no cover costs, intensifying acute hospitals’ financial challenges.

‘The savings required across the NHS will be difficult to achieve by continuing with the same approach used in recent years,’ she said.

‘It is clear that the old ways will not longer work – radical change is required to make the NHS financially sustainable.’

Among the PAC’s recommendations is a review of the national payment system for emergency admissions, a national framework contract for agency staff and evaluation of alternative financing or operating options for costly Private Finance Initiative schemes. These recommendations come after changes to the NHS payments tariff were last week vetoed by providers.

Responding to the report, CIPFA chief executive Rob Whiteman said that some parts of the NHS are heading towards ‘a financial cliff’ unless action is taken. 

He added: ‘If we are to achieve long term financial sustainability for the NHS, while maintaining quality of care, we need to look at new more effective ways of working such as the integration of services like health and social care.

‘Rather than focusing on pre-election top ups for troubled trusts, we need to radically reshape the way we deliver health care. By adopting a whole systems approach to the future funding of the NHS, taking into account the entirety of spend on health and wellbeing in an area, we could better provide for communities without further undermining other public service budgets.’

However, he acknowledged that this would take significant time and investment. ‘It is unrealistic to expect the necessary changes to take effect quickly; we need a sustained and agreed way forward, ideally a cross party answer, but not yet another reorganisation,’ he added.

Rob Webster, chief executive of the NHS Confederation, said the PAC’s findings reflected what the sector already knows.

‘The finances of the NHS need to support a radical change in service to make the NHS sustainable,’ he said.

‘The alternative is that the NHS will reach a point at which finances could collapse quickly. Given very high satisfaction with the NHS reported in the most recent British Social Attitudes Survey, this is not something the public or the NHS would be prepared to see.’

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