Can the NHS escape cuts?

Party conference season has seen health funding move to the heart of the political battlefield. Jonn Elledge reports.

Andrew Lansley

The NHS will be safe, MPs say. Sure, the UK is running a 6 per cent budget deficit, and the NHS is one of the largest areas of public spending. But there will be no need for cuts there.

Despite these straitened times, in fact, both Labour and the Conservatives are still promising they can actually make the NHS better.

That will be difficult. Protecting the NHS budget is not as helpful as it sounds: growing demand and soaring drug costs mean the NHS needs around 3 per cent more money each year just to stand still.

NHS chief executive David Nicholson recently warned it would need to find up to £20 billion in savings between 2011 and 2014. Improving services in that environment sounds improbable.

But there are still two years to prepare for the crunch, and this year's party conferences offered some hints of how our political masters plan to pull off this magic trick. For Labour, 'quality and innovation will be the key drivers', says health minister Mike O'Brien.

In a debate on health funding, he listed ways services could be improved while cutting costs, including telemedicine, keyhole surgery and cutting the hospital tariff to encourage trusts to move care into the community.

Saving money through higher quality is not quite as fantastical as it sounds. Cutting MRSA and C difficile infections saved the NHS £261 million, Mr O'Brien says, because scrubbing surfaces is cheaper than keeping patients in intensive care.

Matthew Swindells, of public services consultancy Tribal, says the lack of community-based care means hospitals 'incarcerate elderly people' because there is no alternative. 'It's really expensive to be that rubbish.'

The DoH pledge to halve waits for cancer diagnostics to one week fits neatly into this agenda. Allowing GPs to book appointments direct should cut red tape. Catching cancer earlier should cut treatment costs and will be popular with patients.

Whether these methods will save enough cash is not clear. New community facilities may cut costs, but require upfront investment. PCT commissioners have a nasty habit of picking the 'best value' (read: cheapest) service, rather than the highest quality one.

The NHS is terrible at spreading innovation, too. If Asda invents a better way of storing trolleys, Swindells notes, 'within two weeks all its rivals have stolen it'. But he adds: 'When an NHS hospital comes up with an innovation, within two weeks every hospital in Britain has declared it unsafe.'

Where will cuts fall?
Prime minister Gordon Brown's plans to make extended hours compulsory will also 'certainly save money', Mr O'Brien says. He did not say how, or if it would be enough.

On one thing he was clear, though. 'We are looking for £15-20 billion of savings, much of which we want to reinvest in the NHS. Cuts won't work,' he told one meeting, warning: 'If you leave it to the Tories that's what they will do.'

That, of course, is not what the Tories say. In his conference speech, shadow health secretary Andrew Lansley pledged to cut the NHS admin bill by a third. 'They spend a total of £4.5 billion in administration every year. So we will cut that bill by £1.5 billion within four years.'

Beyond this, Tory plans to cut costs through better results are similar to the DoH's. Where Labour's key word is 'quality', for the Tories it's 'outcomes'.

Its plans for the QOF are a case in point. Mark Simmonds, Mike O'Brien's shadow, told a Tory fringe meeting that the party wanted to ratchet up efforts to re-focus the QOF on outcomes, because it was 'too process-based'. The party hopes this will help practices see extended roles for pharmacists as a way to boost patients' health, rather than a threat to their income.

The Tories would also focus on public health, ring-fencing the budget and symbolically renaming the DoH the 'Department of Public Health'. Top-down targets, such as the four-hour and 18-week waiting times would go, however, with clinicians trusted to do the best for their patients.

These strategies may go some way to tackling the £20 billion NHS funding gap, but neither party seems ready to admit that any viable cost-saving strategy will mean frontline service cuts.

It has long been said that some services - major trauma centres, say - should be delivered at fewer, better-skilled sites. NHS Confederation chief executive Steve Barnett says 'only brave decisions like closing an entire site save that kind of money'.

The NHS tends to embrace the new without scrapping the old, argues the confederation's PCT network director David Stout: 'In every other industry new technology drives costs down. In the NHS, our costs go up because we do not stop doing things the old way.'

But it will take a brave politician to tell the voters a much loved local hospital must close. Far easier simply to intone about 'hard choices' while freezing pay for doctors (Labour) or the entire public sector (the Tories).

This may help save a few quid - staff costs swallow 70 per cent of the NHS budget. But it will also make it harder for a government of any colour to make the changes that really matter.

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