Since 1948, if GPs want to provide a decent service to their patients, they have had to develop a secure business model for their practices. If, as small to medium-sized enterprises, practices are to be sustainable, GPs must ensure they can generate an income and deliver services that develop that income.
Over the past few years, NHS hospitals have had to move into this environment and, through Payment by Results, have needed to ensure their income measures up to their expenditure.
Given the new financial reality, NHS hospitals must think much harder about the business models they are developing. It is no longer credible - if it ever was - for every hospital to offer every possible healthcare service to everybody in its area.
In mid September, the think tank Reform published The hospital is dead, long live the hospital: Sustainable English NHS hospitals in the modern world, which I wrote with colleague Caroline Mitchell.
It is about the necessity to convert the work of NHS hospitals into more sustainable business models. Such changes will be difficult for those inside and outside the NHS. However, not facing up to the need for them will build into the NHS much greater inefficiencies as well as outcomes that fail to reach the level of safety which we have come to expect.
Cutting hospital services costs means services need to be transformed, with fewer beds, smaller wards and, in some instances, complete conversions in the way hospitals work. Over the course of this parliament, up to 40 hospitals may have to change radically or close.
Currently, hospital failure is averted through granting a variety of forms of interim financial support, yet it is difficult to see how the government can afford this growing 'inefficient hospital fund'.
It is not only financial pressures that are causing hospitals to change. Changing health needs and the challenges of managing care for people with long-term conditions make it imperative to develop new health services.
Alongside hospital turnarounds to ensure affordable high-quality healthcare, integrated care services will have to be organised around patients outside hospital settings. Integrated care demands that more services are delivered in the community and home, harnessing the potential of modern medicine and the latest technologies.
Once passed, the Health and Social Care Bill will create more pressures on hospitals to change, through stronger commissioning and extended patient choice. Yet politicians of all parties are still reluctant to support hospital conversion.
The government's pledge to protect hospitals and create additional barriers to redesigning local services will make it harder for the NHS to deliver £20 billion in savings and maintain quality care.
- Paul Corrigan is a management consultant and former special adviser to Tony Blair. More at www.pauldcorrigan.com/blog