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NHS financial outlook must be cause for 7-day review

HCSA chair Claudia Paoloni questions whether a world first of universal seven-day services is possible amid an NHS cash crunch

There has been much in the media recently promoting the notion that NHS England is in crisis.

Some take the view that Trusts are overspending on their annual budgets, while others maintain that chronic underfunding is the problem.

In reality the truth is more complex – a culmination of both factors, against a background of multiple population and fiscal pressures.

In October 2015, Monitor and the Trust Development Authority reported a collective “overspend” of £930 million by Trusts in the first three months of the fiscal year. It was predicted at the time that the annual deficit would hit £2 billion. But by December a £2.2bn deficit had already been reached, and by the end of the year that figure had risen to £2.4bn in what regulator Monitor described as a “worst-in-a-generation financial position.”

The Department of Health would argue that NHS funding has grown significantly in cash terms. Indeed the DoH’s annual report and accounts for 2014-15 and the autumn statement pledged a 35 per cent budget increase between 2009-10 and 2020-21, rising to £133.1bn.

However, deducting £24bn for inflationary rises over that period the real-terms increase would only be £11bn – 10 per cent – over the 11-year period, an annual increase of 0.9 per cent.

Real-terms spending growth over the period is therefore extremely modest.

Yet NHS costs are also increasing annually by around 4 per cent due to an ageing population, rising obesity, and the price of new technologies and medications.

Health & Social Care Information Centre data shows that the cost of prescriptions alone rose 4.68 per cent from £8.85bn to £9.27bn between 2013-14 and 2014-15, itself an increase of 7.6 per cent on a year earlier. The actual number of prescriptions only rose by 1.79 per cent in 2014-15 – suggesting the cause was the additional price of medicines.

At the same time, hospital demand has increased sharply in England. Total admissions increased 31 per cent to 15.892m between 2004-5 and 2014-15. Annual attendances at A&Es have risen 22 per cent in a decade, to 22.923m in 2015-16.

Total outpatient appointments stood at 85.63m in 2014-15, up 4.4 per cent on a year earlier.

Costs are also driven by increasing head counts. While front-line staff argue that staffing levels remain inadequate, as demonstrated by various hospital inquests and reports eg Mid Staffordshire, the NHS has seen an average annual 1.3 per cent increase in full-time equivalent posts over the past decade.

The perception is often that this is driven by managerial growth, but 2009-2015 saw a 16.2 per cent fall in full-time equivalent senior manager posts and a 16.8 per cent drop for other managers. Over a similar period there was an 8.9 per cent increase in doctors, a 0.7 rise in nurses, and the number of ambulance staff grew by 6.8 per cent.

Yet the Commons Public Accounts Committee (PAC) identifies a long-term trend of understaffing and an underestimation of the impact of fiscal pressures amid a political push for Consultant-led services and now seven-day services.

MPs on the PAC suggest that not enough work has been done to accurately predict either the fiscal impact of seven-day services or the availability of sufficient resources to deliver them.

The DoH and Health Secretary would argue that Trusts have overspent largely as a result of extreme agency costs, leading to a new policy capping these fees. On top of this policy-makers have ordered Trusts to deliver efficiency savings of up to 4 per cent a year with the goal of bridging a predicted £22bn funding gap by 2020-21.

This has left Trusts with a difficult financial balancing act. Initial savings may be found through procurement, wastage management, and efficiency changes and the realignment of services. Then later come bed closures to reduce overheads and ultimately staff reductions and re-banding programmes.

This results in bed shortages, an inadequate skills mix, increased stress and increased sickness rates – driving the need for agency staff to provide cover for absences, leavers and additional waiting lists to clear backlogs and hit targets.

Increased pressure comes from a reduction in funding for local government for social care, so that social support and district services diminish. ONS figures showed that spending on social care for the elderly, for instance, fell by 17 per cent between 2009-14 alone. Taken together this becomes a very complex fiscal and managerial problem, but the reality is that the long-term sustainability of services remains in doubt.

Against a bleak financial backdrop and the PAC’s warnings on staffing and funding, is now really the time to seek the global first of a full seven-day NHS service?

What is absolutely certain is that nothing safe and sustainable will be achieved with a demoralised, exhausted or disengaged workforce.

Now is clearly the time for further thought and a review of the seven-day plans. Without this, the evidence points to a worsening crisis impacting on the well-being of clinical staff and patient safety, and threatening the long-term health of the NHS.