2 Responses to “Alistair Darling in his budget next March is expected to reduce public spending for 2010 – 11 by £5bn. How do you think the NHS could be affected?”
Over the last few years the NHS has benefitted from significant increases in funding, although this has not been evenly distributed with questions over the fairness of the allocation formula being hotly debated as well as being played out in reality (large surpluses ‘v’ large deficits).
Experience also shows that when significant technical changes are made to the financial regime there are major winners and losers. We are likely to see this in the coming year with the introduction of HRG4 and the redistribution of MMF – with big swings in the financial fortunes of both Trusts and PCTs alike.
For the ‘losers’ a £5bn reduction in 2010/11 will mean things look doubly bleak; it would not be surprising if we also see similar central reactions to these perceived failures as previously (eg more ‘turn around’ teams).
In theory Trusts are more protected against national budget reductions as approx 60% of their income is generated through PBR, however as noted above some Trusts may lose out under HRG4 and its very likely the centre will reduce the tariff uplift in order to part fund the £5bn.
Shaving back services (at the expense of quality) to make savings is no-longer a realistic option with new legal duties on quality and the corporate manslaughter act..
As PCTs will be liable to pay for activity under taken through PBR they will need to get alot smarter at managing activity costs both through:
- reducing demand by engaging GPs in managing activity differently
- stronger commissioning (eg benchmarking and comissioning for ‘upper quartile’ performance, reducing variation in practice, and not funding any treatments of limited clinical value).
However many PCTs have been working on demand management for 2 – 3 years with varying degrees of success – experience shows these are usually not quick and easy solutions.
In those areas with the greatest financial challenges I would predict PCTs are more likely to end up in deficit than Trusts as the levers available to PCTs to implement speedy and effective demand management are much more limited than the levers available to Trusts to maximise income (through smarter clinical coding and attracting profitable work in).
In those areas I suspect the usual debates regarding restructuring organisations and key services will crash around the system like a continental thunderstorm.
Delivering the longed for increase in productivity may be the only way to avoid the usual NHS response of service reductions and reorganisation
I have recently read a report suggesting that the NHS buys as though it was still in the 1950′! I am sure that many involved will be seriously upset by this but is there any truth in the statement and is there any energy to do differently other than being forced down a change rout through budget cutting.
After all, the money given to the banks must come from somewhere!
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Dialogue is the regular posting place for the news and opinions of interim management specialists, Interim partners.
January 14th, 2009 at 10:33 pm
Over the last few years the NHS has benefitted from significant increases in funding, although this has not been evenly distributed with questions over the fairness of the allocation formula being hotly debated as well as being played out in reality (large surpluses ‘v’ large deficits).
Experience also shows that when significant technical changes are made to the financial regime there are major winners and losers. We are likely to see this in the coming year with the introduction of HRG4 and the redistribution of MMF – with big swings in the financial fortunes of both Trusts and PCTs alike.
For the ‘losers’ a £5bn reduction in 2010/11 will mean things look doubly bleak; it would not be surprising if we also see similar central reactions to these perceived failures as previously (eg more ‘turn around’ teams).
In theory Trusts are more protected against national budget reductions as approx 60% of their income is generated through PBR, however as noted above some Trusts may lose out under HRG4 and its very likely the centre will reduce the tariff uplift in order to part fund the £5bn.
Shaving back services (at the expense of quality) to make savings is no-longer a realistic option with new legal duties on quality and the corporate manslaughter act..
As PCTs will be liable to pay for activity under taken through PBR they will need to get alot smarter at managing activity costs both through:
- reducing demand by engaging GPs in managing activity differently
- stronger commissioning (eg benchmarking and comissioning for ‘upper quartile’ performance, reducing variation in practice, and not funding any treatments of limited clinical value).
However many PCTs have been working on demand management for 2 – 3 years with varying degrees of success – experience shows these are usually not quick and easy solutions.
In those areas with the greatest financial challenges I would predict PCTs are more likely to end up in deficit than Trusts as the levers available to PCTs to implement speedy and effective demand management are much more limited than the levers available to Trusts to maximise income (through smarter clinical coding and attracting profitable work in).
In those areas I suspect the usual debates regarding restructuring organisations and key services will crash around the system like a continental thunderstorm.
Delivering the longed for increase in productivity may be the only way to avoid the usual NHS response of service reductions and reorganisation
I would be interested in others views ……..
January 27th, 2009 at 3:42 pm
I have recently read a report suggesting that the NHS buys as though it was still in the 1950′! I am sure that many involved will be seriously upset by this but is there any truth in the statement and is there any energy to do differently other than being forced down a change rout through budget cutting.
After all, the money given to the banks must come from somewhere!