Health Service Focus

QIPP 2?

New NHS financial modelling from the Nuffield Trust underlines the true scale of the funding challenge facing the health service over the next decade. Adam Hewitt reports.

The NHS must either deliver unprecedented productivity gains or get highly-unlikely year-on-year funding rises if it is to avoid a huge shortfall by 2021/22, new research suggests.

If funding is kept fl at in real terms, then even extending or renewing the QIPP programme and requiring annual 4% productivity gains by 2021/22 will still result in a £28-34bn gap, the Nuffi eld Trust suggests.

Its new report, ‘A decade of austerity? The funding pressures facing the NHS from 2010/11 to 2021/22’, says: “If NHS funding is increased in line with the historic average (4% a year) after 2014/15, this would be sufficient to meet the projected demands on the service. However, the outlook for public fi nances makes this highly unlikely, as such a settlement for the NHS would have signifi cant implications for other public services and welfare spending, or would require major increases in taxation.

“If spending grew more modestly, in line with the forecast growth in GDP (2.4% a year), the NHS would need to make further effi ciency savings of around 2% a year if the current QIPP challenge is achieved. This represents a profound challenge for the NHS.”

The report’s most pessimistic model, assuming neither funding gains nor adequate productivity gains, suggests a funding gap of £44-54bn by 2021/22.

The basic challenge is set out like this: “The NHS is required to spend within a budget set by the Government, and if the rising demand for health care is not met through a combination of additional funding and productivity gains, this will result in unmet need for care.”

The report was released alongside new Ipsos MORI polling data, commissioned by the Nuffi eld Trust, showing that the public place the NHS top of the list of spending areas that should be protected from cuts, and almost half would raise taxes to ensure the current level of care and services can be maintained.

Ipsos MORI chief executive Ben Page said: “The results of this poll show the lengths the public say they are willing to go to, to protect current NHS services. Whether they appreciate the scale of the challenge is another matter.”

Funding pressures – coming as much from the management of chronic conditions as from the ageing population – mean the NHS faces a “profound challenge”, the Nuffi eld Trust suggests. Productivity gains are subject to the law of diminishing returns, as clearly easier savings will be found earlier, making each year more diffi cult than the last. Few in the NHS want to contemplate the idea of ‘permanent austerity’, lasting years beyond 2015.

Indeed, an NHS Confederation survey last year showed that many chairs and chief executives thought current savings were unsustainable over even the next three years.

Nuffield Trust chief economist and report co-author Anita Charlesworth said: “There are no easy options for health beyond the current spending review. Without unprecedented, sustained increases in productivity, funding for health in England will need to increase in real terms after 2014-15 to avoid cuts to the service or a fall in the quality of care patients receive. The pressures from demography, illness and increasing costs will remain. It is very unlikely that under current tax and spending policies growth in NHS funding at rates experienced prior to 2010 could resume, particularly as other areas of public spending have already been cut much more than health.

“Productivity must increase and be sustained. Management and clinical leadership will need to focus beyond the current four year plans, extending them for at least a decade. Particular attention should be placed on improving quality and performance, and turning these improvements into cash releasing effi ciency savings.”

The report’s forecasts are based on modelling of a number of healthcare trends, including population growth, fertility, mortality, hospital activity for selected chronic conditions and primary care activity.

They assume rising salaries after 2014/15; that the number of GP consultations per person per year will have risen to 7.8 (from 5.5 in 2008/9); a 50% rise in the proportion of over-65s using mental health services; and annual 2% rises in prescription costs.

Some feasible policy shifts, too variable to model accurately, could also make a dent in the funding gap: suggestions include major service reconfi guration, greater integration of services, changing the workforce skill mix, and the effective use of telehealth and telecare.

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