Page last updated at 11:46 GMT, Thursday, 17 September 2009 12:46 UK

The storm is brewing for the NHS

By Nick Triggle
Health reporter, BBC News

The government may want to talk about GP boundaries, but everyone else connected with the NHS is obsessed about just one thing - money. How bleak will it be for the health service?

Storm
The NHS budget is set until 2011, but many fear for the future after that

The grey clouds are gathering over the health service.

It is now just a question of how bad the financial storm will be.

For health economists, the worst-case scenario is being dubbed arctic.

In a recent report by the King's Fund think-tank and the Institute of Fiscal Studies this was described as a cut in funding by up to 2% a year after 2011.

For a service which has seen its budget more than treble since Labour came to power, such a scenario would be a huge jolt to the system.

So while Health Secretary Andy Burnham was unveiling his latest plan for the NHS - the abolition of GP catchment areas - he could not escape talk of the impending squeeze.

Before launching into his "vision for the future" speech on Thursday, the bleak picture for the health service was clearly set out by his hosts the King's Fund.

'Difficult choices'

Chief executive Niall Dickson said: "What I think no one is any doubt about is the years of large growth are over.

"There will be difficult choices at a local level."

The think-tank has been firm in its belief that the health service must improve productivity.

While the private sector increases productivity by about 2% a year, the Office for National Statistics has estimated that productivity has fallen by 0.4% annually over the past decade.

Productivity has also been latched on to by all three political parties.

The market could work against what the government is trying to achieve
Dr Hamish Meldrum, of the British Medical Association

But what all of them refuse to be drawn on, with an election less than a year away, is that it seems inconceivable that such a turnaround in efficiency can be achieved without some level of cuts.

Indeed, Mr Burnham dodged questions about the prospect of a reduction in staff numbers, preferring to focus on what he called the new type of reform.

The health secretary told the audience of health professionals at the King's Fund's London HQ: "There is, let us be honest, real room for improvement and the challenge for all of us is to achieve that through service reform rather than large funding growth."

And this is where his vision for turning the health service from "good to great" comes in.

Instead, of concentrating on things such as traditional top-down targets like waiting times, he said patient experience was now the buzz word.

The ending of GP catchment areas is based on the theory that by giving patients choice over where they register, standards will be pushed up.

Reward

Mr Burnham also said he wanted to link funding directly to patient surveys to make sure hospitals were rewarded for providing care that people valued.

Again, these are all things that have also be championed by the Tories as well.

Indeed, even for those working on the ground, it can seem like the main two political parties are singing from the same hymn sheet.

John Adler, chief executive of Sandwell Hospital in the West Midlands, which has already been through its own financial turnaround after the deficits crisis of a few years ago, said: "There is a great deal more consensus than there used to be... and that helps as we know where we are going."

But not everyone is as optimistic.

Dr Hamish Meldrum, chairman of the British Medical Association, said he was concerned that the scarcity of money could see different parts of the NHS in a desperate fight for patients to ensure they could stay afloat.

"The market could work against what the government is trying to achieve. Hospitals are being told to move patients out into the community but by doing so they will lose money so where is the incentive?"

Dr Meldrum said he could see a similar issue emerging among GPs if boundaries were scrapped.

He said GPs who work in commuter belts could face problems if their commuter patients - who tend to be healthy and place few demands on doctors - chose to register near their place of work.

Such a move would deny doctors the steady stream of income which comes with having people on their lists and potentially threaten their survival, Dr Meldrum believes.

"It could make it difficult for them and it is something that needs to be looked at in the coming months."

Instead, he would prefer the government to move away from its desire to see more competition.

"We need a more collaborative approach," he added.



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