Page last updated at 10:28 GMT, Friday, 19 March 2010

Is the NHS funding shortfall as dire as it seems?

By Adam Brimelow
Health correspondent, BBC News

Can improved efficiency deliver better care?

Health service managers are facing a tough road ahead.

They have been told to plan for a shortfall of £20 billion over the next four years.

Yet a leading health research group has now said pressures on the NHS budget in England may not be as bad as has been assumed.

The King's Fund has calculated that the projected gap in funding can be cut by a third.

Freezing pay, scaling back building projects and accepting current waiting times, could save £6.5 billion, it estimates.

But the fund also argues that improved efficiency should deliver better quality care.

And, it says, the approach taken by University College Hospital in developing better cancer care is a "solid example" of this.

I think the focus for the NHS is and should be on why do we want to improve productivity - to do what?
Professor John Appleby, King's Fund's chief economist

The trust already pays for some of its patients having radiotherapy to stay in a nearby hotel, rather than remain in hospital.

Advances in treatment mean this is becoming an option for many more people. The trust's chief executive, Sir Robert Naylor, says the idea has proved extremely popular.

"We started doing this four or five years ago in a four-star hotel across the road from the hospital, and to our surprise we found out that that was much more cost-effective.

"The hospital cost something like £300 a night to keep a patient in hospital, but it's about a third of that price to put them up in a four-star hotel."

The trust is building a new cancer centre - paid for by selling off other properties - that will enable it to look after many more patients in this way.

Sir Robert says its highly specialised services will lead to even better survival rates.

The King's Fund says approaches like this - keeping patients out of hospital - are vital for the NHS.

Home support

Professor Chris Ham, soon to be the fund's chief executive, says the NHS should concentrate on improving links with social services to support vulnerable people in their own homes.

Sir Robert Naylor
Sir Robert Naylor at the new University College Hospital cancer centre

This joint approach is already working well in Torbay Care Trust in Devon.

Here district nurses, occupational therapists, physiotherapists and social workers are based in the same office, sharing visits, records and budgets to keep vulnerable patients independent and comfortable.

The lead district nurse in the trust's Paignton team, Lorraine Webber, says bringing health and social care together makes it easier to provide better support.

"Whether that's preventing a patient going in or facilitating quicker discharge for patients needing to come out, we can work together with colleagues rather than in a fragmented way.

"We can work together to support that patient in whatever it is they need and we can do it much quicker because we're all here and we're all working towards the same goal."

The health service is looking at these ideas with renewed urgency as the pressure grows to plug the funding gap.

In making its recommendations, the King's Fund has gone back to a review for the treasury carried out by Sir Derek Wanless in 2002 - the report that was responsible for much of the increase in NHS funding in recent years.

This assumed that pay would rise to well above the rate of inflation. But in the pre-budget report last year the chancellor announced a squeeze on public sector pay.

Pay freeze

The King's Fund's chief economist, Professor John Appleby, says freezing pay could save the health service £3.5 billion.

"In a way the NHS will be in a situation where there'll be real pay rises this year in 2010.

"But from April 2011 it is likely that there'll be virtually nil pay rises so there will be essentially a pay freeze."

He also suggests that scaling back spending on buildings could claw back about £1.5 billion, while a similar amount could be saved by accepting that current waiting times are good enough.

"These are not uncontentious or easy decisions of course. But they are decisions that could be taken. And it does reduce in a sense the rather daunting productivity challenge that the NHS is facing."

And he warns against pursuing cuts simply in order to save money.

"I think the focus for the NHS is and should be on why do we want to improve productivity - to do what?

"And I think the examples in terms of UCH and Torbay - those are solid examples of improving quality and releasing resources - saving some money - but not saving money as an end in itself, but to do something else with."

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