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NHS faces 'most severe financial challenge' ever

By 2011 the NHS could face a shortfall of £15bn, say NHS managers

OnMedica Staff

Wednesday, 10 June 2009

The NHS will face "the most severe constriction ever in its finances" within two years, NHS managers have warned today.

"Dealing with the downturn", published today to coincide with the NHS Confederation's 2009 annual conference, paints a bleak picture of the financial pressures and the impact that this will have on the nation's health service.

In the five years from 2011 the paper forecasts that the impact of the recession, allied to rising costs mean it is likely the NHS will face a real terms shortfall of £15bn.

"The NHS will face a real terms reduction of £8-10 billion in the three years from 2011 and the decline could continue beyond this. This means the need for strong leadership and radical productivity has never been greater," it said in its paper.

It also warns that many of the options of past slowdowns in funding could prove counter-productive and ultimately lead to extra costs, and says action is needed now if the service is to remain true to its founding principles and continue to provide care free at the point of need.

In his opening speech to the NHS Confederation chief executive, Steve Barnett, will challenge the NHS to innovate its way through the funding crisis. And Nigel Edwards, the NHS Confederation's head of policy, has said: "Having had seven years of plenty it now looks like seven years of famine from 2011 onwards.

"We are really going to have to think very deeply and carefully about everything we do and subject it to very rigorous scrutiny - and enlist all of our doctors, our front line clinical staff in rethinking the way we do things."


NHS faces serious funding crisis: BBC, 10 June 2009

The organisation's report states that even at its most optimistic, it anticipates modest or no cash increases in NHS spending in the next Comprehensive Spending Review and probably well beyond.

"The real terms effect of this depends on the level of demand, the behaviour of pay and price inflation, and the NHS share of the reduction. Demand is likely to continue to increase from long-term trends in ageing, increasing disease burden from improved survival and rising fertility (particularly in older
women) as well as from the negative health effects of recession in areas such as mental health and alcohol use," states the report.

However it warns against previous strategies such as "slash and burn" indiscriminate savings, letting waiting lists grow or allowing NHS pay to fall out of line with the rest of the economy.

Instead it calls for innovative measures, noting that it might be time for the National Institute of Clinical Excellence to be given a total resource ceiling and stating that there is still an important role for competition, choice and other elements of system reform.

This may worry many clinicians. Both Unison and the British Medical Association have expressed concern that a drive for efficiency savings could lead to a reliance on private sector companies, claiming this would compromise patient care.

BMA chairman Dr Hamish Meldrum stated: "The imminent funding crisis could be very dangerous for the NHS, and has the potential to seriously threaten patient services. We agree with the NHS Confederation that difficult choices will have to be made. "

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