Millions for NHS Pay, but Little for Beds and Operations
By Jeremy Laurance Health Editor
Even by the standards of the NHS, accustomed to tales of woe, it has been a grim week.
Ministers have faced bleak headlines exposing shortcomings in the finances of the health service and gloomy predictions of the spiralling cost of one of its most high-profile projects.
The 11th-hour doubts raised by ministers about Britain’s largest NHS private finance deal highlight the depth of the crisis facing the NHS and reflect growing uncertainty in Westminster and Whitehall about how, and where, NHS care will be provided in future.
Patricia Hewitt, the Health Secretary, yesterday defended her decision to order a review of the pounds 1.2bn plan to rebuild St Bartholomew’s and the Royal London hospitals on the ground that it had doubled in cost while neighbouring hospitals had had difficulty attracting patients.
To add to the Health Secretary’s troubles a leaked Treasury document spelt out the coming squeeze on NHS funding and warned that it must cut costs, such as the drugs budget, to release extra funds for growth.
Even before that occurs, and despite the extra billions invested over the past five years, one in four NHS trusts is forecasting a deficit, amounting to a combined pounds 948m by the end of this year, and is having to cut services to balance the books. Wards are being closed, operations postponed and appointments cancelled or deferred.
Six years after Tony Blair launched the NHS Plan in July 2000, an ambitious document which contained radical proposals to modernise heart, cancer and other services, backed by the largest sustained funding increase in the NHS’s 50-year history, the nightmare that haunted the Prime Minister and successive secretaries of state for health may be coming true.
The spectacular sums invested in the health service look as though they have been swallowed without making a significant impact on the tide of demand. Vast sums have been spent on doctors’ and nurses’ pay – seen as essential to win their support for reform – and on their pensions. Yet the sums available for new hospital beds and operations, extra services that matter to patients, accounted for only 2.4 per cent of the pounds 5bn extra invested in hospital and community services in 2004, according to an analysis by the King’s Fund, the independent NHS think-tank.
There have been successes. The NHS was practically moribund when Labour won power in 1997, but the Blair government delayed for two years before attempting emergency resuscitation. Almost nine years on, its project to save a national health service funded from taxation and free at the point of need has won the support of the Tory leader, David Cameron.
Waiting lists at just under 800,000 are at a record low – 500,000 below their peak in 1998. Hardly anyone now waits longer than four hours in accident and emergency departments. Cancer and heart deaths have fallen by 14 per cent and 31 per cent re-spectively since 1995- 97. The number of patients treated is rising slowly, but not fast enough relative to the increases in staff and funding. The Treasury’s verdict, implied by its focus on efficiency savings, is that the NHS is not getting sufficient extra bang for its bucks.
Yet NHS managers know that time is running out. From 2008, annual increases for the NHS are forecast to halve from the current 7 per cent to 3 or 4 per cent. Ministers claim that waiting lists will be down by then to 18 weeks from GP referral to hospital admission, assuming targets are met, and funding will be up to or above the European average, so the large increases of the past will not be necessary. But most NHS managers think that is fantasy.
There are other pressures. The pattern of health care is changing and some hospitals are already having difficulty attracting patients as more care is provided in GP surgeries and treatment centres. A couple of miles west of Barts, the flagship University College Hospital – a 700-bed institution on Euston Road in London, built with pounds 422m of private money, which opened last July – ran up a pounds 17.4m deficit in its first six months, in part because it has been shunned by patients. Its financial problems were disclosed as a second PFI hospital, the Queen Elizabeth at Woolwich, south-east London, admitted that it was technically insolvent and heading for a pounds 29m deficit this year, rising to pounds 100m by 2008-09.
The trend is set to accelerate with the publication of a White Paper in 10 days’ time on expanding care outside hospital.
The pace of reform is being stepped up with the introduction of patient choice – from this month all patients referred by GPs can choose from at least four hospitals – and payment by results, under which hospitals are paid according to the number and kind of patients they treat.
The White Paper is expected to usher in a wider range of providers – including private health companies, pharmacies and health professionals – who can offer NHS services closer to people’s homes. If patients can get treatment for their chronic condition from their local GP or privately run – but NHS-funded – clinic they are less likely to use expensively funded PFI hospitals. The measures are designed to increase competition and drive change. As a result, some services may falter and hospitals fail. The inevitable consequence is that turbulence will increase.
LEADING ARTICLE, PAGE 26
The NHS in number
Waiting lists: 1997: 1,058,000 2005: 826,300
Cost of theNHS: 1997: pounds 46bn 2005: pounds 94bn
Costperhead of NHS: 1997: pounds 783 2005: pounds 1,567
Average treatment waiting time (outpatients): 1999: 7.7weeks 2005: 6.6weeks
Average treatment waiting time (inpatients) 1998: 14.2weeks 2005: 7.5weeks
Number of GPs: 1997: 29,389 2004: 34,085
Source: Office of Health Economics