NHS faces unexpected £500m cuts, say hospitals

NHS faces unexpected £500m cuts, say hospitals Hospital trusts say frontline services are threatened by cuts on top of anticipated £1bn fall in funding.

The NHS faces unexpected cuts of £500m that threaten frontline services, according to a body that represents hospital trusts.

Despite the government's pledge to protect frontline services with real-terms increases in funding, Monitor, the NHS watchdog, has proposed that in 2014-15 hospitals should be paid 4% less for operations than they were the previous year.

While hospitals were braced for a cut of about £1bn in funding, the Foundation Trust Network, which represents all 160 hospital trusts in England, calculates that Monitor is now asking for another £500m in savings – roughly £3m from each trust.

Chris Hopson, chief executive of the Foundation Trust Network, said cuts to frontline services would be deeper than expected and questioned whether the NHS could invest in much needed changes to the way hospital services work, recommended by the Francis report into failings at Mid Staffordshire NHS Trust.

He warned that hospitals were facing a "quadruple whammy" of "implementing the Francis report's recommendations on quality such as improving staff-to-patient ratios, putting seven-day working in place, coping with increasing demand and investing in much needed change".

"The level of efficiency savings the NHS has delivered over the last three years is unprecedented, but this level of performance cannot be sustained year on year till 2021. We need a reality check here – in the end you get what you pay for, and trusts can't perform miracles out of thin air."

Officials at Monitor were unrepentant, saying the forcing of hospitals to charge less for operations would free more money for clinical commissioning groups – clumps of GPs who purchase care on behalf of patients – to spend on the public.

However, Labour said it was another example of how the coalition's reforms were silently squeezing the NHS.

Andrew Gwynne, the shadow health minister, said: "Hospitals cannot conceivably lose half a billion in funding. Many are already struggling without enough staff and A&E departments have seen the worst year in a decade. The NHS has been pushed to the brink by David Cameron's toxic mix of cuts and reorganisation. He promised to protect the NHS, but he's taking it backwards."

In addition, Monitor will not provide any extra cash for accident and emergency admissions, something many hospitals had been hoping for. The regulator said it would only make small adjustments to the present payment system, which sees hospitals receive only 30% of normal payment for any emergency patient they see above 2008-09 levels. The remaining 70% is supposed to go into a fund for investment in local schemes to manage emergency demand.

Monitor said this cash should be spent with more transparency but refused to accede to demands from hospitals to raise the amount of cash they are paid, arguing that the system had dampened the demand for A&E services: "A&E admissions used to rise at 7% a year; now it is 1% a year."

Officials said that while the 10 trusts with the highest increase in emergency admissions had seen an average increase of 31% since 2008-09, 10 providers at the other end of the range had experienced an average decrease in admissions of 12%.

Paul Baumann, chief financial o officer at NHS England, said: "Providers and commissioners face a major task in constructing robust plans for 2014-15 onward which secure clinical and financial sustainability in increasingly challenging circumstances. To help them succeed in this task, we are proposing tariff arrangements for 2014-15 which provide the maximum possible continuity. Meanwhile we will be taking forward our work on longer-term pricing strategies to support our emerging strategic priorities and incentivise improved outcomes for patients."

Hopson retorted, adding that the powerful parliamentary health select committee had recently called for a shakeup of the present system: "We are disappointed that this arbitrary penalty on hospitals remains. Monitor and NHS England are still trying to have their cake and eat it – insisting A&E targets are met but requiring hospitals treat increasing numbers of emergency admissions for just 30% of the cost of doing so." The Guardian