The big squeeze

When you put someone in charge of Monitor who has said that he wants the NHS dismembered, you should expect something nasty from him. And here it is.

The NHS is expected to make 4% "savings" for each of every year for the next five years. This is extremely difficult, and finance directors of hospital trusts (acute and mental trusts) have been jumping through loops, trying to make the sums add up (for example, Hull And East Yorkshire Hospitals NHS Trust, has recently announced that it needs to cut 300 beds by closing 10 wards over the next 5 years).

Now the economic regulator has moved the goalposts.

Four per cent savings/cuts for 5 years was going to be difficult, but now Monitor says that Foundation Trusts must make efficiency savings of between 6.5 and 7.1% over the next five years. A value of 6.5% compounded over 5 years comes to a "saving" of 37%. This is frankly ludicrous. John Appleby, the chief economist for the Kings Fund is quoted in the Financial Times:

"I can see a hospital doing this for one or two years but not five years," Professor Appleby said. "It’s like the unit cost of a hip operation [around £6,000] has got to decrease by 37 per cent. How?"

How, indeed.

Monitor is deliberately pushing all hospitals towards bankruptcy and the government has said that it will not "bail out" any trust in the future.

Furthermore, there are still 85 trusts that are not yet Foundation Trust, and these trusts have to meet Monitor's tough financial criteria to be authorised.   Even at 4% the Department of Health was worried that 22 trusts would not become Foundation Trusts by the April 2014 drop down dead date forced on them by Lansley. If these trusts are not able to meet these initial 4% criteria by that date, then they will not achieve FT status and since the current NHS Trust status will no longer exist after that date, they will no longer be NHS hospital trusts. They will cease to exist.

Monitor has now made the criteria worse. Increasing the 4% annual "savings" to 6.5 to 7.1% annual "savings", means that all of the remaining 85 NHS Trusts are at risk of not being able to achieve FT status and hence not being allowed to be an NHS hospital trust after April 2014. The fact is, all of these trusts, covering over 100 hospitals are at risk.

This is how David Bennett expects the NHS to be "dismembered".

Here are the details in the letter from Monitor.

Here is a short video from the BBC explaining the issues in the simplest of terms.