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Paul Healy, Senior Economics Advisor, NHS Confederation

Health is a high priority for the public - this is the case the world over. UK health spending has increased almost every year since the NHS was established and the Government has ‘protected’ the NHS in recent years - relative to other aspects of public spending.

No doubt, it is politically unpalatable to cut health spending if, say, defence spending is increasing.
In the good times, the priority status of the NHS enables it to make a strong case for additional investment. Governments will clamour to fund new hospitals, to pledge resources for new disease areas or to use resources to improve key national performance targets. Health is almost always at the front of the queue when the proceeds of economic growth are being shared, and the public mostly approve of this.

Priority-setting in this context is important to ensure public funding is being spent wisely, yet it is much more straight-forward than when times are tough. As public finances get squeezed, the task of setting priorities for health spending is more difficult.

I recently attended the Priorities 2016 conference, hosted by the University of Birmingham, which brought together international experts and practitioners on priority-setting. The context couldn't be more stark with the NHS six years into an unprecedented financial challenge, in which spending per person has remained effectively flat.

Significant improvements in productivity on the part of hospitals, mental health and community services trusts have allowed the NHS to keep the show on road, but at the cost of enabling demand to continue to increase and paring down trusts to a point where many are now apparently unsustainable in economic (and sometimes service) terms.

At the Priorities in Health conference, I presented the NHS Confederation's joint paper with the Health Services Management Centre on the factors affecting decision-making in the NHS. It was helpful to demonstrate the monumental task that local decision-makers are often expected to manage in having to balance concerns about quality with available finance. Our evidence suggests that NHS managers’ and clinicians' ability to act 'rationally' and seek better value can be severely inhibited by real world environmental factors.

In some ways, it was reassuring to hear from other presentations at the conference about how far the challenges faced by the NHS resonate with experience in many other countries, and how deep the well is for ideas about how to maximise health value from available resources. In other ways, it was daunting to observe just how difficult it is to decide how to spend ever more scarce resources.

It was also frustrating to note the tendency in many health systems to sacrifice long-term concerns and priorities (such as preventative health measures), in favour of responding to short-term (typically acute hospital or pharmaceutical) pressures. This is a natural reaction to priority-setting at an individual patient level, but should be challenged within a wider, evidence-based debate. The Priorities 2016 conference demonstrated the depth of evidence that could contribute to this debate, but significant barriers remain to putting the theory into practice.

The first barrier is the perception of the NHS, and health spending more broadly, within the Treasury. While there is likely some will to fund specific capital projects for major innovations, there appears to be a current reluctance to increase ongoing revenue spending for fear that the whole system simply becomes more expensive. This should not necessarily impact on our ability to set priorities effectively. However, at present a wave of skepticism about the financial rigour applied to NHS spending could see it refused the time and space required to deliver transformation.

The second barrier is the public perception that the NHS should be able to provide everything to everyone who needs it.

The NHS is based on three core principles, which dictate that it be available for all, free at the point of use and based on clinical need. In summary, it is fair, free and forever. Yet, while the public debate will often explore the first two principles - through issues such as equity and access - much less time is spent on the last principle that concerns longer term sustainability.

From the outset in 1948, it was clear that the NHS could only be sustained by providing health services on the basis of clinical need (as opposed to open-ended demand, without a gate-keeping function). Furthermore, it was not long before decisions had to be made to prioritise what the NHS could and could not fund, notably with regards to dentistry and optometry, where co-payments were soon introduced.

What is now clear – as the NHS struggles increasingly to balance the books and sustain access to and quality of care - is that we cannot continue as we are and pretend that the funding circle can be squared without significant action. I believe there is a moral obligation on the NHS and its political masters to explore how to do (and fund) things differently.

Sometimes, this might go up against an "endowment effect" within society, in which people are reluctant to trade what they already have. Yet, the scope is there to use the evidence we have and find the evidence we lack, to make a strong case for setting funding priorities in a way that ensures that the NHS can get more from its resources, and can make a case about where more investment (perhaps from increased taxation) will be required.