Yes, the NHS has been 'ring-fenced' by the government, meaning it won't be subjected to swingeing cuts in the Spending Review, but this is only because prior to the election, the head of the NHS, Sir David Nicholson, asked the health service for £20bn savings by 2014, letting any future government off the hook. Indeed, unlike many public services, the NHS will get a "real terms increase". Some economists think this may be as much as £3bn extra each year for the next four years for the NHS in England.
The paradox is that while the NHS budget will rise in the coming years – as pledged in the Tory manifesto – it will not be enough to keep up with the costs of new drugs, an ageing population and changes to people's lifestyles that bring about, for example, an increase in obesity. On taking office Lansley admitted that £20bn was not a deep enough cut. "We may need to do more, because we have increases in demand," he said.
Although not officially covered by this week's comprehensive spending review, thanks to the wider squeeze in public spending and the political difficulties of raiding other departments, the only option is to curb spending. So the NHS, with a budget of £100bn – amounting to a fifth of total public spending – will have to do "more with less".
Economists say the problem is everybody knows how much money is poured in, but no one has worked out how much patients got out. John Appleby, chief economist at the King's Fund said: "We have just begun to get data detailing how patients feel they benefit from operations such as hip replacements, knee surgery, removing varicose veins and hernias. It's about a quarter of a million patients. My latest work looked at which hospitals were best for hip operations, procedures which according to the patient increase the quality of life."
The result is a ranking of hospitals by the cost of each "quality adjusted life-year". "The most expensive in the NHS was the Royal Free (in north London) where the cost was £11,000 per patient for hip replacements. There's huge variation with others costing a thousand pounds. We have only just begun to ask why on earth these costs are so different."
While numbers are being crunched, health trusts desperate to save money are resorting to curbing frontline care. Doctors complain that patients are being denied basic surgical procedures that could improve the lives of thousands of people. In other cases managers have announced the closure of services for a weeks at a time — saving millions for the public purse but lengthening waiting times. Consultants say that they can no longer offer treatments on the "basis of need", complaining that trusts are withholding cash for operations that are "medically necessary".
Mark Porter, chairman of the British Medical Association's consultative committee, said every hospital department is now facing an "8 or 9%" cut in spending this year. "Our concern is that we are seeing financial matters being more important than clinical matters in the NHS," said Porter. "NHS Warwickshire has just announced that not only will there be no low priority treatments such as injections for chronic back pain but also that there will be no orthopaedic surgery for six months without clearance from managers. No IVF treatment either. This is not about medical need, this is really about saving money."
The scale of the cuts is not easy to quantify but there is growing evidence to suggest that primary care trusts, which hold the NHS purse strings, are restricting access to many treatments in order to save money. About a fifth of NHS trusts in England have admitted to closing or considering closing major services — such as accident or emergency and maternity units — since the election.
It's a politically explosive issue for the coalition many of whom campaigned against such closures when in opposition. In Burnley, the Lib Dem MP Gordon Birtwhistle is calling on the health secretary to intervene to save emergency services from the axe. Labour gleefully seized on the housing minister's Grant Shapps opposition to the loss of the maternity unit in Welwyn Garden City.
This slash and burn approach may see the NHS shrunk far faster than anybody imagined. A government health insider told the Guardian that it was envisaged that in the coming years "a fifth of everything the NHS does today will stop". Last week NHS West Kent, the primary care trust that covers Tunbridge Wells, Sevenoaks and Tonbridge, with a £860m budget revealed it was heading for an overspend of £38m and warned of radical steps to balance its budget.
Nigel Edwards of the NHS Confederation, which represents 95% of the health sector, said that there were now trusts considering "closing down services and selling off" hospital wings. "Just shutting a service for a month or two is a one-off saving. I have had a series of discussions with four or five trusts now where they are thinking of a significant reshaping of the system."
Edwards says that cuts are the outcome of a system designed to reward winners. "You could take the surpluses from the successful health trusts which amount to a few billion pounds and use that to fill the deficits of the poor performers but it would send an interesting message about what happens if you do not manage your budgets properly."
All this comes at a time when the health secretary is proposing the most radical shake up of the health service for 60 years. About 20,000 managers will be culled as they are being asked to make swingeing budget cuts. The 152 primary care trusts will be abolished — along with the 10 strategic health authorities and in their place England's 38,000 GPs compelled to band together as consortia and handed over control of £70bn of NHS spending.
Professor Steve Field, chairman of the Royal College of GPs, is concerned the NHS is not well-prepared to make the changes needed to save the £20bn. "The scale of the task is huge. Even though the spending review officially doesn't hit us, we are still having to save large amounts of money", said the leader of the UK's family doctors. "I don't think people [in the NHS] really understand fully how differently we are going to have to do things over the next 12 months, both in hospitals and in primary care."
