Graham Leicester: Only surgery will save the chronically obese NHS

AMID the pain and austerity of the coalition's first Emergency Budget, we can expect at least one service to be spared: the NHS.

Governments north and south of the Border are anxious to reassure us that the NHS remains safe in their hands and its budget will be protected.

This is either deliberately misleading or dangerously complacent. The fact is the NHS is fundamentally unsustainable. And to quote Herbert Stein's Law "if something cannot go on forever, it won't".

The case is set out in detail in a new International Futures Forum report, "Costing an Arm and a Leg: a plea for radical thinking to halt the slow decline and eventual collapse of the NHS".

The founders of the NHS thought that once immediate health concerns were addressed, spending would plateau. Instead, it has risen inexorably – from 12 billion in 1950 (2010 prices) to 120bn today. And the pace of increase is itself increasing – with an ageing population, rising NHS staff and pension costs and expensive new technologies.

When Sir Derek Wanless was asked by the Treasury to take a close look at health spending in 2002, he concluded that even with a "fully engaged" scenario in which the NHS switched its focus from "illness to wellness", spending would still have to rise to 10 per cent of GDP over the next 20 years. In practice, we are close to that mark already, only eight years on.

No country anywhere in the developed world has managed to contain healthcare costs. A survey in 2005 by PricewaterhouseCoopers' health research institute showed that most healthcare executives from 27 countries expected costs to increase even more rapidly in the period to 2020 than in the past. This in spite of the same report's chapter on "The Unsustainability of Global Health Systems" showing that these spending trends cannot possibly continue. "Healthcare spending increases above inflation over time" has come to be seen as an iron law, as reliable as gravity.

No longer. The Department of Health has announced that funding for 2011-12 to 2014-15 will be held at 2010-11 levels. Given the underlying cost pressures this will require savings of between 15bn and 20bn in that same period to balance the books.

The Scottish Government Health Department has been more cagey with an election in the offing and has yet to announce its plans for 2011-14. But with cash allocations reduced by 3.4 per cent in cash terms (11.8 per cent in real terms) by 2013-14 compared with 2009-10, it is likely that the NHS in Scotland will be faced with having to make proportionately more savings than England in the next few years.

The evidence suggests this level of financial restraint within the NHS will prove impossible. The NHS has never experienced a protracted period of flat-line budgeting in its 60 years of existence.

It is generally accepted that greater efficiency might provide 1 per cent savings in the system. A further 1 per cent might be achievable with more radical re-shaping of services. But this carries the risk of major public discontent.

For a zero growth budget, the NHS will have to find 3 per cent savings every year in order to cope with inflationary pressures locked into the system. And nobody knows how to achieve the final 1 per cent – not to mention how to cover additional cost pressures from changing patterns of disease, antimicrobial resistance to drugs, increasing energy costs etc.

The public and politicians are largely in the dark about these deep-seated problems and if anything have higher expectations than ever about what medicine and the healthcare system can achieve. Ministerial statements about rights and entitlements, such as those enshrined in the NHS constitution and now set to be incorporated into law in Scotland, reinforce this message.

Yet everything points to the conclusion that a "predict and provide" model of healthcare provision has had its day. Responding to increased demand by employing more staff, buying more kit and investing in new buildings has not dealt with the underlying drivers in the system. Nor has our tendency to address the health of the individual and the population in smaller and smaller categories of specialist knowledge. It is difficult to avoid the conclusion that without radical innovation this is a system in a state of terminal collapse.

Many will dispute that finding. They will insist that plans for retrenchment and eventual recovery in NHS spending are sound and deliverable.

I disagree. I think we will need to start developing a more desirable Plan B now.

That plan should start from recognition that the existing trajectory of inexorable increase is both unsustainable and undesirable. It should acknowledge that there is very little correlation between how much is spent on healthcare and health outcomes for the population. And it should admit the possibility that a radical new shape of health service could emerge from these next few years of turbulence that is clinically effective, saves lives, treats illness, promotes health for the whole population and costs far less than the current model.

So, for example, we can support new approaches to public health closer to asset-based community development than preaching personal abstinence and restraint. We can learn from the Alaskan healthcare system, representatives of which were in Scotland earlier this month (in particular supporting specific radical innovations in health and social care in Fife). They claim to have "not a plan but a method" – which has considerably improved health and saved money, and which involves paying attention at the primary care level not just to medicine but to relationships. Listening, it turns out, costs nothing.

There is plenty of hopeful practice to work with. But it is small scale, counter-cultural and below the political radar. It cannot scale, and receives little encouragement, in an environment obsessed only with returning the existing system to long term trend growth. Now would be a good time to release its full potential.

• Graham Leicester is director of the International Futures Forum www.internationalfuturesforum.com