Hospitals could see their budgets fall by £2bn, despite growing demand for their services such as A&E care, the head of the NHS in England has warned.
Acute hospitals like Southport and Aintree will get £2bn a year less between them from April 2015 as the money starts being used to help create a new fund to fulfil promises made by the coalition government to promote closer integration of health and social care services.
Without the move the NHS will no longer be sustainable after 2015, according to the chief executive of NHS England.
Hospitals, groups of GPs and other healthcare providers will be able to apply for money from the integration transformation fund (ITF) to put on new services as long as they plan to collaborate with social care providers.
The money should be used to relieve the growing pressure on the NHS by improving services outside hospitals, such as schemes to avoid patients needing to go into hospital, early intervention to prevent illness deteriorating to a critical point and enhancing the supported early discharge of mainly elderly patients.
But it comes at the cost of big cuts to hospital budgets. At the same time that the government is setting up a fund for out of hospital care, it is taking the money from the hospitals.
Hospital bosses are already struggling to deliver the £20bn of efficiency savings by 2015 required by the government and are facing rising demand for healthcare.
The Chief Executive of NHS England, Sir David Nicholson has also warned that hospitals will start to lose some of the £2bn from next April, a year early, in order to avoid what he calls "a financial cliff edge in 15/16".
Matt Tee of the NHS Confederation, which represents hospitals, said it backed the drive to care for more patients outside hospitals.
Nicholson's move "highlights the urgent need for consensus about the challenges the NHS faces and agreement in how and where healthcare is delivered in the future, as growing demands and limited funding mean the current model is probably unsustainable", he added.
The concern is that whoever wins the next election, the NHS faces a growing crisis resulting from the increasing pressures of new treatments and more people living longer. At the same time, health spending in the UK has fallen behind that of every other major western country.
We need to invest in helping keep people in their own homes for longer and in helping keep hospital stays as short as possible. That means better community health services but if hospitals have their budgets cut further, the danger is that the crisis in health will grow out of hand before new services have their effect.
The future of the NHS has never been more in question and I shall certainly be making it one of my top priorities in the coming months and years.