The NHS has a name for stranded costs. It still doesn’t have a strategy to deal with them (9 June 2026)

Summary

'Stranded costs' are fixed expenses that remain when services are reduced or shifted—for example, from hospitals to community care. This article argues that while the NHS recognises the problem of stranded costs, it lacks a clear strategy to deal with them.

As care models change, funding follows activity but underlying hospital costs (like estates, staffing, and long-term contracts) cannot easily shrink, creating financial losses that discourage transformation. This structural issue is reinforced by payment systems that reward activity rather than enabling transition, meaning efficiency gains rarely translate into real savings.

The authors suggest the NHS must explicitly identify stranded costs, fund the transition to new models, and pair reforms with clear plans to decommission old services; otherwise, ambitious transformation policies will continue to fail in practice.