Monitor has warned that the National Health Service is facing a funding gap of some £30 billion by 2021 if it is to provide a service free at the point of use and fit for the 21st century.
The healthcare regulator has warned that difficult decisions will have to be made to address the "greatest financial challenge" faced by the health service in recent year.
The NHS will have to achieve "more for less" at a higher rate than ever before, but Monitor also insists there are opportunities to help close the funding gap.
It says existing services can be improved to boost productivity, and that new ways of delivering care must be developed.
Other opportunities include increasing care in the community, making ‘one-off’ cuts to capital expenditure and staffing costs, and updating the way health spending is allocated.
But "the NHS must undergo radical change if it is to survive", stressed David Bennett, Monitor's chair and chief executive.
Hot on the heels of the report the NHS Confederation unveiled its 2015 Challenge, a two-part challenge to politicians to "create the space for change essential for the NHS's future, and to the NHS to be ready to make the change, and do it well".
It claims there are four prerequisites for the change that is critical to the survival of the health service to happen on the scale and in the timeframe required, and that these form objectives of its 2015 Challenge:
1/. at the next general election the three main parties must share an analysis of the challenges facing health and social care, and that the analysis "rings true" with those in the health service;
2/. the political parties must not be overly prescriptive in their manifestos;
3/. the 'deal' between the NHS and politicians over conditions for political consent to change is "clearer and can be articulated in a way that the NHS locally can ask candidates to sign up to the principles"; and
4/. As much of the NHS as possible should have developed plans for change in the run-up to the general election and be ready to go to consultation soon after.
"If we do not achieve a post-election drive for change, it is very possible that the current basis of the NHS, free for all at the point of need, will become unsustainable in the future," the NHS Confederation warned.
Acute care £2bn shortfall?
News of the huge gap in NHS funds was also closely followed by a warning from NHS England chief David Nicholson that hospitals could be forced to grapple with a funding shortfall of £2 billion a year from 2015, as the introduction of pooled budget for health and social care services begins to bite.
The so-called integration transformation fund, set to be worth around £3.8 billion in 2015/16, is designed to help fuel a shift in care into the community, but this could spell less money for acute care.