NHS makes good start on savings, but faces steep road ahead

13 December 2012

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13 December 2012 | Anna Reynolds

The NHS needs to focus on integrating care and moving services into the community if it is to reach its £20 billion savings target by 2015, according to a report by the National Audit Office (NAO).

The report found the NHS saved £5.8 billion in 2011-12, just under its forecast of £5.9 billion. Just under half of these savings were made by healthcare commissioners securing the same services for lower prices and the Department of Health (DH) reducing national tariffs primary care trusts pay to NHS trusts for healthcare. The government’s two-year pay freeze for public sector workers has also made a significant contribution.

But the NAO questioned the consistency of the reported savings and claimed the DH does not gain independent assurance from each trust about the data they provide. As a result of limited guidance from the DH, trusts measure and report savings differently. Further the NAO stressed it is important savings made are not one-offs but recurrent. The NAO estimated that up to £520 million of the reported savings for 2011-12 were one-offs.

Commenting on the report, Margaret Hodge, chairman of the Public Accounts Committee and Labour MP, said: “While, according to this report, overall quality indicators held up in 2011-12, I am aware that the Department’s own publicly available figures suggest that things have started to get worse. The road ahead for the NHS is steep.”

The NAO also said the NHS has taken limited action to transform the way healthcare services are provided, which is key to sustainability. This includes integrating care where multiple providers work together to provide a coordinated service for patients, and expanding community-based care. Providing services such as physiotherapy outside of hospitals will reduce demand for acute hospital services. The reason for slow progress is thought to be partly due to a lack of evidence of the benefits that service transformation can create.

Amyas Morse, head of the NAO, said: “The NHS has made a good start in making substantial efficiency savings in the first year of the four-year period when it needs to achieve savings of up to £20 billion. To build on these savings and keep pace with the growing demand for healthcare, it will need to change the way health services are provided and to do so more quickly.”

The report recommended the DH develop ways of gaining assurance that patients’ access to healthcare is not being restricted. They need to ensure that local policies are transparent so that commissioners can be held to account. In addition, the DH and the NHS Commissioning Board should work with the NHS to reduce barriers to transforming services and evaluate the impact of transformation initiatives to generate evidence about what works locally and on a larger scale.

NHS spending is expected to increase by 0.1 per cent over the four years from 2011-2015. To keep up with the growing demand for healthcare, the Department of Health has estimated that efficiency savings of up to £20 billion will be needed over this period.

In response to the report, health minister Lord Howe said: “The NHS is doing well to meet its efficiency savings. However, if it is to meet the needs of an ageing population, it needs to seriously look at how it can improve how care is being provided, particularly to older patients and those with long-term conditions. We are investing more than £12.5 billion extra in the NHS, but it must get the best value for every pound it spends. It is making good progress.”

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