NHS England 'not controlling rising cost of specialised services'

27 April 2016

NHS England’s spending on specialised services has increased at a much greater rate than other parts of the NHS, according to the National Audit Office (NAO).

In a report, the NAO said that despite taking on responsibility for specialised services three years ago, NHS England does not have an agreed overarching service strategy, consistent cost information from all providers, access to services and outcomes or how efficiently services are being delivered.

The budget for specialised services, which covers a diverse range of conditions including renal, specific mental health problems and rare cancers, increased from £13bn to £14.6bn between 2013-14 and 2015-16, an average year on year increase of 6.3%. This compares to an increase of 3.5% year on average for the NHS budget as a whole, the NAO said.

The NAO found that NHS England recognises it will be extremely difficult to keep to its budget in the future, even with a planned increase of 7% for 2016-17. It warned that resourcing other services such as primary care, non-specialised hospital and community services will be impacted if it cannot keep within budget for specialised services.

The report found that increasing demand for effective but expensive new drugs is among factors putting financial pressure on budgets. Although NHS England and Monitor have tired to keep costs under control by cutting the prices paid for NHS Services, this could have affected providers’ financial sustainability.

National-level contracting has strengthened NHS England's position to influence providers and reduce prices, but it is not clear whether its commissioning hubs have the skills to manage these contracts effectively, the NAO found. 

The report also concluded that NHS England underestimated the scale of the challenge of commissioning 146 specialised services, and that its original governance arrangements for specialised commissioning were ineffective.

The NAO concluded that without consistent information from all providers on costs, access to services and outcomes, or how efficiently services are being delivered, it cannot manage the ongoing pressure on its budget, make effective strategic decisions or be sure that it is meeting objectives for specialised services.

There were also indications that access to services, their quality and the price paid for them varied, the report said. For example, the price paid for a kidney transplant with a live donor varied from £13,000 to £42,000 across the eight centres providing this service.

Amyas Morse, head of the NAO, said: “Against a backdrop of increasing pressure on NHS finances, NHS England has not controlled the rising cost of specialised services. If specialised services continue to swallow up an increasing proportion of the NHS budget, other services will lose out.”

NHS England took on responsibility for commissioning specialised services, in 2013. Previously responsibility for commissioning highly specialised services was spread across ten 10 strategic health authorities, and 151 local primary care trusts were responsible for commissioning all other specialised services.

An NHS England spokesperson said: “For the first time in three years, specialised commissioning has successfully balanced its budget this year – which is a major achievement – but the NAO rightly points to the pressure we’re having to manage from rapidly rising demand for extremely expensive new treatments.

“But there is no free lunch here, so continuing to balance the books will continue to require difficult choices about investment priorities.”

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