13.12.12
‘Good start’ to NHS efficiency savings – NAO
The NHS has made substantial efficiency savings in 2011-12, the National Audit Office has reported, but it will get harder and harder to find more – and many of the biggest savings came from wider Government policies, such as the public sector pay freeze.
It is unclear what the level of sustainable savings over the next four years will be. By 2015, the NHS must save £20bn in efficiencies to reinvest in services. This year, the DH reported that £5.8bn savings were delivered, just short of the total forecast of £5.9bn.
Most of these savings were generated through the pay freeze and reductions in the prices PCTs pay for healthcare, as well as cuts to back office costs.
The NAO welcomed the savings, but warned that there is limited assurance of the amount saved, with no validation or independent assurance of the data reported. An NAO review of the Department of Health’s analysis of national pay, activity and other data substantiated a total of £3.4bn efficiency savings.
Amyas Morse, head of the National Audit Office, 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 £20bn. 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.”
John Appleby, chief economist at The King’s Fund, said: “As the report notes, efficiencies will become harder to deliver, as one-off savings such as cuts in management costs start to slow, and much will depend on whether pay increases continue to be restrained.”
The NAO recognised that service transformation would be “fundamental” to delivering the necessary efficiency savings, but noted that only limited action has been taken so far. Appleby added: “Significant political courage will be needed in the second half of this parliament to see these changes through.”
RCN chief executive & general secretary, Dr Peter Carter, criticised “ill thought through short term cuts to jobs and services” and called for this year’s efficiency savings to be reinvested into community care to support redesign of services.
NHS Confederation chief executive Mike Farrar added: “We shouldn’t underestimate how much hard work has gone in to achieving this result.
“Changes must happen across the whole system and it’s good to hear the NAO confirm its view that service transformation – such as investing more in primary and community services – is essential to delivering sustainable efficiency savings in the future.”
Dean Royles, director of the NHS Employers organisation, acknowledged that savings are set to become more difficult, with decisions about pay “unavoidable” in the future.
He said: “I want to ensure that we minimise any detrimental impact on job security and patient services. Every one percent increase in pay equates to about half a billion pounds.
“The major financial challenge faced by the NHS has strained relationships between employers, staff and unions. It is a testament to their dedication and commitment that we have all found ways to deliver efficiencies against the odds and carry on to work for the benefit of patients.”
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