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More must be done to deliver NHS savings – DH

Although the NHS is making “significant” savings more needs to be done to deliver transformational change, the Department of Health (DH) has admitted. 

It was responding to the Health Select Committee’s report into public expenditure on health and social care, which said the NHS is not yet financially sustainable and that the QIPP savings so far have been ‘straightforward’ rather than transformational. 

The DH quoted the National Audit Office as saying that 91% of the 2011/12 QIPP savings were recurrent, representing an ongoing saving for the NHS. The DH therefore disagreed with the committee that the sustainability of savings made so far is “questionable”. 

Nevertheless, it did state that the NHS continues to face a “very significant efficiency challenge if services are to be maintained and improved within the available financial resource”. 

It added that a number of actions have been taken to reduce cost pressures on the NHS, including negotiating with the pharmaceutical industry to cap the NHS drugs bill at an affordable level; ensuring that visitors and migrants pay for the services they use; promoting efficiency in back office functions through NHS Shared Business Services; transforming the way the NHS buys goods and services, to ensure greater value for money; and establishing the £3.8bn Better Care Fund. 

The government added that improvements in workforce productivity are also essential to help deliver the efficiency savings in this, and the next, Spending Review period. “So far workforce productivity gains have contributed 12% of the total savings made in 2011–12 and 2012–13, compared with 23% which has come from pay restraint,” the response said. 

The Committee stated that the need for the NHS to achieve 4% year-on-year efficiency gains has been the dominant factor when it looked at expenditure issues. But in the inquiry, evidence has indicated that only ‘straightforward’ savings have been achieved so far and little progress has been made on transformative change. 

The DH, however, defended its position saying that “the savings to date have been spent on maintaining the quality of NHS services while delivering increased and more complicated activity as a result of a growing and increasingly elderly population”. 

The Committee remains concerned, however, that the pressures on available resources across the whole system, but in particular in social care, are now much greater than they were a few years ago, with the result that successful integration of high quality health and care services represents a substantial and growing challenge. 

In response to this, DH said it “shares the concern” that demographic change will continue to place pressure on the health and social care system, making successful integration a growing challenge. 

“This is why we have set up the £3.8bn Better Care Fund of pooled budgets in health and social care from 2015/16,” said the DH. “Given the urgency to deliver transformational change, we believe the Fund is at the right scale and pace. The pooled fund is the biggest ever financial incentive for councils and local NHS organisations to redesign services around the needs of service users in a way that has often been talked about in the past but never achieved. The fund equates to, on average, £25m for each health and wellbeing board area.  This is the minimum amount that will be pooled. Local areas have the flexibility to pool more funds locally and, if that is in the best interest of local people, we would encourage them to do so”. 

Under the plans every local area must have its two-year Better Care Fund plan signed-off by April 2014. Although the Fund is for 2015/16, £500m of the pay for performance element will be tied to improved services and outcomes in 2014/15. 

The DH added that the framework it has set up “strikes the right balance” between driving change at the right scale and pace and giving local areas the time and resources to develop and implement robust, sustainable plans that are genuinely transformative. 

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