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NHS can save up to £5bn a year through efficiencies – Lord Carter

The NHS could save up to £5bn a year by 2019-20 through a variety of efficiency measures, provided there is political and managerial commitment to take the necessary steps and funding to make this happen, an independent review has suggested. 

Lord Carter’s ‘Review of Operational Productivity in NHS providers’ interim report, commissioned by the government last year, has suggested that £2bn could be delivered by improving workflow and containing workforce costs, including better management of rosters and improved guidance on appropriate staffing levels and skill range. 

He added that a further £3bn could be saved from improved hospital pharmacy and medicines optimisation, estates and procurement management by adopting best practices and modern systems. This could include the creation of a “tightly controlled” single NHS electronic catalogue for products purchased by hospitals. 

Lord Carter, whom NHE has interviewed several times during the course of his work, which has analysed data from 22 NHS providers, said there are “significant benefits” to be gained by helping hospitals, using comparative data, to become more productive. 

However, he noted there are two key obstacles: a “lack of quality data” and the “absence of metrics to measure relative performance”. 

The Labour peer said: “We set out to develop an appropriate metric for the NHS to allow hospitals to compare themselves with their peers, and help them identify opportunities for productivity improvement.” 

The result has been the Adjusted Treatment Index (ATI). Lord Carter says would enable providers to review their performance against their peers and create a baseline for improvement. 

“I have also concluded there is a need for a model to define what an efficient NHS hospital looks like. A ‘model hospital’ can show how good clinical practice, workforce management and careful spending lead to measurable efficiency improvements whilst retaining or improving quality.” 

Lord Carter also stated that one of the quickest ways to solve “poor procurement data on prices and volumes” is to accelerate the implementation of a single NHS electronic catalogue, which he has been working on. 

“The introduction of GS1 and PEPPOL standards will allow every NHS hospital in England to save on average up to £3m each year while improving patient care,” he said. 

However, it was added that one thing is clear: “There is no silver bullet for delivering the efficiencies outlined by Five Year Forward View.” 

Lord Carter will publish a full report in autumn 2015. 

NHS Providers CEO Chris Hopson said his organisation strongly welcomed the review. “We particularly welcome the data-driven, sector-led, bottom-up approach he is using. This work is starting to look at NHS efficiency in a different, more granular, more evidence-based way than ever before. It rightly focuses on the importance of eliminating unnecessary variation both within and between providers, recognising that some variation is both desirable and necessary.”

He added that perhaps most importantly, Lord Carter recognises the importance of securing local management commitment in each NHS trust to using this data effectively. 

“This review must be seen as a valuable sector-led management tool developed by providers, for providers,” added Hopson. “In Lord Carter’s own words, ‘a regulatory approach will probably fail to capture the imagination and engagement of hospital boards’. We strongly endorse his view that the role of the Department of Health, NHS England, TDA and Monitor is to provide ‘support that [is] seen as helpful and non-directive’.” 

Health minister Lord Prior said that in the longer term, by using global best practice, the NHS can get even higher levels of performance by redesigning clinical pathways, improving the flow of patients in hospitals and through greater standardisation. 

“I look forward to seeing his [Lord Carter’s] forthcoming template for a model hospital and for the first time, a measure of efficiency in every hospital.” 

NHS Confederation chief executive Rob Webster said Lord Carter has been meticulous over the last year and worked closely with many Confed members to explore how goods and services are purchased in the health service. 

“Agency staff will continue helping the NHS provide quality care for the foreseeable future but we need to reduce their use and cost,” he said. “Improvements in flexible working, better technology and arrangements with local agencies can all help shrink their impact on NHS finances. 

“Lord Carter's interim findings are crucial to understanding how costs might be brought down and we expect that the implementation of his review will be developed further with the sector, in the spirit it has been up to now.”

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