NHS efficiency review identifies £5bn in savings

11 Jun 15

A NHS productivity review has found that as much as £5bn could be saved annually across the health service through procurement improvements and changes to rotas to minimise the use of agency staff.

The examination by Labour peer Lord Carter for the Department of Health found that spreading of best management practice across the NHS would lead to significant productivity improvements in many hospitals.

Among Carter’s recommendations was a call to cut the number of product lines of consumables that the NHS uses from more than 500,000 to less than 10,000, which could save up to £1bn by 2020.

Staffing improvements were also highlighted, with better management of staff and shifts, including improved planning of annual leave and sickness absence, were also areas where savings could be made.

The report, which looked at the management of 22 hospitals, found one was using the soluble version of a steroid, costing £1.50 per tablet, compared to just 2p for the solid version. Using the soluble version only for people who needed it would save £40,000 every year.

In addition, hip operations are costing some parts of the NHS more than double what they should. If costs were be standardised across the NHS, up to £17m could be cut from costs.

The report also found that one hospital could save up to £750,000 a year by improving the way it dealt with staff rosters, annual leave, sickness and flexible working. 

Carter said that the NHS has some of the best hospitals in the world both in terms of quality, innovation and operational efficiency, but the challenge was to lift hospital efficiency to a consistently high standard in every area.

“I do not think there is one single action we can take but I do believe there are significant benefits to be gained by helping hospitals, using comparative data, to become more productive,” he added.

He will now follow-up on his report by identifying what an efficient ‘model hospital’ looks like, which will lead to the creation of a new efficiency measure called the ‘adjusted treatment index’. This will then be used to set a saving target for every hospital in England later this year, based on the report’s recommendations.

Publishing the report, health secretary Jeremy Hunt said he was determined hospitals should focus their resources on patient care by helping them ensure they aren’t paying over the odds for basic items.

“The NHS has huge purchasing power as the world’s single biggest buyer of healthcare products, so we should be driving for the best-value deals every time.”

Responding to the findings, the NHS Confederation said that the health service would need to make £22bn worth of efficiency savings as part of the Five Year Forward View plans.

Making savings from the way NHS supplies are purchased and from temporary staffing will make a contribution to filling this gap, chief executive Rob Webster stated.

“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. The potential savings need to be tested and developed with the wider NHS, so that final savings targets due to be handed to the NHS from September, are owned by the whole service.”

Paul Briddock, director of policy at the Healthcare Financial Management Association, said he eagerly awaited publication of the metrics that are being developed by Lord Carter's team.

“However, he added that the proposed savings represented “a very small part of the solution to the massive NHS £30bn challenge”.

“Even if we can save the potential £5bn identified by Carter, that is a drop in the ocean compared to the overall savings which organisations will be required to make. Today’s report mustn’t mask the fact that transforming service provision, taking a targeted look at what the NHS can and can't afford to provide and employing radically different service models must remain the key focus for the NHS.”

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