Will the NHS fall short on its savings target?

An independent hospital productivity report written by Lord Carter of Coles in June suggested that hospitals could save up to £5 billion a year through increasing efficiency and making better use of staff, medicines and supplies.
Lord Carter’s report was the consequence of spending a year working with 22 hospitals examining the possible ways to improve efficiency and spread best practise. The report outlined that in order to meet plans for a 7-day NHS service, hospitals must optimise the use of medicines, better manage staff, rotas and shifts, improve the organisation of annual leave and sickness absence, and become better at procurement.
The report also found that one hospital could save up to £750,000 a year through improvements to staff rosters and flexible working, while saving money being lost through staff claiming too much annual leave. Additionally, Lord Carter found that another (unnamed) hospital saved £230,000 by improving the way it tracks products and making sure it gets the best price for medicines.
One of the most significant savings highlighted in the report was hip operations, which are currently costing some parts of the NHS double what they should. The hips being used don’t last as long as others available, which leads patients to require more follow up care and replacements. The report suggested that changes to hip operations could save the NHS up to £17 million a year.

Can efficiency targets be met?
Simon Stevens, the chief executive of NHS England, stated in his Five Year Forward View that the NHS would face a £30bn funding gap by the end of the next Parliament. Of this £30bn, he claimed that £8bn is to be accounted for by an increase in funding, while the remaining £22bn is to come from efficiencies. Stevens has continued his insistence that the NHS should pursue its £22n target, and it was reported that he was disappointed by Carter’s report which only identified £5bn of potential savings.
Lord Carter said: “I believe up to £2bn could be delivered by improving workflow and containing workforce costs. amongst other things, this includes increased productivity through having a stronger management grip on non-productive time (for example annual leave, sickness and training), better management of rosters and improved guidance on appropriate staffing levels and skill range for certain types of wards.
“I think a further £3bn could be delivered from improved hospital pharmacy and medicines optimisation, estates and procurement management (£1bn from each) by adopting best practices and modern systems for example, creating a tightly controlled single NHS electronic catalogue for products purchased by hospitals.”

Marginal efficiencies
Currently, the NHS employs approximately 1.3 million staff with a total pay bill of £45.3bn. Lord Carter has suggested that small changes and marginal efficiencies, even just a one per cent improvement in workforce efficiency, will be able to save £400 million. Elsewhere, NHS expenditure on hospital medicines was reported at £6.5 billion in 2012/13.
Bolton NHS Trust saved as much as £40,000 by only prescribing soluble Prednisolone (£1.50 per dose) to patients that absolutely needed that variety, prescribing the insoluble version (£0.02 per dose) to others. This is a small sum in terms of NHS budgets, but this is just one drug amongst thousands that are regularly prescribed – and can be seen as a savings possibility.
It is argued that savings can also be found in the way that the NHS manages its estates. In the TaxPayers’ Alliance spending plan, it was argued that if all trusts managed their estates as efficiently as the top 25 per cent, £3.6 billion could be saved by 2019-20.
Across the 22 trusts that Lord Carter studied, it was estimated that savings in estates could be made through: Cleaning (£10 million); Energy (£12 million); Building & Engineering (£12 million); Laundry (£4 million); Waste (£3 million), and; Water & Sewage (£1.7 million). Lord Carter estimates that hospitals could save an average of £3 million every year if they brought their systems up to the standards set out in the NHS eProcurement strategy. Savings add up and across large hospital budgets they amount to substantial sums.

Controversial contracts
Elsewhere, the NHS Supply Chain has had its controversial contract to provide procurement and logistics services to the health service extended until 2018. The NHS Business Services Authority (NHSBSA), which oversees the deal, said the extension included a savings target of £150 million by October 2018, on top of an existing savings target of £150 million by March 2016.
The contract with DHL was originally signed in 2006 with the prospect of £1 billion savings over 10 years. It involved combining the NHS Logistics Authority and parts of the NHS Purchasing and Supply Agency to form NHS Supply Chain.
Steven Pink, NHSBSA’s director of change and commercial delivery, said: “This agreement provides a step change in savings delivery for the NHS. We’re really looking forward to working closely with NHS customers, suppliers and DHL to secure the £300 million savings target.”
Nick Gerrard, chief executive at NHS Supply Chain, said: “We have worked hard to ensure that the extension agreement contains what our customers have asked for: more cash releasing savings to be delivered through NHS Supply Chain and greater transparency of our contract which will be achieved through an open book arrangement.”
However, Jackie Pomroy, head of supply chain at Portsmouth Hospitals NHS Trust, said there was ‘cynicism’ around the benefits offered by NHS Supply Chain. She said: “We know when we go and talk to other suppliers directly, we can achieve much better savings. Their [NHS Supply Chain’s] pricing is not transparent.”

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