Progress in Making NHS Efficiency Savings

Audited Entities

• National Health Services (NHS)

Audit Scope and Objectives

The audit reviewed whether:

• The NHS delivered the forecast efficiency savings for 2011-12, while maintaining the quality of, and access to, healthcare;
• The programme to deliver efficiency savings is being implemented effectively; and
• The NHS is well placed to make the required efficiency savings over the three years, 2012-13 to 2014-15.

Audit Criteria

• The NHS delivered the forecast efficiency savings for 2011-12, while maintaining the quality of, and access to, healthcare;
• The programme to deliver efficiency savings is being implemented effectively; and
• The NHS is well placed to make the required efficiency savings over the three years, 2012-13 to 2014-15.

Main Audit Findings

• The NHS has made a good start and clearly delivered substantial efficiency savings in 2011-12. These savings will need to be maintained and built on if up to £20 billion is to be generated by 2014-15. For the NHS to be financially sustainable and achieve value for money in the future, it will need to quicken the pace of service transformation and make significant changes to the way health services are provided.
• The Department reported that the NHS made efficiency savings of £5.8 billion in 2011-12, virtually all of that year’s forecast total of £5.9 billion. However, there is limited assurance that all the reported savings were achieved. The Department does not validate or gain independent assurance about the data provided.
• Primary care trusts do not measure or report NHS efficiency savings in a consistent way, undermining the quality of the data.
• Up to £520 million of the reported savings for 2011-12 were non-recurrent, meaning the NHS will have to find replacement savings in future years.
• The NHS is making increased use of demand management measures to reduce the growth in hospital activity, but it is not clear whether the slowdown in growth is sustainable. The aim is to control demand without inappropriately restricting patients’ access to care, but the Department has no way of routinely gaining assurance that this is being achieved.
• The savings made by NHS providers as a percentage of operating costs are increasing, but it is not clear what level of savings is sustainable over time.
• There is broad consensus that changing how health services are provided is key to a financially sustainable NHS. Evidence indicates that the NHS has taken limited action to date to transform services. There is a variety of support available to help the NHS generate efficiency savings, but there is a lack of evidence on the benefits of service transformation.

Audit Recommendations

• The Department should provide better guidance to the NHS on how to measure and report efficiency savings, so that the total savings reported are more strongly supported by robust data.
• The Department should improve transparency by making clear any caveats to data quality when it reports efficiency savings.
• The Department should take a more active interest in demand management and develop ways of gaining routine assurance that patients’ access to healthcare is not being inappropriately restricted.
• The Department and the NHS Commissioning Board should work with the NHS to reduce barriers to transforming services, and evaluate the impact of transformation initiatives, as they are implemented, to generate evidence about what works locally and on a larger scale.
• In developing future mechanisms for paying for healthcare, the Department, Monitor and the NHS Commissioning Board should consider how these mechanisms can be used to drive service transformation and care that is integrated around the patient.
• The Department should develop better ways of monitoring progress on service transformation.

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