News / Pathways and staff hold the key to delivering CSR efficiencies

English NHS spending is set to rise by 4% per year in real terms over the three years from 2008/09. The settlement assumes the service will make at least £8.2bn in cash-releasing efficiency savings by 2010/11, equivalent to about 3% savings a year based on the 2007/08 £90bn budget.

Finance directors at the HFMA’s Policy Forum, held in Cardiff this month to discuss the CSR and capital financing, stressed that the usual efficiency measures, such as cutting back office costs and overheads, would not be enough to meet these targets. Instead, they said, the NHS needed to think ‘radically’ about how staff could work more effectively and efficiently.

Finance directors pointed out that the efficiency requirement would be higher than 3% for many NHS organisations, with trusts required to make surpluses and primary care trusts struggling to cut primary care budgets.

Foundation trusts, believed to be among the more efficient providers, have only been averaging 3% efficiency savings over the past two years, and Monitor is understood to use 3.5% cost improvement programmes as an informal trigger for closer scrutiny of foundation plans.

The Policy Forum said there was still room in some organisations to reduce length of stay to average levels, enabling beds to be removed and costs cut. But all agreed that efficiency targets could only be achieved by realising the benefits from pay modernisation and redesigning clinical pathways.

One finance director said that benchmarking staffing levels could help but that the local deanery would not even provide information about the number of junior doctors per hospital. ‘We need routine benchmarking information,’ she said. Another director agreed, adding that the NHS needed more comparative information about clinical productivity.

Traditional savings still needed to be pursued. There is evidence in some areas of procurement hubs realising savings, although not all trusts are taking advantage.

HFMA chairman-elect Chris Calkin, who led the Cardiff Forum, said the NHS faced a difficult three years. ‘Talk of a projected £1bn surplus creates an impression that the service has cash to spare. But the reality is that we are facing huge efficiency challenges that will not be found from marginal savings here and there. Instead, we need to look at making efficiencies from the health service’s core business . We need to improve care pathways and find more appropriate and efficient ways of working.’