News / ‘Unprecedented’ 5% savings challenge for NHS Wales

Finance directors have predicted that Welsh health bodies will have to make efficiency savings of 5% in 2009/10 following the publication of allocations for local health boards and Health Commission Wales.

The allocations will be the last made to local health boards in their current form before the structure of the NHS in Wales is reorganised. This will see an end to the internal market and seven new integrated planning and provider organisations set up in shadow form on 1 June and operational from 1 October. Officials at the Welsh Assembly government are currently mapping the allocations to the new bodies and formal allocations for the new LHBs are expected in the summer.

The total uplift for 2009/10 is to be 3.3%, but this includes the full-year effect of additional funding allocated during 2008/09, such as extra funds to cover salary rises, as well as funding growth. When this additional funding is taken out, the real level of growth will be 2.5%.

Hospital and community health services core funding will rise by 2% but the Welsh Assembly government has assessed overall cost pressures as totalling 5%, giving a net savings requirement of 3%.

However, finance managers said NHS organisations would have to find further savings if they were to cope with other operational pressures. Health and social services minister Edwina Hart said NHS organisations should plan to achieve targets set out in the Annual operating framework for 2009/10. This includes reducing referral to treatment times to a maximum of 26 weeks by the end of 2009, within the funding allocated. She expected no organisation to plan for a deficit in order to meet her priorities.

To achieve these access targets and meet other cost pressures – such as the European Working Time Directive and continuing healthcare – savings of around 5% would be needed, finance managers calculated. One said: ‘This is going to be a huge financial challenge for the service. On the back of an average 4% savings requirement in 2008/09 the scale of savings required is unprecedented.’

But managers conceded the new structural reorganisation would offer opportunities to make patient flow more efficient by managing the whole system better.