Page last updated at 18:11 GMT, Thursday, 25 March 2010

The uphill struggle facing the NHS

By Nick Triggle
Health reporter, BBC News

The NHS has been told to save more than £4bn within two years. But this is just the tip of the iceberg in what is promising to be one of the toughest decades the health service has ever had.

Hospital ward
The NHS is having to save between 15bn to 20bn in the coming years

The rise in NHS managers which has been reported on Thursday illustrates the problem the service is facing.

This is a part of the public sector that has had pots of money thrown at it over the last decade or so.

The budget in England has trebled to more than £100bn.

This has helped pay for the 80% rise in managers over the period along with the many thousands of extra nurses and doctors.

However, productivity has suffered. Over the period it fell by more than 3% a year on average.

But as Budget Day made clear that trend must now be not just improved, but completely reversed.

The Department of Health has said it will make savings of £4.35bn over two years.

But in truth this is just part of a wider efficiency drive. The NHS is aiming to make between £15bn to £20bn of savings by 2014.

That is about 5% more productivity a year.


Professor John Appleby, chief economist at the King's Fund think-tank, believes the £4.35bn is "perfectly achievable".

"It really should not be that difficult. Improving prescribing by reducing the use of branded drugs or getting hospitals to do some more operations could cover it."

But he said the 2014 target would be "much tougher". He believes this will require a radical redesign of services.

Over recent years, NHS managers have been talking about moving care out of hospitals and into the community.

The NHS budget in England will be £105bn for 2010-11
Future years' budgets have yet to be set, but at best the NHS can only hope for a very small rise
The head of the NHS has already told the health service to make up to £20bn of savings by 2011
The £4.35bn announced on Budget Day is just the first part of this efficiency drive

This means services such as diabetes clinics and minor surgery.

But for the push to make real savings requires hospitals - or at the very least wings of hospitals - to close.

This, of course, is extremely unpopular.

Another area which could be tackled is labour costs, which account for about half of the budget.

Reducing headcount significantly is not easy and so - after years of bumper pay rises for some - staff are now facing freezes in their salaries.

This will save about £3.5bn by 2014. But understandably the approach has proved unpopular with staff.

However, ministers are unlikely to stop there. As the Department of Health announced following the Budget, a saving of £555m is being aimed for by tackling staff sickness.


The average NHS employee is absent through illness for more than 10 days a year, which is slightly higher than the public sector average and much higher than the private sector figure of 6.4 days.

The government aims to do this by giving staff quick access to physio and counsellors to tackle back injuries and stress which are both common problems in the health service.

But staff believe it will also lead to more and more pressure being put on front-line workers not to take days off when they are sick.


Kim Sunley, the Royal College of Nursing's senior employment adviser, says: "We have anecdotal evidence that trusts are adopting more draconian measures in tackling sickness. If anything staff already feel they can't take days off. It is a real concern."

While morale in the health service will probably not be of a great concern in the rest of the economy when people are losing their jobs, it will impact on how successful the NHS efficiency drive will be.

The savings are not being handed back to the Treasury. Instead, they will be ploughed back into the health service to ensure it can keep up with demand.

The ageing population means the pressure on the health service is rising steadily each year.

So the challenge is clear. The NHS pound has to go further - and if this does not happen services for everyone will suffer.

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