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News story: Hospital productivity report shows how NHS can make large savings

Lord Carter says hospitals could save billions of pounds by better use of staff, medicines, supplies and more efficient processes.

Lord Carter has worked with 22 leading hospitals to see how the NHS could save money by doing things more efficiently and spreading best practice. His report finds that the NHS could save up to £5 billion every year by 2020 by making better use of staff, using medicines more effectively and getting better value from the huge number of products it buys.

See Review of operational productivity in NHS providers.

Health Secretary Jeremy Hunt is now calling on the NHS to ensure every penny is spent in the most effective way for patients to improve standards of care while reducing costs. The government particularly wants to see lessons learnt by hospitals who are not being as efficient as they could be across all areas of their work, and could therefore make bigger gains for patients.

The Prime Minister has set out that the NHS must modernise and move to a 7-day service. The size of the NHS means that by doing several small things better, huge savings are possible to help achieve that aim. These include:

  • better management of staff, rotas and shifts
  • improving the management of annual leave and sickness absence
  • optimising the medicines used in hospitals
  • cutting the number of product lines of every day consumables that the NHS uses from more than 500,000 to less than 10,000 and being better at procurement – this could save up to £1 billion by 2020.

The report also finds:

  • one hospital could save up to £750,000 a year by improving the way it dealt with staff rosters, annual leave, sickness and flexible working – this regained the £10,000 a month the hospital was losing due to people claiming too much annual leave
  • making sure every hospital pays the best price for medicines and supplies could save money that can be invested in frontline care. One hospital with 23 operating theatres improved the way it tracks the products used during surgery and saved £230,000 in the first year alone
  • a hospital using the soluble version of a steroid used for multiple illnesses was paying £1.50 per tablet, compared to just 2p for the solid version. By using the soluble version only for children and patients who have trouble swallowing, it is saving £40,000 every year
  • hip operations are costing some parts of the NHS more than double the amount they should. The hips used don’t last as long as less expensive versions, resulting in patients needing more replacements and follow-up care – that difference costs the NHS up to £17 million extra every year

Lord Carter said:

The NHS has some of the best hospitals in the world both in terms of quality, innovation and operational efficiency. The challenge is to lift hospital efficiency to a consistently high standard in every area of every NHS hospital and, where we already perform well, innovate to improve further. I do not think there is one single action we can take but I do believe there are significant benefits to be gained by helping hospitals, using comparative data, to become more productive.

Health Secretary Jeremy Hunt said:

I’m determined hospitals should focus their resources on patient care by helping them ensure they aren’t paying over the odds for basic items. The NHS has huge purchasing power as the world’s single biggest buyer of healthcare products, so we should be driving for the best-value deals every time.

Nothing better embodies our belief in ‘one nation’ than the NHS, so I want to see a 7-day health service that delivers for working people. That means cutting out the waste and making sure every penny counts so that the quality of care continues to improve.

Lord Carter will follow his report by identifying what an efficient ‘model hospital’ looks like and producing a measure of efficiency called the ‘adjusted treatment index’. This will be the first time such a measure has been published.

Later this year, Lord Carter and the Department of Health will then set out the amounts that each hospital is expected to save as a result of putting in place the report’s recommendations.


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