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Scale of NHS efficiency savings is ‘undoable’

King’s Fund economist warns of unrealistic goal

Jo Carlowe

Wednesday, 20 June 2012

Asking the NHS to find nearly £50 billion in efficiency savings is ‘undoable’ – according to the King’s Fund’s chief economist.

In an article published on bmj.com economist John Appleby, warns that the NHS could be setting itself up for failure by stretching for another four years of what he describes as an already ‘barely achievable productivity challenge’.

The article comes because Richard Douglas, Department of Health director general of policy, strategy, and finance, has reportedly said that the drive to find further efficiency savings in the NHS will continue after 2015, with the total savings rising from £20bn to a possible £50bn by 2019-20.

“If we assume no real funding growth (inputs) and the need to improve outputs (the activity of the NHS adjusted for the quality of those outputs) by around 5% a year ....by 2018 this is equivalent to an improvement in productivity of around £49bn at 2010 prices,” explains Mr Appleby.

But he shows that, while the NHS has produced more with more inputs, it has rarely made a positive productivity increase in a year in excess of 1% - let alone 5% each year for eight years.

There is something to be said for having a stretching target, but giving the NHS a challenge on this scale would risk setting it up to fail he says.

And while Mr Appleby acknowledges that there should be no let up in finding new and better ways of using finite budgets he says it is time for ‘some realism’.

“Even if the NHS achieves half the challenge over the next eight years it will have produced something quite unprecedented. Perhaps that’s the best that can be hoped for,” he concludes.

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