NHS ordered to halve management costs

Health secretary Andrew Lansley has scrapped some key NHS performance targets and told the health service it must save at least £222m in management costs this year.

Revisions to the 2010-11 Operating Framework say the NHS must also cut its management costs by 46% by 2013-14, as part of measures to go “further and faster” to achieve savings than had previously been envisaged.

Despite this, the revised guidance says PCTs must be held to account for the operational plans submitted in March 2010 and hit the milestones set out in Quality, Innovation, Productivity and Prevention plans. They must also relase more data to the public to drive choice and competition.

Lansley said: “NHS spending will increase, but so too will demand on NHS services. In order to meet this demand, the NHS needs to make substantial savings and that is why I want to see immediate action this year to reduce management costs so that the savings made can be reinvested in NHS care for patients.”

With immediate effect, the Department of Health has scrapped its performance management of the 18 week wait target for hospitals – although patients will still have a right to treatment within 18 weeks thanks to the NHS Constitution.

Also scrapped are the GP access targets that required practices to offer patients guaranteed access to a primary care professional within 24 hours and a doctor within 48 hours.

The government has further reduced the threshold for the four hour maximum waiting time in A&E from 98% to 95%, while promising to introduce ‘more clinically relevant’ indicators for emergency care.

Lansley said that although he wanted to free the NHS from bureaucracy and targets, providers would be expected to continue to make improvements on referral to treatment times and to provide information about their performance to patients.

He added: “Patients will still be entitled to rights under the NHS Constitution and the quality of their experiences and outcomes are what will drive improvements in the future.”

The revisions to the Operating Framework underline the government’s intention to make more data available to the public to drive choice and competition. As previously announced, hospital infection rates will be published weekly from 5 July.

The revised framework says PCTs must put a stronger emphasis on using the Secondary Uses Services as their data source and says providers need to improve the quality and completeness of their data.

No other changes have been made to IT targets included in the previous government’s 2010-11 Operating Framework and accompanying informatics guidance.

This covered the roll-out of the Summary Care Record, preparation for the Electronic Prescription Service and promotion of NHS Choices.

Although the government’s recently announced freeze on new consultancy and ICT spending do not formally apply to the NHS, the guidance says “organisations should ensure that they can demonstrate similar discipline across these areas and prepare for a period of capital constraint."

The DH said management costs now stood at £1.85 billion and must be reduced by £850m by 2013-14; a 46% reduction on 2009-10.

The revised Operating Framework says strategic health authorities will be responsible for managing the reductions and the DH expects most of the reductions to be realised in 2010-11 and 2011-12, with savings of at last £222m in this financial year and a further £350m in the next financial year.

Looking beyond this year, the guidance says the 2011-12 Operating Framework will include "substantive systemic changes" with the removal of all existing targets "of little or no clinical relevance."

The DH will change the tariff in 2011-12 to cover re-ablement and post discharge support. It says re-ablement services will create opportunities for acute providers to work with GPs and local authorities and make the use of services such as telecare.

Nigel Edwards, acting chief executive of the NHS Confederation, said: “Cutting management costs will provide some respite for the NHS in meeting increased demand for much of this year.

"However, the figure of £1.85 billion is relatively small compared with over £15 billion of savings that the service needs to make over the next four years.

"The removal of centrally driven targets should give NHS organisations the ability to be more responsive to local needs and more innovative, but we need to make sure we do not lose many of the gains they have made in reducing waiting lists and expanding access."

The BMA welcomed the scrapping of the GP access targets and the relaxation of the 18 week referral to treatment targets. It said this would give doctors greater flexibility to organise their appointment booking systems to suit patients and do which is clinically appropriate in emergency care.