Lord Carter report on NHS efficiency reveals “inexplicable variation” in costs

NHS England cost efficiency

A Department of Health commissioned report tasked with identifying areas for cost efficiency has revealed “inexplicable variation” in spending as NHS England works towards its overall target savings of up to £22 billion annually by 2021.

The inquiry, led by Lord Patrick Carter, a Labour peer, has examined the potential for up to £5 billion in savings, achieved in part via maximising the collective buying power of the NHS for the procurement of hospital supplies, the management of staff rostering and a possible cap on management and administrative spending.

The report suggests that a ‘best practice’ approach to treatments and surgical procedures, rolled out across the NHS, could result in improved outcomes for patients and financial savings. It suggests that, just as variations in care standards have been identified, variations in financial management also mean that some hospitals are delivering good value for money while some are not. Corporate and administrative costs were found to fluctuate between acute trusts, from 6% to 11% of total income. The report describes this variation as “inexplicable”.


‘Bed blocking’

The issue of delayed discharge, or ‘bed blocking’ was also looked at, where patients who are otherwise fit to be discharged from hospital are left waiting unnecessarily in hospital beds due to a lack of available social care resources to be transferred to. With up to 8,500 patients said to be affected daily, ‘bed blocking’ has also been found to be a contributory factor in growing A&E waiting times, with fewer beds available for patients who need to be admitted, leading to prolonged patient waits in emergency departments.

Lord Carter’s proposed solution to the problem, said to cost NHS England £900 million annually, has in the past been, somewhat controversially, for hospitals to build their own social care facilities or alternatively to transfer patients to private care homes while they recuperate.

The report also found that overall costs for procedures – for example, knee and hip replacement surgery – can vary markedly. Additionally, post-operative infection leading to readmission was found to vary at different hospitals, with rates between 0.5% and 5% and prices paid by different hospitals for hip prostheses ranging from £788 to £1590.

In order to rectify this, Professor Tim Briggs, a leading orthopaedic surgeon whose research into quality standards was examined during the inquiry, recommends a standard set of techniques and products and improvements to infection control. But critics of this approach have said that differences exist from surgeon to surgeon, since many have perfected their own preferred technique over many years. Professor Briggs, who was appointed National Director for Clinical Quality and Efficiency last autumn, says this approach, if adopted by all hospitals, could save a possible £200 million a year just in orthopaedics.

Hospital Bed

Wary of ‘one size fits all approach’

Responding to the report, Shirley Cramer CBE, Chief Executive of the Institute of Healthcare Management (IHM), warns: “We must be wary of applying a ‘one size fits all’ approach or setting arbitrary targets for trusts that may be operating in markedly different circumstances. We must be doubly wary of creating a ‘race to the bottom’ on management costs, and of casting management spending as waste that is necessarily to be minimised. Recent research has suggested the NHS is in fact under-, not over-managed. We should avoid creating a situation where trusts are prevented from investing in and developing the management talent that is crucial to their future success and sustainability. Management spending should only be capped if and when there is a demonstrable link with underperformance.

“However, the need to make further efficiency savings in the acute sector is clear for all to see, and Lord Carter makes a number of broad-ranging and helpful recommendations to this effect. Rectifying the ‘systematic failure’ of the NHS to utilise its collective buying power in procurement provides a particularly glaring opportunity.”

Nigel Edwards, chief executive of the Nuffield Trust, says: “The fundamental concern about the headline figures is not that there is £5bn of ‘waste’ by NHS hospitals but that we need to find so much more… We need a credible picture of where the rest of this is supposed to come from.”

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