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Background
The financial settlement for the NHS from 2011 onwards will be lean. How lean will not be clear until the intended comprehensive spending review in the autumn of 2010. The NHS Operating Framework 2010/11 advised that primary care trusts (PCTs) should plan for 'real flat' growth in revenue allocations in 2011/12 and 2012/13 and reduced capital allocations. 1 Official NHS sources suggest the gap between supply and demand will reach £15-20bn by the end of 2013/14. Achieving cash releasing efficiency savings on this scale will be a severe challenge.
Considerable central efforts have been made to support providers to make efficiencies. For example, through the Quality Improvement and Innovation Programme (QIPP) initiative at the Department of Health (DH), and through the work of the NHS Institute for Innovation and Improvement, for example in the 'productive ward' series. Locally, better information systems in particular on costs, for example through service line reporting and patient-level costing in foundation trusts, are allowing much better scrutiny of the costs of care delivered by managers and, crucially, clinicians.2 There has also been improvement in financial management locally by PCTs and trusts as reported by the Audit Commission.3 The NHS is in a better state than ever to identify where efficiencies can be made and to identify large variations in practice.
Yet there is evidence to suggest that there is significant room for progress. Productivity, for example, has declined over the last decade in part due to large increases in the numbers of staff without concomitant rises in outputs; there continue to be large and unaccountable variations in clinical practice; there have been significant rises in emergency admissions to hospital for patients with conditions amenable to primary care and for admissions with zero length of stay4; there has been no real shift in care from hospital to community settings whether because of more effective prevention of ill health or substitution of care; and suboptimal care across provider and budgetary boundaries continues to cause avoidable cost through duplication and preventable ill health. Measures to assess the quality of care are still underdeveloped and for most managers and boards of NHS institutions, quality comes second to balancing budgets. This means that the NHS now enters an era of significant budgetary challenge...