Friday, February 03, 2006

Update On NHS Waste

Last week's blog on waste in the NHS used figures from the King's Fund to show that 80% of increased NHS spending had gone on cost increases rather than expanding the provision of healthcare. Quite correctly some commenters pointed out the KF figures only actually applied to the increases from 2004 to 2005.

Now the Fund has published updated figures for this year and next. They show that the proportion going on cost increases has gone up. This year it reached 87%. Next year is uncertain because the overall cash funding increase is not yet known, but KF estimate it could be between 72% and 81%.

So 2004-05 was not a freak one-off. Seeing the bulk of the extra funding gobbled up in cost increases is the normal pattern of events.

Of course, that isn't how CPO Commissar Hewitt sees things. She oils:

“Many of the so-called costs are actually going towards treating more people with drugs, paying for better drugs and modernising our hospitals. The extra money that we’ve put in to the NHS is delivering real improvements in services for patients.

The King’s Fund analysis also ignores efficiency savings. We’re delivering efficiency savings over and above our target, for instance by improving the way we procure supplies for the NHS."

Ah yes, those "efficiency savings". The KF says:

"Although the Department builds efficiency gains into their calculations of available resources, it is hard to ascertain evidence of previous efficiency targets being met. The target for next year of 2.5 per cent is high compared with previous years and there must be some uncertainty as to whether all hospitals will meet this, and whether attempts to cut costs also reduce quality and access."

As we've blogged before, all these government "efficiency savings" bear an uncanny resemblance to so much pie in the sky.

Chart: King's Fund analysis of the £3.6 billion cash increase in 2005/6 for the hospital and community health services in England, and how 87% was absorbed by higher pay and other cost pressures

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