The DH has reported that the NHS achieved £5.8 billion of savings in 2011-12, virtually all of the forecast total of £5.9 billion. But there is consensus that service transformation, such as expanding community-based care, is fundamental to making future savings and only limited action has been taken so far, according to a report from the National Audit Office.
Most of the savings so far, were generated through the pay freeze for public sector staff, and reductions in the prices primary care trusts pay for healthcare. NHS bodies also made savings by cutting back-office costs.
However, there is limited assurance that all the reported savings were achieved.
The chief executives of primary care trusts are required to confirm they are content with the accuracy of their savings data, but the Department does not validate or gain independent assurance about the data reported.
Although the savings made by NHS providers as a percentage of operating costs are increasing, it is not clear what level of savings is sustainable over time.
The NHS is seeking to maintain the quality of, and access to, healthcare at the same time as making efficiency savings. In 2011-12, the NHS performed well against headline indicators of quality, including waiting times and healthcare associated infection rates. The indicators focus mainly on hospital care and the Department faces a significant challenge in monitoring quality across the NHS as a whole.
Amyas Morse, head of the National Audit Office, said:
'The NHS has made a good start in making substantial efficiency savings in the first year of the four-year period when it needs to achieve savings of up to £20 billion. To build on these savings and keep pace with the growing demand for healthcare, it will need to change the way health services are provided and to do so more quickly.'
Margaret Hodge, chair of the Committee of Public Accounts, added: 'What emerges from this report is that the 'low hanging fruit' - the easiest savings - have already been harvested. The NHS will have to search deeper and wider for future efficiency savings. Fundamental service transformation is vital to unlocking savings, but progress to date is underwhelming.
'The Government must ensure that the drive to cut costs does not compromise patient safety or quality of care. While, according to this report, overall quality indicators held up in 2011-12, I am aware that the DH's own publicly available figures suggest that things have started to get worse.
'The Department is trying to reduce demand for acute services, but this must not lead to the NHS shutting the door to patients. Alternative provision must be in place to ensure that all patients wherever they live have access to appropriate care to meet their needs.
'The Department must collect robust information to support and incentivise service transformation. It also needs to sharpen up the quality and reliability of its reported savings to provide greater confidence.'