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Hospitals face tough savings challenge

3rd May 2011

Foundation trusts regulator Monitor has warned that hospitals face bigger efficiency savings than first thought.

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While the Department of Health wants 4% savings over the next five years, Monitor says it expects those saving requirements to be in the region of 6-7% for hospitals in England.

Every hospital in England is expected to gain foundation status by 2014, but now the bar has been raised even higher for those 85 hospitals yet to achieve that.

In a letter to foundation trust applicants, Monitor warns that higher than expected inflation, plus tough financial penalties for things like emergency re-admissions after surgery, mean savings will need to be higher.

But it stresses that the need to make savings does not amount to a directive to make cuts.

It said: “Trusts will need to take account of the individual circumstances that exist within their local health economy, which could mean that they will need to take either a more optimistic or pessimistic approach than the one set out by Monitor.

“It is essential that the quality of patient services does not suffer as a result cost-cutting measures.”

The Department of Health said Monitor's assessment would be "challenging" for the NHS but suggested it was the more pessimistic scenario.

“Monitor's assessment of 6% to 7% is its 'downside case', meaning it is more pessimistic. But it is right that Monitor's assessments are challenging - we want all hospitals to be able to meet Monitor's standards and show that they can provide sustainable, high quality and efficient services for their patients.”

 

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