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Friday 25th May 2018

The NHS in a period of tight funding

7th January 2010

Think tank Policy Exchange’s latest report The NHS in a period of tight funding is released today and recommends that bold decisions should be made with regards to improving productivity and efficiency, and the cash savings that could be achieved by taking fixed costs out of the NHS.
The report’s recommendations include:

  • Performance related pay:  incremental pay increases which currently cost the NHS £420 million per year should be linked to wider organisational performance.  
  • Reducing variations in clinical practice: all NHS organisations performing as well as the top 25% could yield a productivity gain of approximately £7 billion per year.
  • Management capability: focussing attention on developing more doctors into managers would deliver disproportionate benefits in the short term. Top performing NHS managers should receive performance related bonuses of around £30,000.
  • Decommissioning services: National Institute for Health and Clinical Excellence (NICE) should evaluate existing NHS treatments and exclude those that no-longer represent value for money.
  • Transformational change projects: a full scale integrated care pilot should be set up covering any one of a number of financially challenged hospital trusts and their local health economies. 

Henry Featherstone, author of the report and Head of Policy Exchange’s Health and Social Care Unit, said:
“Like all public sector spending bodies, the NHS is going to face an increasingly challenging financial environment.  Beyond 2011, real term increases in funding are likely to be much smaller than the NHS has been used to.  In order to meet these challenges, it is going to be far more politically palatable to look at the options for reducing costs, rather than fundamentally altering the principles of the NHS and relying on top-ups or co-payments. 
“In the past pouring money into the NHS has not delivered value for money.  However, introducing pay for performance across all NHS staff - whereby increases in productivity and efficiency were linked to incremental increases in pay - has the potential to deliver half of the savings required.” 

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