COMMONS

NHS facing tough decisions over spending on specialised services

15 July 2016

The Public Accounts Committee report warns that the disproportionate growth in spending on specialised services poses a risk to the financial sustainability of the wider NHS.

Report conclusions and recommendations

In a new report, the Committee concludes "NHS England will need to make tough decisions" to stay within its budget for specialised commissioning and sets out a number of urgent recommendations.

NHS England took on responsibility for commissioning specialised services—of which there are nearly 150, covering a diverse range of disparate and complex services—in April 2013.

Between 2013–14 and 2015–16, the budget for specialised services increased from £13 billion to £14.6 billion, an average yearly increase of 6.3%. Over this period the budget for the NHS as a whole increased by 3.5% a year on average.

Action must be taken to ensure services are affordable

The Committee is concerned that NHS England and the Department of Health "painted an unduly healthy picture of the state of commissioning specialised services in England", highlighting ongoing shortcomings in the collection of data and the potential impact this has on decision-making and efficiency.

It says NHS England must take action to ensure new drugs and medical equipment are affordable; that services are delivered cost-effectively, and demand for the specialised services it commissions is better managed.

Among its recommendations to Government, detailed below and in the attached Report, the Committee calls on NHS England to set out publicly by October how specialised services fit within the NHS Five Year Forward View as well as "the £22 billion efficiency challenge" facing the NHS.

"Decision-making must be consistent, transparent and equitable"

Decision-making must be consistent, transparent and equitable, says the Committee, urging NHS England to set out by September "the roles of its advisory committees and decision-making bodies, the decisions they make, how these decisions will be documented, and when and to whom they will be made available".

The Committee says that by April 2017 NHS England should be using improved data “to link spend, by service provided, to service quality, patient outcomes and patient experience” so that different providers can be compared and value for money improved.

Chair's comments

Meg Hillier MP, Chair of the PAC, said:

"Our Committee regularly scrutinises spending and performance within the NHS.

Our inquiries and reports over the past year have highlighted significant concerns over planning, weaknesses in data and the risks Government efficiency targets pose to desperately needed services.

As we have reported previously, there is not yet a convincing plan in place to close an efficiency gap running to billions and avoid a ‘black hole’ in NHS finances.

Alarm bells therefore ring when we examine an area of the health service that, while benefiting from above average budget increases, is nevertheless failing to keep within spending targets.

Specialised services provide vital care for many people and, to provide the best possible care to the largest possible number of people, the budget must be spent wisely.

Every pound counts and savings, where there is scope to make them, can be used to help more patients. NHS England can and should do more to get best value from spending on specialised services.

As a matter of urgency it must review the way it commissions these services and make better use of the data available to ensure public money is spent efficiently.

Rapid change is needed and we will expect to see work undertaken to address our recommendations over the summer."

Report summary

Over the last three years spending on specialised services has increased at a faster rate (6.3% a year) than the NHS as a whole (3.5% a year) and now accounts for about 14% of the total NHS budget.

We are concerned that, despite the large increase in the budget for specialised services, NHS England has not kept its spending within the budget it set itself.

The disproportionate growth in spending on specialised services poses a corresponding risk to financial sustainability of the wider NHS and, if NHS England is unable to keep its spending on these services in control, this will affect its ability to resource other health services and wider health transformation set out in its Five Year Forward View.

Action needed in three key areas

To remain within its budget for specialised commissioning, NHS England will need to make tough decisions. These include taking action in three areas:

  • ensuring new drugs and medical equipment are affordable;
  • ensuring services are delivered cost-effectively; and
  • better management of the level of demand for the specialised services it commissions.

When taking action to control its spending on specialised services, NHS England also needs to work closely with NHS acute providers to avoid adding undue pressures to their budgets.

"Unduly healthy picture of the state of commissioning" painted

We recognise that it is challenging to commission such a wide range of complex services while funding is becoming increasingly tight. However, we are concerned that NHS England and the Department of Health painted an unduly healthy picture of the state of commissioning specialised services in England.

It is disappointing that, after three years, NHS England still does not have consistent information from all providers on costs, access to services and outcomes, or how efficiently services are being delivered.

Without this information it cannot manage the ongoing pressure on its budget, make effective strategic decisions or gain assurance that its objectives for these services are being met.

Further information

Image: iStockphoto

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