The Department of Health and National Health Service will be required to make savings of £4.35 billion under the government’s aim to save £11 billion a year by 2012 through streamlining its operations.

In the wake of yesterday’s Budget the DH confirmed that the largest chunk go the £4.35 billion target will be achieved by “driving down the costs of procurement through securing best prices for goods and services”, which it hopes will save around £1.5 billion.

Elsewhere: £555 million will be saved through slashing staff sickness in the NHS; £100 million will be saved by a new approach to the National Programme for IT, offering hospitals greater choice at the local level; and savings of £60 million being targeted from the more efficient use of NHS estates, the DH said.

According to Health Secretary Andy Burnham, the NHS budget is in “a strong position after a decade of record investment”, and 2010’s Budget “locks in that growth, guaranteeing that frontline NHS funding will rise with inflation in 2011-12 and 2012-13”.

But, in order to go from good to great, the NHS must become “more preventative, more people-centred and more productive”, he stressed, and added that by making tough efficiency savings “we can continue to increase real terms resources available for patient care year by year”.

However, it seems that productivity is proving to be a bit of a challenge for the NHS in recent years. Figures published yesterday by the Office for National Statistics show that health sector productivity dropped a substantial 3.3% between 1995 and 2008, and this decline will certainly need to be addressed to help the NHS better cope with tightening purse strings and burgeoning demand on resources.

Tough challenges ahead
“The task for the whole NHS is now to rise to the challenge presented by the financial squeeze that lies ahead – but it will require some tough decisions on the need to redesign, innovate and improve the service we provide to patients,” said Steve Barnett, chief executive of the NHS Confederation.

“These efficiency requirements, when considered alongside today’s announcement on current productivity levels in the NHS from the ONS, makes clear the challenges which face the health service in the next few years”, he added.