The National Health Service (NHS) in England has addressed many of the challenges it faced in 1997 but still needs to change rapidly if it is to meet the big challenges of the future, warns a new report.

Reviewing the NHS’ progress during 1997-2010, The King’s Fund health policy think tank says the Service's main successes have included: - significant reductions in waiting times and improved access to primary care; - less variation in access to drugs and treatment; - significant reductions in Methicillin-resistant Staphylococcus aureus (MRSA) and Clostridium difficile infection rates; sustained reductions in deaths due to cancer and cardiovascular disease; and - sustained reductions in rates of smoking.

Life expectancy has improved for everyone, says the Fund. However, the most significant failure has been that health inequalities have widened since 1997.

The creation of the National Institute for Health and Clinical Excellence (NICE) represented a big step forward in delivering evidence-based and consistent guidance to the NHS on what drugs and treatments are clinically and cost effective, and uptake of approved drugs has improved consistency of service across the NHS, but variations in access to drugs have not been eliminated, it says.

Other key areas where further progress is needed include: - improving productivity, which has declined since 1997; - embedding a stronger safety culture across the NHS; - improving cancer survival rates; - increasing access to out-of-hours general practice (GP) care; and - tackling obesity and alcohol-related illness, which have increased since 1997.

Waiting times for cancer diagnoses and treatment have improved greatly, and there has been progress in improving the quality of surgery and access to cost-effective drugs for patients with cancer, says the review. Adherence to guidelines is also improving rapidly but is still variable and, while mortality and survival rates for several cancers have been improving, they still lag behind those of other European Union (EU) countries, it notes.

Three key challenges now face the NHS, says the Fund. First is the financial challenge - with a potential £21 billion productivity gap facing the Service by 2013/14 and efficiency having declined since 1997, a relentless drive to improve productivity must be its top priority in the short term.

Second, the public health challenge - rising levels of obesity and alcohol-related illness will place NHS services under significant pressure in the decades ahead, unless the progress made in reducing smoking can be replicated, it warns.

And third is the demographic challenge - with the population ageing, the NHS has a long way to go to transform the delivery of care to support increasing numbers of people with chronic conditions such as diabetes, heart disease and dementia, it says.

Commenting on the review, Professor Chris Ham, the Fund’s new chief executive, noted that in 1997, the NHS had been “in intensive care” but, “as a result of investment and reform, it is now in active rehabilitation and is delivering more care to more people, more quickly.”

However, he added, the next government will face “a huge challenge in nursing the NHS to full health at a time when funding will grow very slowly, if at all. Doing more of the same is no longer an option. The NHS will have to do things differently by embracing innovation and becoming much more efficient in how it uses the £100 billion it spends each year.”

“The NHS must now transform itself from a service that not only diagnoses and treats sickness but also predicts and prevents it,” said Prof Ham, who added that if the same energy and innovation that went into reducing waiting times and hospital infections could be put into prevention and chronic care, “the NHS could become truly world class.”

However, this will not be easy and it is vital that politicians engage in an honest dialogue with the public about the changes needed, he stressed.

Commenting on the review, Health Secretary Andy Burnham said the challenge of the last decade “was one of expanding capacity so the NHS could finally remove the long waits and give people access, but we would accept that the big challenge going forward is to get more from this expanded, more resilient, NHS.”

The Conservatives’ health spokesman Andrew Lansley said the report “exposes Labour's failure to tackle our ballooning public health problems,” and that while resources have doubled, “the performance of the NHS has not improved as it should have done.”

For the Liberal Democrats, health spokesman Norman Lamb welcomed the report’s highlighting of “the massive challenges ahead in getting better value in the NHS.”

“If we don’t tackle the public health time bomb that faces us and take steps to invest in preventative ill health measures, we could bankrupt the NHS,” he said.