By March 31 this year, the NHS reform programme had cost £1.1 billion, or 15% more than expected by that point, says the National Audit Office.
However, the Department of Health is confident that total costs will not exceed £1.7 million, and these are outweighed by the £2 billion-plus estimated savings in administration costs arising from the reforms by March 31, the NAO reports.
The reform programme has closed more than 170 NHS organisations and created over 240 new bodies. The NAO finds the transition to the reformed health system was implemented successfully - in that the new organisations were ready to start functioning on April 1, 2013 - but not all were operating as intended at that date, and that much remains to be done to complete the transition.
Also, NAO finds only limited assurance that care quality was maintained during this period because little data is available to track the quality of primary care.
Getting staff in place was the biggest challenge for the new organisations, and all of them had enough staff to start operating on April 1. They now need to assess if the staff they have inherited are affordable and if they have the right skills, says NAO, adding: "further changes are expected to be needed."
All 211 clinical commissioning groups (CCGs) have been authorised as statutory bodies, although some cannot yet operate independently, and the number of CCGs that initially lacked credible financial plans raises concerns that they will be unable to make savings and remain financially viable in the coming years, the report warns. Many CCGs also began operations in an atmosphere of financial uncertainty - NHS England was still adjusting budgets after April 1, causing delays in the groups agreeing contracts with healthcare providers.
By end-March 2013, around 10,000 staff had been made redundant, at an average cost of £43,095 per person, and redundancy payments accounted for 40% of the reforms’ total costs at that date. 2,200 staff made redundant during May 2010-September 23012 have been subsequently re-employed; redundancy payments can be reclaimed only if the individual rejoins the NHS within four weeks of leaving.
Commenting on these findings, NAO head Amyas Morse said each organisation now needs to reach a stable footing, and this will be "particularly challenging" at a time when the NHS is having to make significant efficiency savings.