Health Secretary Jeremy Hunt has laid out plans for NHS bosses to save up to £10 billion a year through a fundamental rethink of how the service spends its £110-billion budget.

Piggy-backing on the NHS’ Five Year Forward Review (5YFV), Hunt told a King’s Fund gathering that “true financial sustainability means rethinking how we spend money not just day-to-day but more fundamentally”, and outlined 10 ‘savings challenges’ to reign in between £7 billion and £10 billion by 2020. 

These include a saving of £466 million by addressing drug errors, around £150 million from reducing medicines waste, a further £300 million in admin costs, and at east £1.5 billion through a new Procurement Efficiency Programme. He also called for solutions to cut the cash to managements consultants, on which the NHS spends more than £500 million a year. 

The savings would be part of the £22 billion annual saving pledged by NHS England chief Simon Stevens as part of the 5YFV, which lays out a roadmap for the NHS to sustainability and attempts to address the £30 billion hole in its cash stream expected by 2020.

Lagging behind

Hunt also pointed to faster uptake of innovation as a means of saving money in the long run. “We have not built a system that is good at adopting and rapidly diffusing new ways of doing things. Given that much innovation saves money as well as lives, we need to change the NHS from a lumberingly slow adopter of new technology to a world class showcase of what innovation can achieve,” he said.

Too often the NHS lags behind other countries in offering access to new technologies that prevent illness because of short-term cost implications. “This will not change until healthcare is commissioned holistically, so that the budget holder who pays for innovative prevention sees the financial benefits that accrue as a result,” Hunt said, unveiling a new move that will see all clinical commissioning groups collect and analyse expenditure on a per-patient basis for NHS England.

“CCGs will then, as co-commissioners of primary and specialist care with NHS England, and co-commissioners of social care and potentially public health with local authorities, be able to pinpoint more clearly where there is the greatest potential to improve patient outcomes by reducing avoidable costs through more innovative use of preventative measures”, he said.

Hunt also announced that Dame Fiona Caldicott has become the first ever National Data Guardian “to be the patient’s champion when it comes to the security of personal medical information”.