The NHS made a substantial amount of efficiency savings in 2011-12, although it has, “understandably," started by making the easiest savings first, according to the National Audit Office (NAO).

The Department of Health has reported that the NHS achieved £5.8 billion of savings in 2011-12 - virtually all of the forecast total of £5.9 billion. Most of the savings were generated through the pay freeze for public sector staff, and reductions in the prices which Primary Care Trusts (PCTs) pay for healthcare, says the NAO. NHS bodies also made savings by cutting back-office costs.

However, the NAO finds "limited assurance" that all the reported savings were achieved. The chief executives of PCTs are required to confirm they are content with the accuracy of their savings data, but the Department does not validate or gain independent assurance about the data reported, it notes.

A review by the NAO of the Department's analysis of national pay, activity and other data substantiated a total of £3.4 billion of NHS efficiency savings.

The savings made so far will need to be sustained and built on in future years if the NHS is to generate up to £20 billion of savings in the four years to 2014-15. However, the NAO says that, while the savings made by NHS providers as a percentage of operating costs are increasing, it is not clear what level of savings is sustainable over time.

'There is consensus that service transformation such as expanding community-based care is fundamental to making future savings, but only limited action has been taken so far," it says. "Changes to transform services take time to implement and the Department has always expected that these savings will predominantly come in the latter half of the four-year period."

The report also notes that the NHS is seeking to maintain the quality of, and access to, healthcare at the same time as making efficiency savings, and that in 2011-12, it performed well against headline indicators of quality, including waiting times and healthcare-associated infection rates.

However, the indicators focus mainly on hospital care, and the Department faces a significant challenge in monitoring quality across the NHS as a whole, the NAO cautions.

"The Department does not know whether the demand for healthcare is being managed in ways that inappropriately restrict patients' access to care," it says. "Reducing demand and redesigning care pathways to treat patients in the most appropriate setting are key ways of generating savings."

"The Department told the NAO that, where it has been made aware of specific concerns, the relevant Strategic Health Authority [SHA] has been asked to investigate. It has also made clear that blanket bans on particular procedures are not permitted," it adds.

Commenting on the NAO's findings, Margaret Hodge MP, chair of the Commons Committee of Public Accounts, said that the £5.8 billion-worth of efficiency savings which the Department reports the NHS made in 2011-12 may sound like welcome progress. However, over 30% of these savings "lack any kind of independent assurance to provide Parliament and the public with confidence that they present a true picture."

What also emerges from the NAO report is that the "low-hanging fruit" - the easiest savings - have already been harvested, said Lady Hodge. “The NHS will have to search deeper and wider for future efficiency savings. Fundamental service transformation is vital to unlocking savings, but progress to date is underwhelming," she said.

She also urged the government to ensure that the drive to cut costs does not compromise patient safety or quality of care. While the report states that overall quality indicators held up in 2011-12, "I am aware that the Department's own publicly-available figures suggest that things have started to get worse,” she said.

"For example, they show that since April this year the number of people waiting for more than four hours in A&E has risen to half a million, compared to 432,000 in the same eight-month period last year. Data from the Care Quality Commission [CQC] also shows that 16% of the hospitals inspected in 2011-12 were understaffed."

The Department is trying to reduce demand for acute services but this must not lead to the NHS shutting the door to patients; alternative provision must be in place to ensure that all patients, wherever they live, have access to appropriate care to meet their demands, Lady Hodge warns. 

She also calls on the Department to carefully monitor the impact of "demand management" to ensure that healthcare is not being rationed, and says she is "astonished" that it does not yet have a mechanism in place for doing so. The NAO's recommendation that the NHS Commissioning Board consider establishing national access policies should be taken seriously by the Department, she advises.

Finally, while the NHS has registered a surplus for 2011-12, this disguises the "financial woes of 31 Trusts and Foundation Trusts in deficit and on life support from the Department," she says. 

"The need to pump money into these failing Trusts is the mark of an unsustainable system that is struggling to square growing demand with the scale of efficiency savings required," says Lady Hodge.