Hospitals face greater than expected savings target
pharmafile | May 4, 2011 | News story | | Monitor, NHS reforms, foundation trusts
Hospitals are being asked to nearly double their savings target as a result of the increasingly tough economic environment they face.
Monitor has advised hospital trusts that they may now need to make over 7% in annual savings by 2015, nearly double the 4% set by the Department of Health last year.
The foundation trust regulator described this as a ‘downside case’, but it does reflect some of the more pessimistic views on how hard the recession will continue to hit the NHS.
In a letter to all foundation trusts Monitor said it had taken into account higher inflationary pressures, the impact of tariff issues and the demands of making £20 billion in savings by 2015.
The challenges posed by these issues have skewered the DH’s assessment of last year Monitor said, forcing the regulator to reassess the savings targets so they better reflect the economic environment.
A Monitor spokeswoman told The Guardian: “The changes to the economic environment mean all trusts will need to plan accordingly and some savings will be required.
“However, we should be clear that these assumptions are a reflection of the risks in the external environment; they are not a directive to make cuts.
“Trusts will need to take account of the individual circumstances that exist within their local health economy, which could mean that they will need to take either a more optimistic or pessimistic approach than the one set out by Monitor.”
The new downside savings targets are as follows:
- 2011/12: 6.5%
- 2012/13: 6.0%
- 2013/14: 6.4%
- 2014/15: 6.7%
- 2015/16: 7.1%
Around 15% of all NHS prescriptions – including nearly all those in oncology – come from hospitals, meaning trusts may look to squeeze their drugs bill to help make the extra savings.
This is already happening with GPs who have been asked not to prescribe certain drugs and instead look for a cheaper alternative.
Labour swiftly came out against plans, with shadow health secretary John Healey saying: “This confirms that the combination of broken promises on NHS funding and reorganisation is putting a huge strain on hospitals.”
He added that Prime Minister David Cameron is now obligated to halt his ‘high-risk, high-cost overhaul of the NHS’.
Ben Adams
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