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Government blueprint spells it out: consultants’ and nurses’ jobs will go

McKinsey report says NHS

Andrew Lansley's NHS reorganisation is unpopular both with the public and health service staff. Such a large scale reorganisation (likened to "throwing a grenade into the NHS", by Conservative MP Dr Sarah Wollaston) would be difficult even in the Blair years of increased funding. But we are not in such a situation; we are in an era of flat funding, when in real terms the NHS funding is the same each year. Flat funding is very difficult when there are rising demands on the service and there are two ways to approach this problem, either ration healthcare or use the funding more efficiently. Rationing NHS healthcare is electoral suicide, so it is understandable that the government insists that it is making the NHS more efficient.

In 2009 the Labour government commissioned management consultants McKinsey to provide advice on making the NHS more efficient. The result was a report which said that the NHS could save "between £13–20bn, over the next 3-5 years". When this appeared in the Operating Framework 2010/11 (the rule book for the NHS) it was phrased as "£15-20 billion of efficiency savings by the end of 2013/14". The current Coalition government have changed this to a demand for the NHS to make "£20 billion of annual efficiency savings by the end of the Spending Review period [2014/15]". None of these documents says how the NHS can make these "efficiency savings", so we must assume that if the current government accepts the figure of £20bn provided by McKinsey, they also accept the advice on how this will be achieved.

McKinsey says that about one third of the "savings" will come from rationing healthcare (their phrase is denying "low value added healthcare"), one sixth will come from shifting treatments out of hospitals to cheaper alternatives like GPs and community care, and the remaining half will come from cutting the costs of hospitals and GPs (mostly the former).

McKinsey report - breakdown of "savings"

McKinsey are somewhat inconsistent because they say that UK hospitals are relatively efficient, citing OECD data showing that per case, the cost of treatment in NHS hospitals is 80% of the OECD median. Even so McKinsey say that 15% of the savings have to come from increasing "hospital productivity", but it is clear from the report that the savings are expected to be made by reducing the number of treatments in hospitals (McKinsey say that in the UK 50% more cases are handled in hospitals than the OECD median). They also recommend that some £4bn could be saved by encouraging patients with chronic conditions to monitor and treat themselves, and for GPs and community services to perform more treatments.

These actions will reduce the number of treatments in hospital – and hospital income. This explains last Friday's announcement – obscured by the royal wedding – that Monitor (the Foundation Trust regulator) now demands that hospitals make savings between 6% and 7% every year for the next four years. The only way to achieve these savings is for hospitals to cut staff and treatments. McKinsey recognise this by saying that for every 300 staff there must be 35 redundancies including two consultants, one registrar, ten nurses and ten healthcare assistants. This is why we are seeing hospitals cutting frontline staff and, through Freedom of Information requests, False Economy has established that there will be 50,000 frontline job cuts.

The McKinsey report makes it clear that a sizeable amount of the NHS "efficiency savings" must come from job losses. Andrew Lansley agreed to implement the report in spite of the pledge from David Cameron before the election that if "any cabinet minister, comes to me and says: ‘Here are my plans’ and they involve frontline reductions, they’ll be sent straight back to their department to go away and think again". It is time Lansley binned the McKinsey report and was sent back to the Department of Health for a rethink.

Richard Blogger writes about the NHS and social policy at NHS Vault.

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