Rising NHS management costs to be reviewed

A REVIEW of management costs in the National Health Service following the introduction of the internal market has been ordered by Sir Duncan Nichol, chief executive of the NHS, after a study showing huge variations in how much health authorities spend on buying care.

The review - put in hand ahead of this week's attack by John Redwood, the Secretary of State for Wales, on the 'grey suits' of the NHS bureaucracy - was disclosed yesterday. That came as figures from NHS finance officers showed that one health authority employs as few as 5 people to buy pounds 50m of health care, while another employs 65. In bigger health authorities, the range for buying pounds 175m of care was between 15 and 80 employees.

Sir Duncan made his review known as Virginia Bottomley, the Secretary of State for Health, warned NHS finance staff that the health service will face a tough financial year from next April.

This year's requirement to make 2 per cent efficiency savings had been 'challenging', she told their annual conference in London. But she warned that next year's target would be 'equally challenging'.

Earlier, Sir Duncan told the conference that he has asked regional general managers to review health authorities' purchaser management costs 'to satisfy themselves that they are appropriate to the task'.

'Substantial finance and contracting departments have emerged over the last few years - and that has been right to meet the demands of the market,' Sir Duncan said. But it was time to review such departments 'so that prices for health care delivery do not contain unnecessarily high overheads'.

The review comes as latest Department of Health figures show the number of managers in England has risen by 12,000 in the past three years, while administrative and clerical staff are up 18,000.

Sir Duncan said some of the increase in managers was because senior nursing staff had been reclassified, but he was not apologising for strengthening NHS management. He was 'proud of the way we have reinforced the finance and personnel functions in the NHS'.