Health trust managers will find it extremely difficult to make £20bn of efficiency savings unless they are free to make hard decisions about which procedures to offer, the chief NHS employers' representative has warned.
Mike Farrar, head of the NHS Confederation, said Andrew Lansley's ban on rationing treatments would make it problematic for Primary Care Trust to balance their books – another key requirement of the Government.
"If you were asked to cut costs in industry you'd look at three areas," he said. "You'd look to consolidate services – but politically it is very hard to shut hospital services. You would also look to reduce your labour costs – but in the NHS most of these are centrally agreed and cannot be altered.
"Finally you would look to grow the income that you get from carrying out procedures. But again under Payment by Results these are also controlled through a central tariff.
He added: "If you don't have the leverage to do the job properly – it is harder to live within your budget."
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