Hospital inefficiency risks financial collapse, economists warn

Dozens more NHS hospitals could run into financial trouble because they are 'inexplicably' wasting millions of pounds a year in inefficient practice, health economists have warned.

A University of York report found huge differences in treatment costs and length of stays between hospital trusts even when differences in the local population’s health were accounted for.

The economists warned that trusts could struggle financially unless they improve their use of limited resources.

It comes after health secretary Andrew Lansley placed NHS South London Healthcare hospital trust into administration last week after it developed what it described as ‘long-standing financial issues’.

Earlier this month the National Audit Office warned GP commissioners risk inheriting 'unsustainable' deficits in NHS finances. A report by the watchdog found the DH was forced to spend £253m bailing out struggling hospitals last year.

Researchers from the Centre of Health Economics at York University looked at ten treatments provided by 151 hospitals. As many as 549,036 patients were included in the analysis. Conditions included acute MI, childbirth, stroke, and hip and knee replacements.

Even after hospital characteristics such as teaching status and specialities were taken into account, some still had significantly longer length of stays or higher costs than others. The variations could not be explained by factors such as patients’ age and disease severity.

The cost of care for acute MI varied from around £1,583 to £2,186, a difference of 26% either side of the national average cost. Knee replacements cost over £1,000 more in some trusts than others.

Women giving birth in some hospitals were admitted for 1.6 days on average, while hospitals in other parts of the country admitted women for 3.9 days.

Researchers concluded that hospital managers can solve the problems by visiting the department in question to find out why there are such high costs.

Co-author Professor Andrew Street from York University said: ‘Our findings demonstrate that most hospitals have scope to make efficiency savings in at least one of the clinical areas considered by this study.’

He added: ‘Inexplicable higher costs or lengths of stay suggest room for improvement. Unless hospitals improve their use of resources, they could struggle financially.’

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