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NHS reform could cost £3bn, says health economist

By Gareth Iacobucci

A row has developed over the potential cost of the Government's sweeping NHS reforms, with a leading health economist arguing that the wholesale reorganisation required could cost almost double the £1.7bn set aside by the Government.

NHS chief executive Sir David Nicholson revealed that the NHS in England has set aside nearly £1.7bn this year to carry out the Government's ambitious plans for reorganisation, which include abolishing two tiers of NHS management structures and shifting the majority of commissioning budgets to GP consortiums.

The Government claims the plans will cut management costs by 45%, but a health economist writing in the British Medical Journal estimated that the total cost of the reorganisation, laid out in last week's White Paper, could be between £2bn and £3bn, with no guarantee of better care for patients.

Professor Kieran Walshe, professor of health policy and management at Manchester Business School, said Mr Lansley appeared to ‘have learnt little from the history of NHS reorganisation' despite spending six years as shadow health secretary.

He wrote: ‘It remains to be seen whether these changes, which involve abolishing 162 organisations and creating 500-600 new ones, will produce higher or lower management costs, but throughout the past two decades the numbers of NHS managers and the management costs of the NHS have grown steadily, regardless of reorganisation.

‘The government needs to produce empirical evidence—not ideological platitudes—to support the case for change. This would mean making the intended costs and benefits of NHS reorganisations explicit and measurable in a statement to parliament.'

The Government's reforms could cost £3bn, according to a health economist