The Department of Health has revealed its revenue budget for 2010-11 is to be adjusted down from £104.6bn to £102.3bn. But it said despite that cut, spending will rise by 18% over the current three-year review period ending March 2011.
Money allocated to PCTs in December to commission local health services in 2009-10 and 2010-11 will not be affected.
An NHS efficiency drive to make £2.3bn in savings by 2010-11 will see moves to cut the average time patients stay in hospital after an operation, it has been announced.
Reducing the costs of keeping patients in hospital longer than necessary while at the same time "improving patient experience and clinical outcomes" would save an estimated £500m, according to the Treasury.
Cuts in the money a hospital receives or each clinical procedure – known as the NHS tariff – are expected to offer up another £500m in savings. The Department of Health is expected to make a 0.5% cut in 2010-11 after already reducing the average price by 3% in the financial year that started in March.
And around £550m will be saved by paying less for branded prescription medicines, while purchasing in bulk and encouraging NHS organisations to share back office activities such as finance and human resources should save a further £100m.
"Nothing new here. Reduced post-op stays generally mean more cost to primary care/community nursing and higher readmission rates. Prescribing is a constant target, as are shared services. It will be interesting to see what services survive reductions in the national tarriff and the brave new world of competition and foundation trusts. I think we could all identify better areas for cuts in expenditure such as quarterly national patients' surveys, huge sums spent on monitoring and target setting and ever-increasing nonproductive administrative jobs" – Name and address withheld