Low productivity levels and increasing obesity rates risk threatening the very fabric of the NHS, a landmark report claims.
Sir Derek Wanless also warned that while cost-cutting through prescribing cheaper statins and reducing waiting times have boosted the service, there is "little robust evidence" the new pay deals are providing significant benefits.
The review for the King's Fund assesses how extra cash has been spent, and says the NHS is still falling behind in some areas.
Sir Derek acknowledged the government has made progress in increasing staff numbers, but said more doctors will be needed by next year.
His study also said the government is on track to build 100 new hospitals and modernise more than 3,000 GP premises, but maintenance backlogs increased by a fifth between 2000 and 2005.
And on the multibillion pound National Programme for IT (NPfIT), Sir Derek said problems and delays mean the service envisaged in his 2002 report may be "seriously" undermined.
He added the government's "restructuring" of the NHS has been costly, not just financially, but "in terms of disruption, loss of experienced staff and changes in working relationships both within the NHS and with external organisations".
The former NatWest chief executive also criticised the speed of some reforms, saying: "NHS Direct was implemented nationally before the results of pilot studies were available; and the early design of the Payment by Results system took too little account of international experience."
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