Now the dust has settled, and the gleeful shock-horror media lens has moved on to some other undeserving victim, we can begin to understand what Lord Carter of Coles’ interim report on operational productivity in NHS providers is telling us. Reading the full report is a revelation in several ways: first, the potential level of cost-saving without any compromising of patient experience and safety is breath-taking (it practically answers Simon Stevens’ projection of necessary savings); second, the route to those savings is clear, achievable, and cumulative; thirdly, the solutions proposed by Lord Carter and his team provide an unprecedented opportunity for NHS management teams and structures to show their value to the healthcare system as a whole.

The report needs to be seen against a complex background of good and bad news. Our current government (and this would almost certainly apply whichever party were in power) is committed to a package of reforms in the public sector that are commonly labelled as ‘austerity’ measures; that is, they demand efficiencies and cost savings from every part of the public sector. At the same time, the NHS is already recognised (by the Commonwealth Fund report, Mirror Mirror on the Wall) as the most cost-effective health system in the world in terms of value for money for the taxpayer.

The NHS’ achievement in this respect is the more extraordinary when one considers, as Lord Carter notes, that the UK healthcare system has not adopted the kind of cost and productivity metrics used by hospitals all over the world to drive down procurement costs and get more from their budgets. His report is the first step – and a genuinely important step – towards implementing a culture of productivity in the NHS that scrutinises costs and rationalises procurement regimes across the board, while preserving the central mission of the NHS.

The report is cautious about projecting an overall figure on the potential savings, but the regularly quoted £5 billion annual saving looks achievable, and possibly modest, when one looks at the detail of the report, and the evidence of substantial savings made through implementing sensible innovations at individual hospitals. Twenty-two hospital trusts took part in the pilot stage of the report, and many are already finding that using the recommendations and guidance is making a real difference to how they deliver services.

Four main areas are investigated: workforce; pharmacy and medicines; estates management; and procurement. For the workforce, the main aim is to make better use of staff time (both productive and non-productive time) and lessen the reliance on agency staff. For medicines, the focus is on better procurement procedures and more efficient targeting and prescribing, including making more use of the expertise of NHS pharmacists. Estates management can be improved by robust metrics and comparison with peers. Finally, procurement needs to adopt a new business model, and get rid of the glaring inconsistencies in costs that are perhaps the most critical part of the report – and the source of much of the (accurate, but needlessly damning) media reaction to it.

The metric developed by Lord Carter’s team, the Adjusted Treatment Index, or ATI, is a comprehensive toolkit for identifying areas of inconsistency and overspend, tightening up management and procurement, and working towards a properly cost-efficient, but care and patient-centred organisation. In the report, Lord Carter promises to provide a working model of what ‘good’ looks like, to help hospitals with their future planning, and to offer a bench mark for managers and staff that allows them to compare their own performance in specific areas of practice and work towards incremental improvement.

At the heart of the report are two issues: the first is the relationship between devolved NHS providers and a central structure of oversight; the second is the crucial role that managers both in individual providers and at the broader regional and national level can play in delivering the changes necessary to drive this model of improvement.

Procurement is a prime example of the potential disadvantages of a devolved system. The frankly shocking variation in cost for everyday items is in part the result of a fragmented retail system; local managers are making local decisions with individual providers of equipment and materials. As a consequence, the catalogue of product lines for everyday consumables within the NHS is a staggering 500,000 lines with price differences of up to 35%. Compare this with the global best practice average: 6 – 9,000 items, with a price variation of 1 – 2%. This illustrates both the potential for massive savings, and the scale of the task.

Clearly a core product list, developed and used nationally, and regulated to ensure high compliance levels, would alleviate this problem and produce considerable savings. But what kind of relationship between national protocols and local delivery is the best fit to make this happen? The answer will come from a collaborative approach; the combined expertise of NHS managers at all levels will be needed to realise the potential savings, and one must hope that managers at all levels will see the rewards, both in terms of actual savings, and also for their status and image in the NHS as a whole. If they do, then we will see a different NHS emerge; a more unified culture in a more devolved system – a world leader in all respects.

To make the Carter recommendations work will require than just management input, however. Clinicians can contribute hugely, particularly in terms of those products where they make the choices: prosthetics and high-value, hi-tech plant and equipment. The report gives the example of hip replacement products to show both the huge local variance (regularly up to 120%) and the obvious potential for cost consistency and efficiency. It also offers a clinical rationale for efficiency; patient outcomes are improved along with the cost savings.

In fact, every organisation within the reformed NHS, from NHS England at a strategic level, through guidance-based bodies such as NICE, to staff representative bodies such as the RCN and BMA, can make its own contribution to the changes and improvement proposed.

This is an interim report; a final report will follow in the autumn, after further research and consultation with a wider range of NHS providers. But it is already clear that, if its recommendations are followed, and if the cultural will to make the necessary changes emerges quickly from within the NHS, the quiet revolution embodied in this report has the power to transform the NHS.