NHS needs 'business model' change, says former Brown adviser

Sir David Varney, who advised Mr Brown from 2006-09, joined Barking, Havering and Redbridge University Hospitals Trust as chair at the end of last year.

Businesses generally try to hang on to their existing model for too long

His career includes being chief executive of British Gas, executive chair of mobile operator O2 and executive chair of HM Revenue and Customs.

Sir David told HSJ the coming spending restraint, twinned with new technology and increasing demand, would need more rapid and radical change.

He said: “The NHS has not just got an income problem, it has also got a population which is ageing and living longer, and the emergence of series of problems like obesity, all of which have to be coped with within constrained resources.

“The point people need to understand is you can do a cookie-slicing operation on the costs - cutting X per cent out of your costs in the year - but there will come a point where you can’t cut your costs with that business model.

“Businesses generally try to hang on to their existing model for too long whereas changing your model, the more radical option, can often lead to a lower cost and better satisfaction.”

Examples would include using technology to provide more services at home, and more people accessing health information on the internet.

The NHS in east London is consulting on moving activity, particularly urgent care, away from hospitals. Proposals include replacing the trust’s King George Hospital emergency department with an urgent care centre.

Sir David said a major challenge would be persuading patients not to come to major accident and emergency departments.