At the beginning of a new and very challenging financial year for the NHS, all health services are facing tough times ahead. Every pound spent will be examined for its cost-effectiveness.

While there are grave dangers in cutting health service provision thoughtlessly, it is right that we look critically at what we are spending now and where necessary find ways of using that money more wisely. Nowhere is this more the case than in secure mental health services.

Secure mental health services work with people who need to be detained under the mental Health Act following a criminal offence, either directly from court or as a transfer from prison.

There are about 8,000 secure beds in England, a few in high secure hospitals but most in medium and low secure units. A typical patient will spend about two years in secure care. The average cost of a year in a secure hospital is about £200,000 per person. Overall, secure services cost £1.2bn a year, or one-fifth of the NHS’s specialist mental health care budget, and throughout the last decade spending on secure care has risen more sharply than any other area of NHS mental health care.

Yet secure mental health hospital beds in England are being blocked by a lack of step-down and community services for people who no longer need to be detained.

And this is causing long delays in transferring prisoners who are acutely unwell.

There are a number of inefficiencies in the system. Many prisoners are assessed several times before being accepted in hospital, where there are high occupancy rates. But the main barriers to the system working better are a rigid risk aversion that requires all prisoners to go to high-cost high or medium secure units and a lack of less costly rehabilitation services for people who no longer need so much security.

We need to focus instead on creating step-down services and intensive community support. People leaving secure care still need a lot of support but even very intensive community care costs much less than a medium secure bed.

A resident in a secure mental health unit recently told us: “I was given an absolute discharge at my last tribunal seven months ago, but due to the lack of a suitable community placement, I am still in a medium secure hospital. It costs nearly £4,000 a week to fund my stay in hospital, which is about £100,000 so far, compared with around £600 per week in the community.”

To facilitate this reform, we need to change the way secure services are commissioned. Currently primary care trusts pay for a fixed number of beds each year, often commissioned on their behalf by regional specialist commissioning groups. As a result, PCTs lack incentives to invest in alternative provision.

Instead we recommend that the commissioner – which may in future be the NHS Commissioning Board – pays for a whole package of care for someone, from end to end, and focuses not just on maintaining people safely but also on helping them to recover better lives, for example to get stable accommodation, paid work and a good family life.

Secure beds will always be a necessary part of the mental health system and a vital therapeutic alternative to prison for people with acute and severe illnesses. But we must ensure people do not languish there and in so doing prevent others who need urgent care from getting a bed.

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