Rival consultancy firm KPMG told the Department of Health it could make less than half the savings McKinsey claimed were needed.

McKinsey told the DH the NHS could initially make £8.3bn in new efficiency savings a year, potentially rising to £20bn a year by 2013-14 if productivity savings were accompanied by better quality and shifts in care settings.

Nobody can be in any doubt that money will need to be saved because [the NHS] will probably get flat cash and the demand for services and activity levels will continue to rise

KPMG UK head of healthcare Alan Downey

But in a briefer February report to the department seen by HSJ this week, KPMG estimated possible savings at a much more conservative £4.4bn a year, although the consultants said “potentially much more” might be found.

KPMG’s report to the DH was co-authored by health data specialists Dr Foster. The firms proposed the DH commission them to “hot house” NHS organisations for a year to help commissioners and providers reshape the supply of NHS care.

The consultants based their savings on the NHS Institute for Innovation and Improvement’s own Better Care, Better Value indicators, which suggest the biggest annual saving - £2.2bn a year - could be made by reducing hospital length of stays.

KPMG UK head of healthcare Alan Downey told HSJ: “Nobody can be in any doubt that money will need to be saved because [the NHS] will probably get flat cash and the demand for services and activity levels will continue to rise.”

But Mr Downey said KPMG had not told the DH it would need significant job cuts to make its savings, although staff would need to be redeployed to different care settings.

He denied that would ultimately add up to staff reductions and said more nurses, for example, may be needed if care was carried out in the community.

KPMG proposed strategic health authorities should work intensively with primary care trusts to help them better plan developments in their local health economies through data analysis and leadership.

Although the consultancy advised the DH against large scale institutional change as a way to create efficiencies it said it would expect the process to lead to weak PCTs being identified as suitable for merger or acquisition by others.