Health cuts: Welsh NHS Confederation says reform needed to save more cash
The NHS in Wales can not cut its costs further without making radical hospital reforms, according to the body representing health boards and trusts.
The Welsh NHS Confederation says this year's savings targets of about £300m will be met, but service changes will be needed to save more.
Ministers say hospital reforms are based on the need to provide safe, sustainable and high quality services.
The Welsh government blames a tough budget settlement from Westminster.
Helen Birtwhistle, director of the Welsh NHS Confederation, says: "Every indication is that health boards and trusts will be living within their means.
"Altogether around £300m worth of savings have been made this financial year, £1bn in the last two-and-a-half to three years - that's a huge achievement."
However, looking ahead, when the Welsh NHS faces real-term budget cuts, she identifies a tipping point.
"We can't keep making savings, year on year, from the same group of services.
"We have to change services radically," she warns.
Proposals for moving hospital services in west Wales have already proved contentious, with demonstrations over the future of treatment in Aberystwyth and Llanelli.
Ms Birtwhistle says this is the only way to make the NHS more efficient, adding: "We all have to get used to the fact that we have to move away from seeing hospitals as the only place where health care can be delivered."
Health boards have already been under unprecedented pressure to balance their books, with a warning from health minister Lesley Griffiths in November that there was "no margin for error".
At Cardiff and Vale University Health Board, a "turn-around team" tasked with reaching an £87.7m savings target has been launched.
It identified huge variations in spending, not least the £1m a year it was spending on pain relief patches.
"When we looked at our practice it was way out of line with other health boards," says Dr George Findlay, divisional director of specialist services.
"The whole of England spends £6m a year on these patches and we were spending £1m.
"They were being used for simple things that other, cheaper pain killers would be effective for."
According to Dr Findlay, the health board is now on course to hit its savings target and stay within its annual budget.
"We get £1.1bn a year to spend on health care," he says.
"We've looked at the totality of that rather than just thinking about saving a small percentage.
"It's been quite challenging, but it's completely turned the organisation on its head."
The Welsh government argues that it spends 43% of its budget in health and social services, but points to a tough budget settlement from the UK government as its reason for having to make savings.
In a statement it says: "This means we need to find new and innovative ways to deliver even greater efficiencies within the NHS, currently estimated to be between 4-5% per annum."
It argues that the need for hospital re-organisation is based on the "need to provide the Welsh public with safe, sustainable and high quality services".
"However, it would be reasonable to expect there to be some cost benefits resulting from more effective delivery of services, making the best use of new technology and keeping people out of hospital where appropriate."