Although inflation in the wider economy has now fallen below three per cent, health inflation is running at eight to 10 per cent, partly because of the cost of new drugs and treatments, according to Catherine Hubbard, Hinchingbrooke medical director. That is nowhere near matched by small increases in the hospitals £100million-a-year income, so Circle Health, the part-partnership that has been running the hospital since February on a 10-year management franchise, must act. Part of the deal is that Circle should reduce or even eliminate nearly £40m the NHS says it owes as historic debt. So, when its real income is falling, the hospital has both to save cash and generate more income if the franchise is to be a success for both patients and Circle. The hip and knee surgery overflow has seen Addenbrookes releasing 120 patients to fast-tracked operations at Hinchingbrooke, though patient choice means they do not have to accept the offer. However, between 40 and 50 are already scheduled for surgery. The capacity at Hinchingbrooke has been created by improvements in non-emergency orthopaedic surgery since the doctors took over managing the department under Circle. At the same time, the hospital is hoping to lose surplus staff through the NHS-wide mutually agreed resignation scheme (Mars) and is redesigning its cleaning contract with Mitie to get better value for money. All staff have been offered the chance to express an interest in leaving under Mars, now in its third year across the NHS. If resignation goes ahead, staff receive half the cash they would have if they had left under the NHS redundancy scheme, which is based on one months pay per year of service. Hinchingbrooke believes the opportunity - agreed nationally with the health service unions - might be attractive to employees nearing retirement, though there were no targets for losing staff. We want to get the quality right first, then look at the finances, a spokesman said. We are looking to reduce bank and agency staff and hire more permanent staff. The Government has demanded that the NHS reduce costs across the board something that is more difficult for a small, efficient hospital, as the NHS acknowledges Hinchingbrooke to be, than for a large institution suffering financial obesity. Meeting the challenge is going to be tricky, chief executive Jim OConnell told The Hunts Post this week. We know there isnt going to be more money about, and we have the additional challenge of medical inflation. Do we just take five per cent each year? The question is what kind of a role the hospital can play in the health economy. At the same time we desperately need to be efficient, so we are doing a range of voluntary things, including reducing peoples working hours if its mutually suitable. But the need to be financially lean sits alongside the newly-empowered clinicians determination to improve the service to patients. An early example of that was the amalgamation earlier this month of A&E with the acute assessment unit, which means patients are out of the hospital more quickly after treatment. If they have to be admitted for a couple of days, they are actively monitored so that any complications are picked up and dealt with before they become serious. This patient focus was one of the 16 staff-generated improvements promised when Circle took over, and followed employee workshops in which nearly all the staff were involved. Circle is helping us to be innovative and look at things in a new light, Dr Hubbard said. We are going to reduce costs by focusing intensely on greater efficiency and by getting it right first time. Thats what weve got to make happen. One factor that has really encouraged the new management is the quality of senior medical recruits since the franchise began including soon-to-arrive orthogeriatrician Sally Bashford. One of her urgent tasks will be to halve the average length of stay for patients who have fractured the neck of their thigh bones from the current three weeks. If we can do that, patients tend to be able to go back home rather than into sheltered care, Dr Hubbard said. We really are getting some excellent people in, now that theres certainty about the next 10 years Mr OConnell added. They are the ones who are going to shape the services over the next 20 years.