Recall of mental health services called for by charities.

More than £500m could be saved if mental health services in England were run more efficiently, a report says. Better community support, cutting unnecessary hospital stays and reducing sickness absence can all help cut costs, say policy experts.

The NHS has been asked to find £20bn of efficiency savings by 2014. The Kings Fund and Centre for Mental Health say changes might improve productivity but mental health services should not be singled out for cuts. One pound in every £10 spent on the NHS goes into mental health services. Report author Chris Naylor, of The King's Fund, said: "This report shows that, by redesigning services, there are significant opportunities to reduce costs and reinvest the proceeds to improve the quality of patient care."

The report recommends:

A reduction in unnecessary bed use in hospitals and psychiatric units by better use of crisis teams and community support

Fewer transfers of patients to facilities outside their local areas

Improvements in services for older people with mental health conditions, such as reducing delays in discharging dementia patients from hospital.

Better support for people with mental health problems to enable them to stay in work.

Report co-author Andy Bell, of the Centre for Mental Health, said improving support for people with mental health problems represented good value for taxpayers' money.

He added: "Mental health services can do their bit to make the NHS more productive but should not be singled out for cuts to valued and valuable activities."

The study is published ahead of a cross-government mental health strategy to be launched soon. Commenting on the work, Prof Nick Craddock, Professor of Psychiatry at Cardiff University said more research was crucial. "We need services informed by evidence, rather than the political ideology that has driven many of the wholesale changes over recent years. It is good to avoid unnecessary hospital admissions. However, it is important to realise that for many patients admission is life saving, and is a vital part of high quality care."

The Care Services Minister Paul Burstow said the report recognised the approach the upcoming mental health strategy will promote. He added: "The NHS has to get better at seeing the whole person. Treating someone's physical symptoms and not understanding their mental health just isn't good enough." He said he would set out plans on Thursday to extend psychological therapies to older people and those with long term conditions as part of the new strategy.

Marjorie Wallace, chief executive of the mental health charity SANE, said: "We do not want cuts to hurt mental health services, however our experience of a series of tragedies highlights our view that closing beds and hospital wards and relying on crisis teams is not the answer. "We know of many patients who need more intensive help than many hard-pressed community teams can offer. Without the backstop of in-patient care, they and their families can find themselves neglected when they are most in need."