The NHS needs to be more productive – or is it more efficient?

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Stop reading this and get back to work – you need to be more productive. Or is it more efficient?

In the long-term plan, NHS England sets out a goal of achieving at least 1.1 per cent increases in productivity over each of the next five years. But there’s often confusion about the term ‘productivity’ and what it really means, with efficiency and productivity often used interchangeably despite meaning very different things. In the simplest terms, an increase in productivity is when a business makes more of a product (in the case of the NHS, it would be more “care”- doing more operations, for example) using the resources they have available. Efficiency, however, relates to the quality of the work being done – so producing the same, but at a lower cost to the NHS or with less waste.

NHS England and NHS Improvement have spent the past few years focusing on pushing the NHS to the limits of what can be efficiently achieved with the resources available. And it’ll use some of the additional £20.5bn in the funding settlement to get more of the same with the resources available, improving efficiencies in staffing, estates, equipment etc. But there’s a limit to what you can do with those resources, and that’s where productivity should come in.

If you look at the Office for National Statistics’ recent trend in public service healthcare productivity in England, 1.1 per cent per year doesn’t seem like an unrealistic target on the surface. Keep in mind this is productivity, and does not include the cost saving targets of around 4 per cent given to providers of hospital and other frontline services in recent years. The chart below shows that productivity increased by 2.1 per cent per year on average between 2010/11 and 2016/17. In fact, there was only one year of negative growth between 2002/03 and 2016/17.

Source: Office for National Statistics

The most significant gains since 2010/11 came from the extent of wage restraint in the NHS keeping input costs down. By keeping wage growth much lower than the increase in the number of people being cared for, the NHS was able to see big increases in the amount of care provided relative to the cost of each staff member or piece of equipment. With wage restraint ending and a big recruitment drive outlined in the long-term plan, how is this trend going to be maintained? If you look at the post-Francis Report period in Figure 1 (2012/13), you can see that the last significant NHS recruitment drive slowed productivity growth as labour costs rose at a faster rate.

For the next 2 years, the long-term plan outlines 10 priority areas for productivity growth. Most of these have already been enacted or announced – such as capping spending on agency staff, improving procurement, networking pathology and diagnostic services, improving value for money in prescription spending and reducing the number of clinically ineffective treatments. Future plans to increase productivity include a greater emphasis on using digital technology in community health services, a drive to reduce administrative costs and the publication of a 10-year national strategy to reduce patient harm.

The agency staff cap has provided significant savings to the NHS, with trusts spending more on bank than agency shifts, at least in nursing. In the future though we can expect to see the percentage of this saving fall as that form of staffing becomes less common. At the same time, absence due to stress and mental health issues has increased to record levels in recent years among nursing staff. How can we expect staff to work even harder in their time on shift?

The NHS has been working to reduce prescription costs and has produced huge savings over time through better use of generic drugs (though drug costs have been increasing in recent years, thanks to big increases in the cost of certain generic drugs). Similarly, waste in procurement and variation in prices paid for supplies could also open up significant savings, following on from NHS Improvement’s Model Hospital programme.

Less clear is the impact that technology will have on the productivity of the NHS. There are plans to digitise some services in the community across mental and physical health as well as primary care, but the evidence on the likely return on this investment is mixed. Individual schemes have shown cost-effectiveness, but the success of many digital technology schemes depends on a range of cultural factors, including the clinical model at work and engaging clinicians and other staff.

The thing is, of all the activities I’ve listed, in practice it’s likely only the digital technology schemes that would potentially increase productivity as opposed to efficiency. Despite referring to these changes as improvements for productivity and efficiency, most of the schemes outlined in the long-term plan focus on improving how the NHS provides more of the same care with the same workforce, rather than transforming the possibilities of what staff can do.

If the NHS continues to focus on the same schemes and improving efficiency it’ll see smaller and smaller returns until there’s little left to gain. As we and others have said, the funding settlement is only enough to maintain existing services at their current level, not provide enough additional funding to help transform how care is provided.

Productivity may have to wait, efficiency calls.

Comments

Dr Malcolm Rigler

Position
Retired GP,
Organisation
The Patients Association - Project Volunteer.
Comment date
14 March 2019

For the past few years I have had some pretty clear ideas about how to reduce the loss of revenue for the NHS as a result of successful litigation launched by members of the Legal Profession. I have yet to find anyone within the NHS or at The Kings Fund that can guide me to be able to share my ideas with the "powers that be" within the NHS Litigation Authority. Maybe this comment might help me to find the contact I need. However, my main point is that I believe that within the NHS there are many members of staff , patients and carers who might well have good ideas that would make the NHS both more effective and more efficient. Perhaps we need a new well advertised agency within each community that would have links to the amazingly complicated NHS administration so that good ideas could be communicated to the right people. Could this perhaps become one of the functions of The Society of Local Council Clerks (
https://www.slcc.co.uk/ ) the "Hidden Giant" in our system of Local Government in the UK?

Dr Malcolm Rigler

Position
Retired GP,
Organisation
The Patients Association - Project Volunteer.
Comment date
14 March 2019

For the past few years I have had some pretty clear ideas about how to reduce the loss of revenue for the NHS as a result of successful litigation launched by members of the Legal Profession. I have yet to find anyone within the NHS or at The Kings Fund that can guide me to be able to share my ideas with the "powers that be" within the NHS Litigation Authority. Maybe this comment might help me to find the contact I need. However, my main point is that I believe that within the NHS there are many members of staff , patients and carers who might well have good ideas that would make the NHS both more effective and more efficient. Perhaps we need a new well advertised agency within each community that would have links to the amazingly complicated NHS administration so that good ideas could be communicated to the right people. Could this perhaps become one of the functions of The Society of Local Council Clerks (
https://www.slcc.co.uk/ ) the "Hidden Giant" in our system of Local Government in the UK?

Stephen Black

Position
data scientist,
Comment date
20 March 2019

The core problem of NHS productivity (or efficiency) is that the system doesn't understand the difference between designing better systems (which do more higher quality work) and getting the same output at lower cost (by paying less for its inputs). Worse, it assumes that cheaper input costs automatically translate to better efficiency and productivity even if those loser costs make the process worse.

It is very common for the NHS to do things on the cheap and assume this means higher productivity. So it pays analysts far lower than the going market rate and tends to get inexperienced people who are not as good at their jobs as more experienced people would be. The assumption is the output of cheap analysts is the same as the output of expensive ones (the reality is a good one can be 10 times as "productive" as a good one whether we measure volume or quality of output). The same problem applies to equipment both in IT and in clinical settings. Cheap is assumed to mean the same as productive even if the maintenance is more costly and the capability of lower quality.

This problem is particularly serious when it is associated with the capital budget rationing that afflicts the current system. Many hospital buildings have huge maintenance backlogs that directly affect the clinical output possible (theatres shut because the plumbing leaks, for example). Yet the capital budgets are perpetually raided to cover up deficits in the current spend budgets.

What the NHS doesn't get is that more output and higher quality output sometimes need investment up front. Hospital building that don't leak are more productive and efficient; modern theatre equipment and IT does more and better work old cheap kit.

A great deal needs to change to make the NHS better. Starving the system of investment and being confused about how to be more productive and efficient isn't a good place to start.

Frank Kennedy

Position
Retired electrical eng tech.,
Organisation
None
Comment date
24 June 2019

I went to Abingdon hospital today it was hot! I had to drop my patient then go find parking, finding none I could use at the hospital I had to walk to and from abingdon beds which was virtually empty, to the hospital and wait for my patient I had brought. Thrre is plenty of land at the hospital but each building is run indepensantly with no thought as to patient transport, by ambulance or patient transport only available for thosee who cant get in a car, why not use some spare land for the buildung of a multi storey car park better still build it at Didcot which badly needs a teaching hospital like southamptons instead of these cold looking hotels. Why not build it down in the earth to give sraff places to park customers onnthe top. Ambulances etc must be given their own route as must also delivery drivers, service staff etc.at all hospitals.

Podiatry was located right at the back how the hell can patients access this if they cant walk? Have a heart somebody please yours sincerely

Frank Kennedy.

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