Productivity in the NHS and health care sector

Productivity is one way people measure the performance of a sector – it compares the growth in the quantity of outputs to the growth in the quantity of inputs. Different bodies measure health care productivity in England in different ways.

The Office for National Statistics (ONS) measures the productivity of the whole health care sector in England by taking a comprehensive measure of the inputs into the sector (eg, the number of staff, the amount of medicines and infrastructure) and comparing it to the quantity of outputs (eg, activity across primary care, hospital care and community care). For example, in 2019/20, the most recent data available not effected by the Covid-19 pandemic, productivity fell by 1.8%, because, compared to the previous year, health care sector inputs increased (for example, staff numbers grew) faster than outputs.

Productivity figures can be adjusted to reflect the ‘quality’ of outputs (eg, patient outcomes such as mortality rates). Productivity can also be measured in other ways, for example, productivity assumptions in NHS England’s long-term workforce plan focus on labour productivity, which only looks at the outputs per member of the workforce (largely in the acute hospital sector). The University of York also has its own measure of NHS productivity that it periodically updates, which is similar to, but not the same, as the ONS measure.

How has productivity changed over time?

According to ONS figures, over the past few decades, the productivity of the health care sector in the UK had been growing at a faster rate than other public sector services, such as education and social care, and more recently faster than the wider economy. In 2020/21, the productivity of the health care sector in England fell by 23%, largely due to disruption caused by the Covid-19 pandemic, which caused inputs to increase (eg, expanding critical care capacity) and output to decrease (eg, because of the cancellation of many non-emergency elective operations).

NHS productivity has long been a focus of politicians and policy-makers, but the topic has been given a particular focus as NHS services attempt to recover from the impact of the Covid-19 pandemic. In 2021/22, productivity partially recovered, but was still 7% lower than pre-pandemic levels. The Secretary of State for Health and Social Care and the Chancellor have expressed concerns about productivity in the NHS because elective activity has not increased despite recent increases in funding and employing more staff. More recent analysis by NHS England, which only looked at productivity of the acute sector, suggested that productivity in 2023/24 was still 11% lower than pre-pandemic levels, with industrial action contributing 3% to that decline.

What has driven the recent fall in productivity?

The puzzle of why NHS productivity has fallen, and how it could be increased has been the subject of much interest both politically and from a research perspective. NHS productivity has formed a key part of the scope for the Chancellor’s public-sector-wide productivity review, NHS England has done its own analysis and productivity has been the subject of many reports, notably from the Institute for Fiscal Studies, and the Institute for Government and Public First.

The consensus is that there is likely no one reason or factor behind the drop in productivity in the NHS. Instead, commentary points to a number of different factors. These include the lack of investment in capital and technology which means staff are working with outdated equipment in buildings that are not fit for purpose and the NHS having a comparably low ratio of managers to overall staff, which means there is less time and expertise to think through how to streamline processes. Higher staff sickness absence rate alongside industrial action has seen increased low morale and staff burnout, while turnover rates of experienced members of staff means more newer staff who may be less familiar with processes and require more training. There are also problems with hospital flow, contributing to rising numbers of people waiting longer to be seen in A&E but also delayed discharges, while patients are also sicker and have more complex needs leading to longer length of stay in hospital. It has also been suggested by NHS England that changes to how the NHS delivers care, such as the use of virtual wards, are not fully reflected by current productivity measures. However, because of the complexity and size of the NHS, there is still little firm evidence of the relative importance of each of these factors in driving the fall in productivity.

What are the current limitations to official productivity data?

Productivity data is often limited in a number of ways. For example, although available data suggests there are ongoing problems with NHS productivity, NHS England’s recent board paper, and comments from Amanda Pritchard, the Chief Executive of NHS England, argued that current ways of measuring productivity do not fully capture how the NHS is now working differently. For example, innovations such as virtual wards and the use of technology can mean that patients can receive the same care in less intensive health care settings, but these wider benefits cannot be captured in current measurements. NHS England’s analysis identifies areas to focus on to drive increases in productivity, but also recognises there is still a gap between pre- and post-pandemic productivity that cannot be explained by national data, for example, the impact of reduced staff discretionary effort following the pandemic and during industrial action.

The wider debates about productivity, and conflating productivity measures with ‘how hard clinical staff are working’, could lead to even higher rates of staff doing unpaid hours, feeling burnt out and experiencing unrealistic time-pressures. The most recent NHS Staff Survey results show that NHS staff are already feeling undervalued and stretched with two in five staff report feeling unwell due to work-related stress.

Is productivity going to increase?

The ONS has not yet calculated England’s productivity figures for more recent periods, but it has predicted that the productivity of the health care sector in the UK may have almost returned to pre-pandemic levels by the end of 2022. However, the ONS figures are not the only measure of productivity and there may still be opportunities to increase productivity further. Increasing productivity is a key part of government plans to improve NHS services and make funding the NHS more sustainable. For example, productivity increases are embedded in government plans such as the NHS Long Term Workforce Plan and the elective recovery plan. Furthermore, in the Spring Budget 2024, the government announced an NHS productivity plan with £3.4 billion investment in technology from 2025/26, which is expected to deliver £35 billion in cumulative productivity savings to 2029/30. The plan states that this will be achieved by a target to increase NHS productivity growth to an average of 1.9% from 2025/26 to 2029/30, rising to 2% over the final 2 years.

High productivity growth per se may also not be desirable depending on how it is achieved – for example, if the NHS is expected to provide more care but health care inputs such as staffing numbers and capital investment are suppressed at unsustainable levels. Ultimately what matters for health is the quality and quantity of services the NHS can provide, not just how productively it is provided.