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The NHS productivity challenge

Experience from the front line

The unprecedented slowdown in the growth of NHS funding in England since 2010 required the NHS to pursue the most ambitious programme of productivity improvement since its foundation. It has broadly risen to the challenge, with pay restraint, cuts in central budgets, and the abolition of some tiers of management producing significant savings. But the strongest pressure has been applied and felt at the front line, by hospitals and other local service providers, faced with squeezing more and more value from every health care pound.

This report describes how six trusts have been grappling with the productivity challenge. It also suggests ways to divert the NHS and social care from their current trajectory, which is heading towards a major crisis.

Key findings

  • The current NHS productivity challenge is uniquely different (and difficult) because funding restraint has been more severe and long lasting, and coincides with major reorganisation.

  • 2015/16 is a possible financial ‘cliff edge’ for some providers, who plan to cut emergency and other elective work as part of the opportunity cost of diverting a further £1.8 billion of NHS allocations to consolidate the £3.8 billion Better Care Fund.

  • NHS spending as a proportion of gross domestic product (GDP) will fall from its peak of 8 per cent in 2009 to just over 6 per cent in 2021 – equivalent to 2003 spending levels.

  • Closing the ‘income–expenditure gap’ at local level requires significant efforts to increase income (not just reduce costs).

  • Current productivity policy levers are not sustainable, even in the short term. Local health economies needed to think collectively (and with guidance) about how to provide services within budget. Politicians and the public need to acknowledge that this means major shake-ups in where and how services are provided.

Policy implications

The NHS and social care face enormous challenges over the next 18 months. To avoid a major crisis – in terms of widespread overspends, decreasing quality of care, or both – the NHS needs:

  • more time

  • more money for transformational change and short-term support

  • measures to support change and value for money.

It may also need to run overlapping services – ‘double running’ – until new services and delivery arrangements take root, while acknowledging that payback (in terms of better quality services and improved productivity) may not be realised for some time.

Finally, there needs to be a renewed effort to encourage clinicians to identify and lead change. This is the best way to ensure that improving patient outcomes remains at the heart of the search for greater efficiency.