Don’t believe the hype, NHS productivity is actually rising

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Contrary to popular misconceptions, NHS productivity, when measured properly, is not declining but is on the up, as our research shows. Don't believe the hype, NHS productivity is actually rising. The latest figures produced by the Centre for Health Economics at York University show that the productivity of the NHS in England increased by 2.1 per cent between 2010-11 and 2011-12. ‘There has been a significant increase in NHS activity over the past 14 years and the quality of care has improved’. This follows growth of 3.2 per cent between 2009-10 and 2010-11, and is the first time since the late 1990s that there have been two successive years of positive productivity growth in the NHS. The centre’s productivity measure uses the most detailed information available to measure growth in the amount of healthcare provided to NHS patients and in the total amount of resources used to produce this care. The measure of NHS output captures, as far as possible, all the activities undertaken for all NHS patients wherever they are treated in England. Based on information in the hospital episode statistics and reference cost returns, around 12,000 categories are used to describe this activity. In comparison, the consumer price index, used as a measure of inflation, is based on a “basket” of just 600 goods and services. More survivors. There has been a significant increase in NHS activity over the past 14 years. Changes in the number and type of people treated in hospital and improvements in the quality of their care translate into a 68 per cent increase in hospital output since 1998-99. There has also been a 130 per cent increase in outpatient attendances. There has been a 24 per cent growth in primary care consultations and prescribing has increased by 126 per cent. Prior to 2004-05, community care activity was not reported in a form that allowed it to be included in productivity calculations, but activity has increased by 13 per cent since 2004-05. As well as treating more people, the quality of care has improved. Quality improvements are captured by hospital survival rates, inpatient and outpatient waiting times, and blood pressure control in primary care. Even though the average age of people admitted to hospital has increased, survival rates 30 days after discharge have improved year on year. In 1998-99, 99.29 per cent of elective patients were alive 30 days post-discharge; this proportion had increased to 99.78 per cent in 2011-12. The survival rate for non-electives was 94.72 per cent in 1998-99; it had improved to 96.12 per cent in 2011-12. More staff, higher wages. Waiting times for an elective admission have varied over time, remaining fairly stable between 1998-99 and 2003-04, then falling progressively to reach their lowest level in 2008-09, since when they have increased. ‘The NHS cannot afford complacency. The national picture disguises the variation in productivity across the country’. Although the form in which they are reported has changed, outpatient waiting times show a similar pattern, and have been fairly stable since 2007-08. Substantial improvements in blood pressure monitoring were recorded in primary care up to 2006-07, after which levels have stabilised. Increased NHS output has come about in response to pronounced increases in health expenditure since the late 1990s. This has funded both higher wages and more staff and resources devoted to the health system. Wages rose by 76 per cent between 1998-99 and 2011-12, while there was a 24 per cent increase in the number of NHS staff. There has been increased use of agency staff, but there have been periods of retrenchment, notably between 2003-04 and 2006-07 when the hospital sector was struggling to reduce deficits. The use of non-staff resources, such as equipment and supplies, has increased by virtually the same proportion year on year. Capital utilisation increased up to 2007-08, after which it declined. The national picture. Looking over a succession of years reveals that output growth and input growth track each other closely but not exactly. Between 1998-99 and 2003-04, productivity growth was negative, the downward trend due to the average growth in inputs exceeding growth in outputs. Between 2004-05 and 2009-10, year on year productivity growth fluctuated from negative to positive. This pattern implies constant returns to scale over this period, with output growth lagging slightly behind input growth. Productivity growth has been positive since 2009-10, with 2010-11 to 2011-12 exhibiting a second consecutive year of productivity growth. While annual output growth has been lower than in previous years, input growth has been lower still. Over the full period, between 1998-99 and 2011-12 NHS output increased by 79 per cent while inputs increased by 78 per cent. ‘Contracting and payment systems need to be redesigned so providers and commissioners have the right incentives’. Despite successive periods of productivity growth, the NHS cannot afford complacency. The national picture disguises considerably the variation in productivity across the country. Payment by results has made little impression on reducing this variation, partly because of its exclusive focus on the acute sector, and commissioners have struggled to find effective measures to reduce hospital admissions. Looking ahead, contracting and payment systems need to be redesigned so providers and commissioners have incentives to ensure the most cost effective treatments are provided in the most appropriate settings. This will help reduce variation across the country and will be key to securing future productivity gains. The latest Centre for Health Economics report on NHS productivity and an interactive spreadsheet allowing users to interrogate the underlying data are available here.
Period17 Jan 2014
Held atHealth Service Journal Blog, United Kingdom