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Feature Data Briefing

A productivity challenge too far?

BMJ 2012; 344 doi: https://doi.org/10.1136/bmj.e2416 (Published 19 June 2012) Cite this as: BMJ 2012;344:e2416
  1. John Appleby, chief economist
  1. 1King’s Fund, London W1G 0AN, UK
  1. j.appleby{at}kingsfund.org.uk

The NHS in England is already embroiled in a barely achievable productivity challenge. But if the government pushes this policy goal for a further four years beyond 2015, is the NHS setting itself up for failure? John Appleby looks at the figures

Richard Douglas, Department of Health director general of policy, strategy, and finance, has reportedly said that the drive to find further efficiency savings in the NHS will continue after 2015,1 with the total savings rising from £20bn (€24.6bn; $31bn) to a possible £50bn by 2019-20. His comments are a startling admission of the long term impact on public services of the global financial crisis and ensuing recession.

But perhaps it should come as no surprise. Firstly, economic recovery has been slow to the point of stagnation. According to the National Institute for Economic and Social Research’s “recession tracker” (www.niesr.ac.uk), the UK economy is still four percentage points below the last peak in the economy—over four years ago—and has now overtaken the recession of the 1930s in the time it has taken to get back on an even keel.

Secondly, and related, is the coalition government’s steadfast adherence to its “plan A” deficit and debt reduction goals. Given that economic growth is nearly flatlining it is hard to see the tax-spend squeeze relaxing any time soon (whether it should is another question).

To these might be added a further reason for continuing gloom for the NHS: as it has been relatively protected in this spending round, other departments will have a greater claim to any growth monies in the near future. It is highly unlikely that the pay freeze will continue beyond 2014-15, so this will force a further squeeze on the NHS purse. The cold truth must dawn that the NHS is unlikely to enjoy a return to full steam ahead real growth after 2014-15.

So where does this leave the NHS productivity challenge?

As the figure shows, on a historical assessment the task looks frankly undoable. If we assume no real funding growth (inputs) and the need to improve outputs (the activity of the NHS adjusted for the quality of those outputs) by around 5% a year to match the Wanless “challenge” for a better NHS, by 2018 this is equivalent to an improvement in productivity of around £49bn at 2010 prices. But while the NHS has produced more with more inputs, it has rarely made a positive productivity increase in a year in excess of 1%—let alone 5% each year for eight years.

Figure1

Inputs and outputs for the NHS, 1995-2018. Orange circles indicate increases in productivity that year; blue circles decreases in productivity; circle size relates to size of increase or decrease. Data for 1995-2009 from ONS (www.ons.gov.uk/ons/taxonomy/index.html?nscl=Public±Service±Productivity); projections for 2010-18 from King’s Fund

It is possible to quibble with the productivity data from the Office for National Statistics: the outputs are adjusted for quality, but only crudely. And there are tweaks that could be made in terms of the activity covered by the ONS figures. But these are just quibbles; better, more accurate measures are not suddenly going to reveal an undiscovered well of productivity gains.

There is something to be said for having a ”stretching” target, a productivity figure so big that perhaps, like the NHS chief executive’s claims about the government’s reforms, it too can be seen from space. It can get minds focused on the task and, even if not achieved in full, may produce better results than would less testing goals. But giving the NHS a challenge of this magnitude would risk setting it up to fail. If the productivity policy goal is already just this side of credible, stretching it another four years surely must have crossed the line.

The imperative to get the biggest bang out of every health buck of course remains. But that has always been the case. To be inefficient is not just to waste money, it’s to waste lives. So, there should be no let up in finding new and better ways of using finite budgets to do good things for people who use the NHS. But maybe it’s time for some realism.

Even if the NHS achieves half the challenge over the next eight years it will have produced something quite unprecedented. Perhaps that’s the best that can be hoped for.

Notes

Cite this as: BMJ 2012;344:e2416

Footnotes

  • Competing interests: The author has completed the ICMJE unified disclosure form at www.icmje.org/coi_disclosure.pdf (available on request from the corresponding author) and declares no support from any organisation for the submitted work; no financial relationships with any organisation that might have an interest in the submitted work in the previous three years; and no other relationships or activities that could appear to have influenced the submitted work.

  • Provenance and peer review: Commissioned; externally peer reviewed.

References

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