The Centre for Health Economics (CHE) has published its latest NHS productivity growth report for the period 2014/15 to 2015/16 and finds that overall productivity growth was 0.04%.
Since 2009/10, productivity has been growing at an average of 1.17% year-on-year, so this year’s growth falls below this average. In addition, productivity growth within the NHS is no longer outpacing that of the rest of the economy.
This series of reports began in 2004/5 and in the years to 2008/9 NHS productivity growth kept pace with that of the whole economy. Between 2008/9 and 2013/14 NHS productivity outpaced the whole economy. However, from 2014/15 onwards that position has reversed: “substantially so in the most recent year.”
The report measures productivity growth by comparing growth in the outputs produced to growth in the inputs used to produce them. Outputs include all the activities undertaken for NHS patients and further account is taken of the changes in the quality of care provided to patients. Inputs include all staff, equipment and clinical supplies and the facilities at which care is provided.
Outputs have grown substantially since 2004/5, mainly due to the increasing numbers of patients being treated. In 2015/16 hospitals treated 4.9 million more patients than in 2004/5 – an increase of 39%. The number of outpatient attendances has also increased by just under 76% since 2004/5.
Year-on-year improvements in hospital survival rates are offset slightly by waiting times, which have been getting longer since 2009/10. Taking this into account the overall quality-adjusted NHS output increased by 2.62% between 2014/15 and 2015/16.
Inputs have also increased. Between 2004/5 and 2015/16 the number of NHS staff has increased by 6.5% and expenditure on staff has increased by 48%; expenditure on materials and capital has increased by 198% and 156% respectively. Overall, expenditure on NHS inputs has increased by 2.59% between 2014/15 and 2015/6.
Hospital Trusts
The data specifically relating to hospital Trusts reveals a better overall performance from this sector than from the NHS overall.
The quality adjusted output index rises to 3.38% (compared with the NHS overall of 2.62%). The CHE says this is largely due to the exclusion of primary care activity. This figure also shows an increase on the period 2013/14 – 2014/15 where the output growth for hospital Trusts alone was 2.86%.
Similarly, hospital Trusts performed better than the NHS overall on the input index. Input growth of 2.4% as opposed to 2.59% for the NHS overall gives hospital Trusts a productivity growth of 0.96%. This difference is said to be due to the growth of the NHS England group expenditure on materials.
Conclusion
In 2014 NHS England set a target of increasing productivity by 2-3% a year. The CHE finds this to be increasingly unrealistic: “Our previous reports have shown that this target is ambitious because the average increase since 2004/05 has been 1.17%. This latest report indicates that the NHS had zero productivity growth over the last year. To catch up with the 2-3% target, it implies having to find unprecedented productivity gains.
“Establishing the reasons for the stagnation in NHS productivity is beyond the remit of this report. However, our findings suggest that the target growth in productivity of 2-3% may soon be unattainable. There may thus need to be a reassessment of what the realistic funding needs of the NHS are, going forward.”
There’s a lot more detail in this report. To read the full report click here.
