Despite “significant” increases in funding, productivity in NHS hospitals in England has fallen over the last 10 years, says the National Audit Office (NAO).
Moreover, there is still too much variation between hospitals in terms of productivity, and they all if performed at the level of the top 25%, the NHS could save around £1.6 billion a year, the NAO estimates in a new report.
Since the NHS Plan in 2000, hospitals have used their significantly increased funding to deliver against national priorities, but they need to provide more leadership, management and clinical engagement to optimise the use of these additional resources and deliver value for money, the study advises.
The Department of Health has focused on delivering national priorities within a fixed budget and has achieved significant improvements in such areas as waiting times, healthcare-associated infection rates, patient outcomes, reduced cancer mortality and the patient experience, says the NAO. However, it adds that the NHS pay contracts introduced since 2003 have increased costs but are not always used effectively by hospitals to drive productivity improvements.
The annual measure by the Office for National Statistics (ONS) shows a decline by an average of 0.2% per year since 2000 in NHS overall productivity, with productivity in hospitals falling by around 1.4% a year, and this is against a background of NHS expenditure increasing by over two-thirds in the ten-year period.
Moreover, about 40% of the £15-£20 billion of efficiency savings each year - the target setby NHS England chief executive Sir David Nicholson for the Service by 2013-14 - is expected to come from increasing efficiency in hospitals, and recent research indicates that the scale of these savings will require productivity gains of approximately 6% per annum, says the NAO.
While the Payment by Results system of setting national tariffs has promoted some efficient practice, such as reductions in the length of time patients spend in hospital and more operations taking place as day cases, there is still substantial variation between hospitals - for example, in the money spent by hospital to provide the same treatment, the report comments, and it estimates that, if all hospitals performed at the level of the top 25% in respect of staff costs, use of estate, control of emergency admissions and bed management, the NHS could save around £1.6 billion a year.
Other initiatives to increase productivity, such as the Productive Ward scheme, are not consistently or comprehensively used, it adds.
The report also warns that there are risks to the delivery of the national Quality, Innovation, Productivity and Prevention (QIPP) initiative launched by the Department to help the NHS deliver these savings, because this is the responsibility of Strategic Health Authorities (SHAs) and Primary Care Trusts (PCTs), “whose focus may be distracted by the proposals for their closure by 2013.”
Commenting on the report’s findings, Nigel Edwards, acting chief executive of the NHS Confederation, said the figures on productivity were “disappointing.”
“Measuring productivity in health is incredibly complex and can often miss a lot of what the NHS does. But it is an important issue - demand is rising and so the NHS has to get more bang for its buck,” he said.
“The productivity challenge will come into sharper focus given the broadly flat spending settlement for the NHS and the need to find up to £20 billion in efficiency savings over the next four years,” he said.
“The answer lies in providing care very differently,” said Mr Edwards, and he warned: “the scale of productivity improvement required cannot be achieved without making some major changes to how care is delivered. This will mean taking some difficult decisions about the future shape of hospital services.”