The trend of year-on-year declines in National Health Service productivity seems to have been turned around as more patients are being treated at a lower cost, an analysis by the Audit Commission has revealed.

NHS productivity has been on a downward spiral for many years as costs have risen at a much higher rate than productivity. Given that the health service could be facing a real-term shortfall of £15 billion in the five years after 2011, when spending growth looks set to dry up, it is crucial that productivity and efficiency improvements are made where possible to help deal with the rising remand on resources.

During a speech earlier this month Tory leader David Cameron warned: “If productivity keeps falling at the rate it is today, then even with real-terms increases in spending we couldn’t hope to cope with the pressures on the NHS”, highlighting the urgent need for more efficient services.

But, encouragingly, the Commission’s analysis shows that average unit costs for hospital patient care dropped for the first time in years in 2007/08, falling by 1.8% per cent year-on-year compared to a growth of 4% for 2006/7, and while unit costs are not available for 2008/9 information on activity and income suggest it has more or less held steady, it said.

On the down side, the analysis, which looked at PCT levels of spending and activity over the last two years, suggests that trusts “made little or no in-road in 2008/9 to transferring care from hospitals into the community or in dampening demand, either in terms of investment or activity,” key factors in reducing costs further.

And on the basis of these figures, it is looking unlikely that demand management will make a significant contribution to any savings in the short term, the Commission concluded.