Hospital productivity has fallen over last decade

New pay contracts have increased hospital costs but not driven productivity, while payment by results has achieved only patchy increases in productivity, according to a report published today by the NAO.

Additionally attempts to boost productivity through sharing good practice, such as the productive ward, have not been used widely enough within hospitals, the NAO has found.

A report published last week by the NHS Institute for Innovation and Improvement and King’s College London warned the productive ward programme, launched in 2008, has been implemented in fewer than half the wards in England.

The NAO’s report on hospital productivity over the life of the NHS Plan also concluded that hospital trust managers had concentrated on hitting targets and maintaining financial balance, rather than increasing productivity. 

It also warned there was a risk that quality innovation, productivity and prevention (QIPP) plans would not be delivered due to a lack of input from hospital trusts, and the planned abolition of strategic health authorities and primary care trusts.

The NAO did accept that the extra money poured into the NHS over the past decade had helped deliver more and better paid staff, reduced waiting times, higher quality care and better hospital facilities. It acknowledged that productivity could be expected to fall initially when extra funds were being pumped in.

However, it recommended future NHS pay settlements should set out expected productivity gains and that PbR tariffs should promote productive behaviour.

Additionally, major NHS initiatives should be evaluated after implementation for their cost and benefit, and data on hospital costs and activity must be improved.

Commons Public Accounts Committee chair Margaret Hodge said the extra resources put into the NHS “have not been achieving as much as they should”.

She said: “With the rate of increase in NHS resources set to slow markedly, the Department of Health now needs to ensure that hospitals focus as much on delivering value for money as they have on meeting targets and improving outcomes.”

Also responding to the NAO report, NHS Confederation acting chief executive Nigel Edwards said the figures identified by the auditors were “disappointing”. He warned the NHS must “get more bang for its buck”.

“The scale of productivity improvement required cannot be achieved without making some major changes to how care is delivered,” he said. “This will mean taking some difficult decisions about the future shape of hospital services.”

King’s Fund chief economist John Appleby said the NAO report had identified opportunities for the NHS to increase productivity, particularly by reducing variation in clinical performance by frontline teams.