Government efforts have reduced the NHS productivity challenge by £6bn, but also increased its instability

Based on the small real terms increase in funding promised by the government, a new King’s Fund analysis shows the NHS will face a productivity gap of up to £14bn a year by 2014. This is less than previous assessments as it is based on reduced estimates for expenditure that may now no longer be required on pay and procurement, shorter waiting times and capital investment.

There will be instability at a time when we need single minded focus

Finding £14bn means achieving annual productivity improvements of around 4 per cent instead of the 6 per cent that would have been required if the target had been £20bn.

A great deal of work has been done to analyse opportunities for improving productivity. The King’s Fund review shows the most significant opportunities lie in reducing variations in clinical practice. The Department of Health’s quality, innovation, productivity and prevention programme should therefore focus on action within clinical microsystems - the frontline teams that deliver care to patients. For example, improving decisions taken in prescribing drugs, using diagnostic tests and the length of time patients stay in hospital, provide the best opportunities to deliver the QIPP agenda.

GP commissioning and service line management have the potential to free resources within clinical microsystems, but depend upon excellent clinical leadership, together with high standards of management support. It is also important to provide timely, accurate information about performance and incentives to motivate teams to improve their performance. The NHS must continue to invest in leadership and skills development to ensure these ingredients are not lost.

Provider organisation leaders and commissioners have a critical role to play. Providers’ priorities include improving workforce productivity and cutting spending on sickness absence and the use of bank and agency staff. For commissioners, the aim must be to redesign care pathways to reduce unplanned admissions and better meet the needs of people with long term conditions.

NHS chief executive Sir David Nicholson emphasised that many of the most significant productivity opportunities arise at the interfaces between organisations. Capitalising on these opportunities depends on organisations working together in local systems of care to explore ways of sharing services and costs, as well as reconfiguring clinical care.

A systems approach is especially important in reducing duplication and concentrating services where this will improve outcomes.

A practical example of this kind of approach can be seen in Torbay, where health and social care integration have had a significant impact on the use of hospitals, as well as other benefits. Co-located teams use a single assessment process and pooled budgets to commission care for Torbay’s older population. This has delivered low emergency admissions, a reduction in the number of daily occupied hospital beds and a low rate of discharges to residential homes.

National decision makers can support work by providers and commissioners by continuing to exercise constraint on pay and prices. They also have a role in providing the evidence base to support productivity improvement and in using the tariff to create incentives to improve productivity and efficiency. Careful thought must also be given to the levers used to improve NHS performance and the balance between stimulating competition and supporting collaboration.

Changes to the organisation of the NHS as a result of the white paper mean there will be considerable instability at precisely the time when there needs to be a single minded focus on delivering productivity improvements. There is a significant risk that many experienced leaders may lose their jobs or decide to leave the NHS as the government seeks to make substantial cuts in management costs. This risk must be managed to ensure that the people most likely to deliver QIPP are protected and given the security needed at a time when the NHS faces arguably its biggest ever challenge.

Learning from experience of delivering transformational change in high performing companies, the government and the NHS must recognise the importance of working across a series of dualities. These include:

  • managing the present and planning for the future;
  • empowering frontline staff and providing leadership in national and local systems;
  • promoting competition and supporting collaboration;
  • supporting clinical engagement and valuing the role of managers.

Above all, the focus of QIPP needs to shift from analysis to action at all levels of the NHS. Priority has to be given to execution and implementation to realise the productivity opportunities that have been identified and to free up resources to fund new drugs and technologies and to meet the needs of the ageing population.

  • This article is based on Improving NHS Productivity: more with the same not more of the same by John Appleby, Chris Ham, Candace Imison and Mark Jennings, which is published today by The King’s Fund.

King's Fund seeks clarity on NHS cost pressures