NHSE reveals 10% productivity drop

A report to the board yesterday included an analysis to understand the drivers of productivity in the acute sector.

It said: “Based on this analysis, adjusted productivity (taking into account the above) would be around 11 per cent lower than before the pandemic or 8 per cent if we adjusted for the impact of industrial action.”

Four factors were said to explain roughly half of the decline: increasing costs as infrastructure and tech is upgraded; increased length of stay for patients; increasingly expensive new medicines; and temporary staffing costs.

However, the report added: “This still leaves a gap which we cannot yet explain from national data. In particular, we cannot yet estimate the impact of reduced staff discretionary effort as we have come through the pandemic and industrial action.”

It also suggested the loss of experienced workers after covid could have contributed.

In relation to length of stay, it said this was partly due to rising acuity, but also “disruption to operational processes [and] constraints on out of hospital capacity in particular social care where domiciliary care capacity has been recovering since 2022”.

NHSE is pledging a new plan to cover “all aspects of productivity improvement”, covering a further emphasis on prevention, maximising savings and investing in IT and tech, the report said.

The paper was authored by chief finance officer Julian Kelly.

The service has faced criticism for its major increases in staffing and funding whilst not delivering significantly more activity.

Earlier this year, NHSE CEO Amanda Pritchard pledged to improve productivity by 2 per cent a year in exchange for investment in tech.

It said current measurements of productivity need to be improved, particularly where service delivery models have changed. Certain activity types, including diagnostics, advice and guidance, and same day emergency care, were not included in the analysis.

Speaking during the board meeting, Mr Kelly said NHSE was in “active discussions” with the Office for National Statistics about reflecting preventive investments in measurements of NHS productivity. It says that improvements to productivity were dependent on fixing the NHS’s “ageing estate”, claiming that 12,000 incidents in the past two years — including electrical faults and leaks — had disrupted clinical services.

During the meeting, Mr Kelly said: “We will also continue to talk with [the government] about how we continue to find the investment we will also need to put into the estate because one of the things that still hinders us is the growth in critical backlog maintenance, and the fact that every day we will be losing a theatre, a ward block, a pathology department.”

Agency spending fell from £3.5bn in 2022–23 to £3bn in 2023–24, equivalent to 3.6 per cent of total pay, according to the paper, which says this is the lowest level of spending as a proportion of staff since 2017–18.

Layla McCay, director of policy at the NHS Confederation, called for further investment in social care and capital.

Dr McCay said: “Clearly, the NHS has further progress to make and health leaders are fully committed to that. However, this will forever be a challenge if the government does not wake up to the scale of the population’s health problems and the capital investment that is desperately needed to truly modernise and transform what the health service can offer its patients.”

Siva Anandaciva, chief analyst at The King’s Fund, said: Measuring NHS productivity accurately is not an easy task – but NHS England are clearly investing time and energy to understand the reasons behind the sluggish NHS productivity growth over recent years.

“The ambition to publish a plan in the summer to recover productivity in the NHS should be welcomed, particularly if it helps reinforce the message that health systems might take steps to improve care for patients and the public – such as investing in preventative care and implementing the long term workforce plan – that will take some time before they ‘show up’ in NHS productivity measures.”