Measures of productivity in the NHS can be misleading and take no account of improvements in quality.

Published:25/04/2002, Volume II2, No. 5802, Page 22 23

Can the government improve the quality of care in the NHS at the same time as showing gains in efficiency? The Labour government has staked its reputation on improving the NHS and devoted record sums to improve services over the next five years.But will the increases be enough? Part of the answer has to do with productivity.

On most measures, the NHS seems by international standards to be relatively productive. In 2000, the World Health Organisation health systems report put the UK at 26th in terms of health spending per capita but 9th in terms of overall goal attainment.

1 Measures such as the number of patients treated and prescriptions issued have been rising faster than spending, indicating improvements in productivity.Cost-improvement programmes in the NHS have been based on reductions in unit costs of 2 per cent or more a year.However, if productivity increases were to slow or reverse, the increased spending may not be enough.But because the government uses impoverished measures of efficiency in its performance assessment framework, success in achieving the NHS plan will show up as worsening efficiency.

The NHS is poor at measuring its own productivity.The performance assessment framework, introduced in July 2000, comprises six indicators: health improvement, fair access, effective delivery of appropriate care, efficiency, patient and carer experience, and health outcomes.

2The efficiency indicators are: day-case rate, length of stay, generic prescribing, and unit costs in maternity and mental health.The last two of these were omitted in 2002's indicators, which substituted 'missed outpatient appointments'and 'data quality' (neither of which relates directly to efficiency).So comparisons over three years can only be made for the first three indicators.The 2002 publication makes comparisons only with the previous year.Detective work is needed to examine trends over three years (see table, right).

Day cases refer to patients discharged on the same day, who are omitted from length-of-stay statistics.Much increased activity in hospitals has been from day cases.They account for most elective, planned admissions.The performance indicator focuses on 25 procedures, with an adjustment for the mix of cases treated.The indicator shows that 65 per cent of patients were treated as day cases in 1998-99,63.6 per cent in 1999-2000 and 64.9 per cent in 2000-01.

Though the commentary on the 2000-01 results noted a 2.1 per cent improvement on the previous year, no comparison was made with the year before that.No improvement has occurred over the three years.Length of stay has been falling while hospital admissions have risen, at around 4 per cent a year.

Records show 12.3 million finished consultant episodes in 2000-01, which - allowing for multiple episodes (10 per cent) and emergency repeat admissions (6 per cent) - still leaves around 11 million people, or over 20 per cent of those admitted to English NHS hospitals.The relevant case mix-adjusted lengthof-stay indicator, based on all acute hospital admissions, showed a small annual improvement (0.3 per cent) in 2001-02, but no data was published for 1999-2000. Indeed, the technical notes for that year's indicator warned against using it to compare movement year on year.

Generic prescribing has been important in controlling drug costs.The number of prescriptions issued by GPs has also been rising at around 4 per cent over the past decade, with just under 600 million in 2000-01 or over 10 prescriptions per head.This increase, often for new drugs, has been possible within tight budgets due to heavy reliance on use of generic rather than branded drugs.

Generic prescribing in the performance indicators is measured by the ratio of generic prescription items as a percentage of all prescription items, based on GP prescribing.This indicator rose from 65.5 per cent in 1998-99,70.2 per cent in 1999-2000 and 73.6 per cent in 2000-01.But while generic prescriptions have traditionally been cheaper than branded equivalents, this margin has eroded since 1999, when the NHS faced sharp rises in the cost of generics.The 14 per cent rise in prescription costs that year was attributed mainly to generic drugs, whose pricing is turbulent.Setting maximum prices in 2000 moderated the rate of increase.

One additional indicator applies to trusts: an index of its costs relative to what those costs might have been expected to be if national averages applied.This indicator was not part of the package announced in 2000 and no values were included in the February 2002 issue.The indicators above do not provide evidence for continuing productivity gains in the NHS.The dropping of several indicators and lack of data for 2000-01 compared to 1999-2000 fuels suspicion of further 'spin'.Can these impressions be corroborated with other evidence? The hospital episode statistics show that crude length of stay increased for all specialties from 7.7 days in 1999-2000 to 8.2 days in 2000-01.

3This rise was the first in NHS history.

4The number of beds also increased slightly in that year, again reversing the trend.While it is possible that case-mix adjustment could turn this result into a decline, a claimed small decline of 0.3 per cent is hardly reassuring, particularly given the lack of comparative data for the previous year.

The Department of Health has acknowledged that productivity problems exist. In its evidence to the Commons health select committee, it noted a 5.5 per cent reduction in hospital and community health services efficiency in 1999-2000.

5It speculated that measures which previously enhanced efficiency, such as increases in day-case activity and the closure of long-stay psychiatric hospitals, no longer seemed to deliver the same benefits.

NHS policy is likely to raise rather than reduce the cost per patient treated, for various reasons.The NHS is committed to raising standards, through reduced waiting times and the national service frameworks for particular diseases (coronary heart disease, mental illness, older people, diabetes, cancers).The Prescription Pricing Authority has highlighted the frameworks' impact on prescribing costs, which were rising at 9 per cent a year in December 2001, driven mainly by cardiovascular, endocrine and central nervous system drugs.

6Also, more staff are being hired to deliver these ambitious goals.Staff shortages are seen as the key barrier to delivering the new NHS.The National Institute for Clinical Excellence guidance on use of particular health technologies has increased costs to the NHS by around 0.5 per cent in its first year.

More fundamentally, quality improvements should in principle be included in productivity measurement. In another sphere, the improvement in the quality of personal computers has been as important as prices decline. In most sectors of the economy, official surveys of the quality of particular products are used to build quality into estimates of productivity.

The NHS, however, like all other health systems, has no ready quality measures, so its performance assessment relies on relatively crude measures of activity and cost.This is why the World Health Organisation health systems report used a range of cost, outcome and distribution measures to rank health systems.

Productivity as historically defined in the NHS may have stopped improving.Two main measures - day-case rates and length of stay - have levelled off.Generic prescribing no longer automatically saves costs.None of these measures will improve endlessly.Also, should the NHS succeed in delivering its ambitious plans to improve quality, as outlined in the NHS plan, the inherent difficulties in all health systems, including quality in measures of productivity, will show improvements in services as efficiency losses. l REFERENCES 1Health Systems. Improving Performance.WHO health report 2000; [online] www. who/int/dsa/ 2Department of Health.NHS Performance Indicators. February 2002. [online] www. doh. gov. uk/nhsperformancei ndicators/ 3Department of Health.Hospital Episode Statistics 2000/1.

Department of Health. [online] Cited Apr 02 www. doh. gov. uk/hes/ 4Office of Health Economics.

Compendium of Health Statistics, 1997.Table 3.25.

5Department of Health.

Memorandum to House of Commons health committee: public expenditure questionnaire 2001.

2002. [online] Cited Apr 02 www. parliament. the-stationeryoffice. co. uk/pa/cm200102/cmselect /cmhealth/242/242m08. htm 6Prescription Pricing Authority.

Volume and Cost.2002. [online] Cited Apr 02 www. ppa. org. uk/news/vol_cost_p resc. htm