Improving productivity in the NHS is key to meeting the challenges of increasing demand, constrained resources and post-pandemic recovery. The government has set a productivity improvement target of 2% per year but measuring productivity in a complex healthcare environment is notoriously challenging. Meeting the demands for current and future health care requires an ambitious effort to improve productivity measurement at national, system and local levels to confidently identify what works well, and direct resources accordingly.
It is this ambition that prompted the Health Foundation – an independent charitable organisation working to build a healthier UK – to commission NHS Arden and GEM to examine how productivity in the NHS is currently assessed and how it should evolve. Our comprehensive review has included widespread engagement with stakeholders across government, academia, NHS England and local health systems, as well as a review of existing literature and metrics.
What stands out from the review is that the solution isn’t about adopting a one size fits all approach. It’s about understanding and applying the right mix of measures and methods to gain meaningful insights, which starts with understanding what you want to measure and why.
Productivity in the NHS
While productivity, in its simplest terms, can be defined as the ratio of outputs to inputs, it is fundamentally challenging to meaningfully measure how productive a large, complex system such as the NHS is. As evidenced in our conversations with stakeholders, productivity metrics need to have clinical resonance, be outcome orientated, focus on health gains for patients, and be used as an enabler to decision making as part of a broader set of measures. Distinctions between productivity, quality improvement and benefit realisation are often unclear, but at the heart of all measurement is a desire to find and enhance value.
Several measures of productivity exist, enabling comparisons over time and benchmarking nationally, but these do not always work at a local level. Digital technologies and data-driven tools such as the Model Hospital are helping to capture efficiency at ICS-level as well as identifying improvements in patient outcomes and the value of care. A multi-faceted approach which combines these and other metrics enables healthcare providers to more accurately reflect productivity in its broadest sense, but significant gaps remain.
Understanding the challenges
One of the main challenges is how we account for short term pain when developing new ways of working. Changing a care pathway or implementing new processes may lead to productivity dropping initially as the individuals and organisations involved adapt. Even when data does start to show improvement, it may not fully capture the wider benefits. For example, improvements in working practices or introducing digital tools may have direct productivity benefits but may also strengthen workforce resilience and reduce staff turnover more broadly, with indirect benefits which may not be captured as part of a productivity measure.
Prevention is one of the government’s three main shifts and is expected to be a major area of investment as neighbourhood health takes shape. Capturing the impact of prevention is complex, particularly in terms of productivity. Benefits to patient health may take a long time to be realised, decades in some cases. Although shorter-term measures can be applied, we don’t yet have an answer to how we accurately measure the impact on productivity of this strategic shift.
Both challenges are exacerbated by inconsistent data quality, particularly outside of the acute sector. As multidisciplinary and cross-organisational work increases so too does the complexity in measuring productivity. We need to further develop tools to link activity and outcomes across all system partners, particularly the social care and independent sectors, to help systems to disaggregate metrics and identify individual drivers of productivity. This in turn would enable a more nuanced approach to optimising different elements of complex workflows.
Applying existing metrics
Notwithstanding these gaps, ICBs and broader neighbourhood health teams do have access to a wide range of metrics that can meaningfully inform decision making. The first step is in understanding the different types of metrics available and their use. Different measures of productivity may be appropriate for a hospital manager carrying out short-term financial planning, compared to an ICB leader considering approaches to population health management. Pairing this with awareness of what is not yet adequately measured will also help commissioners avoid making assumptions that could derail an otherwise promising initiative.
As a practical output of this review, we have identified and classified several methods of productivity evaluation based on the reason for measurement. This is designed to help NHS organisations adopt a combination of suitable productivity metrics to suit the needs of different programmes and audiences.
Figure 1: Productivity classification matrix
Macroeconomic productivity measures provide system or nationwide indicators, that enable accountability and transparency for governments and system planners. Microeconomic metrics provide comparisons of productivity at sector or specialty level, including quality improvement, programme monitoring and service planning. Some metrics focus on more technical aspects, such as whether we are producing more with the same resources, while others are more evaluative, looking at whether we are achieving value with our resources. All have a role to play to a greater or lesser degree, depending on the process or pathway being evaluated and the lens through which it is being assessed.
Future developments
This review is a step towards honing and improving how productivity is measured and can help commissioners to navigate the breadth of measures currently used across different settings. As models of care evolve and healthcare becomes more integrated, investing in more refined, long term and context-sensitive productivity metrics will be key to ensuring healthcare is not only efficient but truly valuable to patients. This will require better tools and new metrics to measure productivity across evolving care pathways, specifically addressing the current gaps in data and analysis and incorporating workforce factors which reflect long term capability and sustainability.
The report highlights several key areas for development. These include aligning productivity measures with future service needs and long-term investment goals, better reflecting patient outcomes and workforce resilience. It also calls for bridging local and national insights through integrated evaluation methods, improving how we value preventative care, and enhancing tools to assess productivity across the full spectrum of care, including social care and the independent sector.
By Sheena Dungey, Senior Health Economist, Rebecca Gossage-Worrall, Senior Improvement Consultant, Mui Wan, Associate Director of Finance and Performance Improvement, NHS Arden & GEM
