Productivity in English hospitals falls for the third consecutive year, new Health Foundation research shows

Productivity in English hospitals has fallen for the third consecutive year, according to new research from independent health care charity the Health Foundation. The decline partly explains why English hospitals are in deficit – in the first half of 2015 NHS Trusts were £1.6bn in the red.

The Health Foundation’s analysis underlines the increasing difficulty for the NHS of achieving the £22bn efficiency savings required by 2020/21, with provider costs increasing at a faster rate than their outputs.

Recent evidence has suggested that productivity for the NHS as a whole (including both providers of care, such as hospitals, and commissioners) has increased at a faster rate than the productivity of hospitals only, the rate of which continues to decline.

Today’s research comes soon after Lord Carter of Coles published his government commissioned report into hospital operational productivity, which included recommendations on how hospitals can make efficiency savings.

Anita Charlesworth, Director of Research and Economics at the Health Foundation, comments: 'The NHS is in the midst of a financial maelstrom. Falling productivity and ballooning deficits mean there must be serious questions about whether the additional funding announced in last year’s spending review will be sufficient to sustain the quality and range of services. If the NHS carries on as now – the NHS budget will fall short. The NHS is in desperate need of a new approach to improve productivity.'

According to the Five Year Forward View, the NHS in England needs to make 2-3% of efficiency savings each year between 2015/16 and 2020/21 to avoid a significant funding gap.

Between 2013/14 and 2014/15 productivity fell by 0.96%. This is the result of inputs such as staffing rising faster (5.7%) than outputs such as outpatient appointments (4.7%) in 2014/15.

Between 2009/10 and 2014/15, hospital productivity increased only by 0.3% in total, an average of 0.1% per year.

Anita Charlesworth continued: 'The need to improve productivity and efficiency in hospitals in England is both critical and immediate. The NHS needs a new approach to change if it is going to reverse the recent deterioration in productivity, make £22bn of efficiency savings and transform the delivery of care for the long-term.'

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