The NHS in England used almost half of the £2bn real terms increase in funding it received in 2015/16 to commission care from non-NHS organisations and support the under-funded social care system, according to a new Health Foundation report.  

The report finds that organisations outside the NHS are delivering an increasing share of non-emergency care. NHS hospitals are increasingly focused on meeting rising demands for emergency care, for which they receive a lower financial return, making it harder for NHS trusts to break even, according to A year of plenty? An analysis of NHS finances and consultant productivity.

With rising costs and demand in a labour intensive sector, finding ways to improve workforce productivity will be vital. The report includes an in depth analysis of the factors associated with consultant productivity. It finds that systemic problems mean that the NHS is not getting the most out of its consultant workforce.

The research found that despite the hard work of consultants, productivity has been falling and found several factors that could be addressed to make the most of the NHS’s highly skilled workforce. A link was found between a higher proportion of nursing and support staff working in a hospital and improved consultant productivity. This suggests that a more coherent workforce strategy which invests in a balanced increase in staff would improve productivity.

The report has been published ahead of NHS England’s Five year forward view delivery plan, and in the middle of the most austere decade in the NHS’s history – with planned funding increases for the rest of this parliament much lower than previous years.

 Anita Charlesworth, Director of Research and Economics at the Health Foundation, said: 'Rising demand for emergency care meant that NHS providers haven’t had the capacity to deliver planned care and patients had to be diverted outside the NHS. NHS hospitals were left squeezed by sharply rising drug and staff costs with little additional funding. The result was big deficits that had to be covered by raids on investment budgets.

‘The NHS urgently needs to look at how to ensure additional funds reach NHS providers. The health service needs to plan better for emergency demand, fund emergency care fairly and make sure it gets the best possible price for care provided outside the NHS.

‘Getting more NHS funding flowing to NHS hospitals is necessary but not sufficient to turn round the health service's finances. The NHS has got to use the skills and talents of its workforce much better.

‘Consultant productivity has been falling but not because staff aren't working incredibly hard. NHS consultants work in a system and if that system isn't well designed they can't be productive.

‘Much better workforce planning is critical. Increasing the number of consultants by a fifth without investing in nurses is a prime example of short term cost savings undermining the essential task of improving long-term productivity. With no obvious end to austerity there must be a decisive shift from short-term policy making.'

Findings in the report include:

  • Almost half of the £2bn real terms increase for NHS England in 2015/16 was spent on care provided by non-NHS organisations and support to local authorities for social care. Most of the care commissioned from non-NHS organisation is delivered by independent sector providers. Inpatient and outpatient services provided by non-NHS providers rose by 7% last year.
  • A growing share of planned care is being delivered by non-NHS providers, with NHS hospitals having to focus on meeting the rising demand for emergency care which attracts lower payments for hospitals.
  • NHS hospitals, mental health, community and ambulance trusts received relatively little of the £2bn real terms uplift to the NHS commissioning budget last year. NHS providers' operating income rose by just £0.8bn in real terms, while their costs rose by £2.4bn.
  • Despite the government making mental health a priority, planned spending on adult mental health for 2016/17 is £20.8m short of the additional funding needed to meet the parity of esteem target for 2016/17.
  • In the last six years the number of NHS consultants increased by over 20% compared to a 1% increase in the number of nurses. But the NHS is not using the skills of its consultant workforce well.
  • Ineffective use of staff means the productivity challenge set in the Five year forward view is becoming increasingly difficult. Consultant productivity across 150 NHS acute hospitals fell by an average of 2.3% a year between 2009/10 and 2015/16.
  • Falling consultant productivity doesn't mean consultants aren't working hard - they are. But consultants must be supported by strong teams within well organised systems. Hospitals with the lowest consultant productivity have fewer nurses and support staff working with consultants, a higher number of delayed transfers of care, and pay rates that are less competitive for their area.

Media contact

Jack Cutforth
0207 664 4623



Further reading

Research report

A year of plenty?

March 2017
Research report

The NHS is facing unprecedented financial pressures 2.5 years after the publication of the Five year...

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