The Health Foundation’s Efficiency Research Programme invests in teams who will discover ways to make our health care system more sustainable. We spoke to Peter Smith, Emeritus Professor of Health Policy at Imperial College and Chair of our Efficiency Research Advisory Group, about the priorities for efficiency research, and how the knowledge it delivers can help the NHS deliver better care.

Why is researching efficiency in health care so important?

I’m actually quite passionate about the pursuit of efficiency in health care systems. Not just as some dismal austerity principle because funds are tight, but because if you waste resources in one area, there’s always a cost somewhere else in the system. Someone will be getting poorer care or no care at all because of that inefficiency.

It also affects our perception of the NHS. If politicians, the press, and the general public see inefficiencies, it sows seeds of doubt about whether money is being spent wisely – possibly affecting future funding or support for the NHS.

What are the big priority areas for efficiency research?

Allocative efficiency looks at whether we’re spending our money on the best interventions and treatment. The National Institute for Health and Clinical Excellence already looks at interventions, mainly pharmaceutical, to see whether they’re value for money. My work extends that to the much trickier area of health care interventions such as types of surgery or even care for conditions like cancer and diabetes.

We know from previous research that spending a small amount extra on care really does – on average – yield substantial benefits. So we have to be very careful about spending too much money on new drugs, as it takes resources away from more mainstream care such as emergency services that are actually be pretty good value. Research colleagues have done a lot of work on this recently, for example in relation to the Cancer Drugs Fund.

The other big area is technical inefficiency, which accepts that we’re doing the right things, but asks if we are doing them at minimum cost or indeed securing the expected outcomes. For example, are we wasting resources in the way that we organise services for older people? Are doctors, nurses and other health care professionals working to best effect in delivering services?

These are the sorts of big issues that the Health Foundation’s Efficiency Research Programme is addressing.

Why is efficiency research such a challenging area?

Researching efficiency can be difficult because inefficiency is a symptom that something is wrong, but pinpointing the source of inefficiency can be quite difficult. You can have inefficiency at a very micro level. For example, duplicate tests might be ordered during treatment, leading to unnecessary spending. But then at the more macro level you might have inefficiency because you haven’t got beds available to treat an emergency in a timely fashion.

Almost all the ways we measure efficiency, like length of stay or number of operations per surgeon, are just partial measures. They’re helpful but they don’t tell the whole story. Indeed, they might even give perverse stories. For example, a low length of stay in your hospital might actually be at the expense of inefficiency in A&E or primary care services having to deal with people who have been discharged too early.

I’ve just finished editing a book with the European Observatory on Health Systems and Policies. We try to break down inefficiency into all the various stages, from just receiving the money in the first instance and converting that into real resources (like workforce), and then using those resources to create physical outputs (such as an episode of hospital care), and then beyond that to the outcomes of care. At any stage you can have wastage of some sort.

Tell us about some of the projects that are being funded as part of the Efficiency Research programme?

One current project by the Institute of Fiscal Studies is using a unique data set that links older people’s use of social care and health care services. This research could help to answer questions about the best ways to provide social care, and how this could reduce the burden on health care services.

Another project led by the London School of Economics and Political Science is looking at the diffusion of new technology in the NHS and its impact on the workforce. The results could help to support better workforce planning.

We commissioned four projects in the first round of the programme and we’ll soon be announcing a further three, taking efficiency research into new areas.

What are the opportunities for future research that could have a big impact on our health service?

Mental health is the single biggest programme of care in the NHS (bigger than cancer or heart disease), with massive variations across the country in treatment offered. Not all of those areas can be doing it right, and there are data sets coming on stream that may show where efficiency and outcomes can be improved.

Another area is community health care services. The NHS spends a lot of money on these, but there is very little information at the moment about whether that money is spent wisely. Research will help us understand how community services can be used to better effect.

The objective always should be to get more health for the money we put into the NHS.

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