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Productivity of the English NHS: 2013/14 update

Posted on 29 January 2016

CHE's latest Research Paper 126 written by Chris Bojke, Adriana Castelli, Katja Grašič, Daniel Howdon and Andrew Street

126 cover

The issue of NHS productivity currently holds substantial public attention, particularly given the efficiency challenge set out in the Five Year Forward View published by NHS England and other national bodies 2014. In 2015 the Department of Health appointed a Minister (Parliamentary under Secretary of State) with a specific ministerial brief for NHS productivity.

This report is the latest in a regular series of NHS productivity measures produced by the Centre for Health Economics. This report updates the time-series of National Health Service (NHS) productivity to account for growth between 2012/13 and 2013/14. NHS output encompasses all activity, as valued by administrative costs, for NHS patients, and is measured by combining data from Reference Costs, Hospital Episode Statistics, Prescription Cost Analysis, and the GP Patient Survey.

NHS inputs are made up of labour, intermediates and capital, used by the NHS in carrying out its activity for the financial year. We calculate input growth using data from organisational accounts and from workforce data.

Productivity growth is positive when the rate of growth of outputs exceeds that of inputs – as we again observe here for the most recent financial year – and negative when the opposite is true.

Output growth is measured at 2.64% for the NHS as a whole, with improvements in quality accounting for 0.27% of this growth. These rates represent an increase on the previous year’s output growth of 2.34% – the lowest recorded since our series began in 2004/5 – and a return to a positive quality adjustment. Quality improvements include reductions in waiting times and improvements in HRG-level survival rates following discharge from hospitals. Output growth is broadly within the range observed over the last four years, and is driven mainly by growth in nonadmitted activity as captured by Reference Cost data.

We find that overall NHS input growth is low, at around 0.55%, and down from 2.36% on the previous year. This is mainly due to replacement of Primary Care Trusts by Clinical Commissioning Groups, following the 2012 Health & Social Care Act.

Productivity growth between 2012/13 and 2013/14 for the NHS was 2.07%. This represents a substantial rise on the 0.36% estimate recorded for the previous financial year, and is the fourth consecutive period of positive year-on-year productivity growth.

Full report: CHE Research Paper 126 (PDF , 3,087kb)

NHS outpaces the UK economy in productivity gains. The Conversation

Other papers in the CHE Research paper series can be found at: In house publications