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NHS struggles to improve productivity

Posted on 3 May 2018

The NHS will find it difficult to stay within budget due to a failure to meet productivity targets, new research from the University of York suggests.


Extreme financial pressures could be limiting the NHS’s ability to make long-term money saving investments.

To avoid overspending the NHS needs to increase the quality and quantity of what it delivers from given resources, by improving productivity by 2-3% each year.

However the new study, which tracks trends in improvements in NHS productivity growth from 2004, has revealed that between 2014 and 2016 the NHS productivity only grew by 0.04%.

Investment

To be more productive, the NHS needs to invest in new technology, the authors say. However, they warn it is possible that extreme financial pressures could be limiting the NHS’s ability to make long-term money saving investments.

Co-lead author of the paper Professor Martin Chalkley, from the Centre for Health Economics at the University of York, said: “Between 2008 and 2014 NHS productivity growth outpaced that of the UK economy. However, from 2014 onwards that has reversed, substantially so in the most recent year.”

“It is normal for these rates to fluctuate, but years of really low growth make it difficult for the NHS to catch up. The NHS is receiving more money and the quality and quantity of what it delivers has grown, but not at the rate needed for the system to stay within its budget.”

Health demands

Recent years have seen a huge increase in health demands on the NHS. By 2016 UK hospitals were treating 4.9 million more patients than in 2004 – an increase of 39%.

This is due to a combination of factors including longevity and an increase in the number of treatments offered by the NHS.

Upping tax funding to keep pace with the demands on the NHS is widely seen as untenable in the current financial climate. The ability of the NHS to make ever better use of its resources is therefore increasingly important in order to make ends meet.

Co-lead author of the report Dr Adriana Castelli, from the Centre for Health Economics at the University of York said: “2-3% productivity growth is an ambitious target, given that the UK economy is only achieving around 1%. Our study, which looks at the value of everything delivered by the NHS and takes into account quality indicators such as survival rates and improvements to health, puts average growth at 1.17% over the 11 years.”

Productivity of the English National Health Service: 2015/16 update is published by White Rose University Press.

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About this research

This research was carried out by Professor Martin Chalkley and Dr Adriana Castelli, from the Centre for Health EconomicsExplore our research.