Case study

How productive is the NHS?

Research from York measures the productivity of the NHS and influences the size of the NHS budget.

The issue

Measuring inputs such as staff, hospital beds, medicines and outputs, such as GP consultations, operations and hospital stays, gives an indication of NHS productivity. 

Productivity is a key indicator of efficiency and competitiveness and is influential in government decisions on how much money the NHS receives. It is also an important way to account to the public for how their tax revenues are spent. 

The research

A novel method to measure NHS productivity was devised by a York team of researchers in 2005 and an ongoing research programme at York has continued to refine and improve the methods ever since. The approach involved detailed analysis of routinely collected NHS data to produce a measure of outputs that was comprehensive, based on over 5,000 healthcare categories and for all NHS patients treated in primary care, in hospitals and in community settings. It also took into account the quality of the outputs by using indicators of health outcomes and waiting times and refined the measures of inputs, especially capital and labour, that are used in the productivity calculation.

Every year, the York research team provides estimates of NHS input, output and productivity growth for the Department of Health and Social Care, incorporating new methods and data each time. They have also developed methods to measure productivity at regional and hospital level in order to indicate where improvements in productivity may be possible.

The outcome

The NHS spends over £120bn a year and the budget provided for the NHS is influenced by the evidence on how well the money is spent. The annual estimates of productivity that we produce for the Department of Health and Social Care are a key part of their negotiations with the Treasury about the size of the budget and the research is cited in exchanges with ministers and government committees that scrutinise NHS spending. In particular, the quality adjustment method devised by York is important in ensuring that productivity is not under-stated which may have a negative impact on the size of budget settlements and hence lead to lower investment in the NHS.

The Office for National Statistics uses the estimates to produce the annual UK National Accounts that measure the size and growth of the whole economy. Governments and health ministries in other parts of the world (eg Japan, Italy, Malaysia, Sweden) have taken an interest in the methods developed in York in relation to measuring productivity in their health care systems.

Featured researcher
Adriana Castelli

Adriana Castelli

Dr Castelli's research interests include health policy reforms, performance measurement with a particular focus on the development of productivity measures of healthcare goods and services, and analysis of geographical/spatial variation in quality of life and health.

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Featured researcher
Katja Grasic

Katja Grasic

Miss Grasic's work includes measurement of the NHS productivity, selection of quality indicators for performance measurement and research on fair payment for specialised services. Currently, she is analysing the effects of the Best Practice Tariff incentive scheme as part of her NIHR doctoral fellowship.

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