Hospital productivity goes down says NAO

Management of NHS Hospital Productivity, published on 17 December, says that while funding has been increased since 2000, average NHS productivity for the UK has fallen by 0.2%, with hospital productivity dropping by 1.4%. Amyas Morse, head of the NAO, said: "Over the last 10 years, there has been significant real growth in the resources going into the NHS, most of it funding higher staff pay and increases in headcount. The evidence shows that productivity in the same period has gone down, particularly in hospitals." The report attributes the decline to an emphasis on meeting national priorities, with the money going to pay for staff, reduced waiting times, improved facilities and higher quality care. Overall levels of activity have not increased at the same rate as resources. The NAO says that hospitals need to provide more leadership, management and clinical engagement to optimise the use of resources and deliver value for money. One of the core issues has been that pay contracts implemented since 2003 have increased costs and not always used to improve productivity. As an example, the NAO highlights the failure to align consultants' activity with hospital objectives. It also says there have been delays in rolling out the Payment by Results (PbR) scheme, with about 40% of hospitals' income not covered, and that the quality of information used to pay hospitals has been variable. This is despite the fact that PbR has promoted some efficient practice. There has been slow progress with Department of Health initiatives to improve productivity, and hospitals have been slow to identify where they could obtain efficiency savings. In addition, some hospitals do not effectively control staff costs. The NAO makes a number of recommendations: - any future national pay contracts should set out the expected productivity gains and efficiency savings; - an alignment of the national tariffs in PbR and associated business rules with expected efficiency gains; - a review of the accuracy of costing data; - an assessment of costs and benefits of national initiatives; and - the production of new data on quality such as patient reported outcome measures. It also advocates on the last point that the current UK measure should, if possible, be disaggregated for the devolved administrations and by type of healthcare service.