Content originally from The King’s Fund
The NHS is inefficient
Myth
The NHS is sometimes characterised as being over-managed, inefficient and wasteful.
The facts
Measuring the productivity of the NHS over time can be difficult, as full data on the volume and quality of the outputs and outcomes the NHS produces are not always available. However, a study by the University of York’s Centre for Health Economics found that NHS productivity increased by 16.5 per cent between 2004/05 and 2016/17 compared to productivity growth of only 6.7 per cent in the economy as a whole. This averaged at a year-on-year growth in productivity of 1.3 per cent.
The NHS is one of the largest and most complex organisations in the world. Yet, evidence indicates that it employs relatively few managers, with one study recently suggesting that managers make up around 2 per cent of the NHS workforce compared to 9.5 per cent of ‘managers, directors and senior officials’ in the UK workforce as a whole.
The NHS compares well with other health systems, coming 4th out of 11 systems for efficiency in the Commonwealth Fund analysis.
The NHS compares well with other health systems, coming 4th out of 11 systems for efficiency in the Commonwealth Fund analysis. It also compares well on other key indicators of productivity such as the average length of stay in hospital and the proportion of drugs that are prescribed in their (cheaper) generic form instead of the (more expensive) branded version.
There is no doubt that the NHS can do more to improve productivity and reduce unwarranted variation in how services are delivered. For example, Lord Carter of Coles estimated that reducing unwarranted variation in procurement and delivery of hospital care could save around £5 billion each year. The Getting it Right First Time programme has also shown that significant gains can be made by reducing variation in the delivery of clinical services.
At the same time, the NHS is operating in a context of intense pressure on services, with high levels of staff vacancies, growing waiting times for care and very high hospital bed occupancy. These factors combine to reflect a system that is ‘running hot’, with little capacity to focus on improvement and efficiencies. Against this background, the government has doubled the annual efficiency target for the service from 1.1 per cent to 2.2 percent, aiming to deliver an annual saving of £4.75 billion without setting out a plan for achieving this.
Verdict
As the former Secretary of State for Health and Social Care, Sajid Javid, said recently, the NHS is already one of the more efficient health services in the world, and evidence suggests it is far from being over-managed. While it can, and must, do more to improve productivity, it is hard to see how current efficiency targets can be met.
SWF Health & Social Care Group 