Unlocking the productivity door – is increased funding the only solution?

Following the recent report from the Institute of Fiscal Studies and The Health Foundation, Andrew Walton discusses how to tackle the NHS productivity challenge.

6 August 2018


I am moved to write this after reading the excellent report by the Institute of Fiscal Studies and The Health Foundation  “Securing the future:  funding health and social care to the 2030’s”.

Most people would agree that levels of provision/service are falling in most parts of the NHS.  This report very credibly, (by using lots of reliable supporting evidence) looks at health and social care together and paints a realistic picture of what will be needed to provide good levels of care and treatment in the next 10-15 years.

It makes clear that meeting the challenges over that period is not just about additional resources – these are necessary but not sufficient.  Changes to the way we deliver services to improve their effectiveness whilst maintaining a relentless focus on improved efficiency and productivity, is also required.

The report includes detail confirming things that are well known; projected growth in population size (10%), demographic composition (4m more over 65s) and prevalence of chronic conditions.  There are also some less well understood observations such as the overall rise in health costs associated with increased longevity resulting from successful initiatives for reducing the prevalence of risky health behaviours. For example, scenarios of reducing alcohol consumption even suggest increasing costs of treating alcohol related conditions as people are more likely to survive long enough to develop them e.g. breast cancer.

Pay is the single largest cost of delivering healthcare; two thirds of NHS spending.  The report points out that a mere 1% pay growth per annum would cost the NHS an additional £18bn over the next 15 years so an individual’s productivity is very significant.  There is already a problem with recruitment, retention and morale of staff; the recent generous, and necessary, award is a sticking plaster. Changes in culture and bureaucracy, in my view, are keys to unlock that particular door.

The government’s productivity framework identifies 5 drivers that interact to undermine long-term productivity; performance, investment, innovation, skills, enterprise and competition.

My personal observation is that laudable increases in productivity over the last decade have resulted in poorer conditions for health workers leading to deteriorating morale which is beginning to negatively affect discretionary effort which, in turn, will lead to further reductions in productivity. The solution is not to squeeze the lemon harder and harder but to innovate. New processes and systems supporting inspired, empowered staff who are prepared to move away from historical practice. Benchmarking exposing better ways of doing things, as well as waste and no/low value activity.

Will more money alone solve these problems? And is the money going to be available?  Most other public sector functions have suffered to allow the increases in health spending, (e.g. Defence spending as a % of GDP 1978-79 was 4%, 2016-17 was 1.9%) but is that sustainable?

The two most important ingredients to deliver the change that is required in addition to significant funding increases are leadership and technology.  Just like many areas in society, in business and in local authorities, old power bases and hierarchies will have to be challenged.  So, the leadership required will have to be a sophisticated and tough breed and must focus on the patients’ needs above all else.  Many clinicians, and others will see technology as a threat to their status and power.

The report gives context to why, if we believe in the importance of universal healthcare free at the point of delivery, all responsible citizens, clinicians and managers must be responsible for change.  Everyone shares that responsibility, and all must be prepared to question our personal and professional motives for why we do what we do.