The NHS needs to be more productive – or is it more efficient?

David Maguire writing at the King’s Fund – Stop reading this and get back to work – you need to be more productive. Or is it more efficient?

In the long-term plan, NHS England sets out a goal of achieving at least 1.1 per cent increases in productivity over each of the next five years. But there’s often confusion about the term ‘productivity’ and what it really means, with efficiency and productivity often used interchangeably despite meaning very different things. In the simplest terms, an increase in productivity is when a business makes more of a product (in the case of the NHS, it would be more “care”- doing more operations, for example) using the resources they have available. Efficiency, however, relates to the quality of the work being done – so producing the same, but at a lower cost to the NHS or with less waste.

NHS England and NHS Improvement have spent the past few years focusing on pushing the NHS to the limits of what can be efficiently achieved with the resources available. And it’ll use some of the additional £20.5bn in the funding settlement to get more of the same with the resources available, improving efficiencies in staffing, estates, equipment etc. But there’s a limit to what you can do with those resources, and that’s where productivity should come in.

If you look at the Office for National Statistics’ recent trend in public service healthcare productivity in England, 1.1 per cent per year doesn’t seem like an unrealistic target on the surface. Keep in mind this is productivity, and does not include the cost saving targets of around 4 per cent given to providers of hospital and other frontline services in recent years. The chart below shows that productivity increased by 2.1 per cent per year on average between 2010/11 and 2016/17. In fact, there was only one year of negative growth between 2002/03 and 2016/17.

Healthcare Productivity

Source: Office for National Statistics

The most significant gains since 2010/11 came from the extent of wage restraint in the NHS keeping input costs down. By keeping wage growth much lower than the increase in the number of people being cared for, the NHS was able to see big increases in the amount of care provided relative to the cost of each staff member or piece of equipment. With wage restraint ending and a big recruitment drive outlined in the long-term plan, how is this trend going to be maintained? If you look at the post-Francis Report period in Figure 1 (2012/13), you can see that the last significant NHS recruitment drive slowed productivity growth as labour costs rose at a faster rate.

For the next 2 years, the long-term plan outlines 10 priority areas for productivity growth. Most of these have already been enacted or announced – such as capping spending on agency staff, improving procurement, networking pathology and diagnostic services, improving value for money in prescription spending and reducing the number of clinically ineffective treatments. Future plans to increase productivity include a greater emphasis on using digital technology in community health services, a drive to reduce administrative costs and the publication of a 10-year national strategy to reduce patient harm.

The agency staff cap has provided significant savings to the NHS, with trusts spending more on bank than agency shifts, at least in nursing. In the future though we can expect to see the percentage of this saving fall as that form of staffing becomes less common. At the same time, absence due to stress and mental health issues has increased to record levels in recent years among nursing staff. How can we expect staff to work even harder in their time on shift?

The NHS has been working to reduce prescription costs and has produced huge savings over time through better use of generic drugs (though drug costs have been increasing in recent years, thanks to big increases in the cost of certain generic drugs). Similarly, waste in procurement and variation in prices paid for supplies could also open up significant savings, following on from NHS Improvement’s Model Hospital programme.

Less clear is the impact that technology will have on the productivity of the NHS. There are plans to digitise some services in the community across mental and physical health as well as primary care, but the evidence on the likely return on this investment is mixed. Individual schemes have shown cost-effectiveness, but the success of many digital technology schemes depends on a range of cultural factors, including the clinical model at work and engaging clinicians and other staff.

The thing is, of all the activities I’ve listed, in practice it’s likely only the digital technology schemes that would potentially increase productivity as opposed to efficiency. Despite referring to these changes as improvements for productivity and efficiency, most of the schemes outlined in the long-term plan focus on improving how the NHS provides more of the same care with the same workforce, rather than transforming the possibilities of what staff can do.

If the NHS continues to focus on the same schemes and improving efficiency it’ll see smaller and smaller returns until there’s little left to gain. As we and others have said, the funding settlement is only enough to maintain existing services at their current level, not provide enough additional funding to help transform how care is provided.

Productivity may have to wait, efficiency calls.

From lab to bedside: ensuring new medicines are available in a cost-effective and timely way

David Omojomolo writing at The King’s Fund: At a challenging time for the NHS in terms of finances, demand for services and patient expectations, policy-makers need to ensure patients have access to new medicines in a cost-effective and timely way.

Much of recent investment from the pharmaceutical industry has been in personalised medicines, using advances in the understanding of genetics to tailor medicines to individual patients. Individualisation does come at a cost, with associated larger costs for research and development, manufacturing and treatment dispensing. These high costs per patient may be unaffordable in the context of an economic evaluator like NICE, even if outcomes are better than best practice. For example Kymriah, a CAR-T cell therapy, has the potential to extend the lives of even the sickest blood cancer patients but at an estimated cost of $475,000 per patient.


Other new medicines may offer affordable treatment on a per-patient basis but have such large potential patient populations that the total cost is deemed unaffordable, this time by the payer NHS England. In 2015 NICE deemed Sofosbuvir (a treatment for hepatitis C) cost effective and recommended several indications/treatments for routine use. NHS England was alarmed by projected treatment costs of £700 million annually – driven not by the cost of each individual treatment but by the large patient population. Through a protracted process NHS England capped availability to the sickest patients: its efforts were successful, restricting the bill to a fraction of projection, although medicine reached patients 10 months later than originally expected and some less serious cases are still ineligible for treatment.

In March 2017, NICE introduced the Budget Impact Test, which formalised the affordability checks NHS England wanted to apply to recommended medicines and applied a funding envelope. Medicines recommended by NICE need to have projected spending of less than £20 million in each of first three years they are available on the NHS to be automatically recommended. Manufacturers of medicines that exceed this have to enter into commercial negotiations with NHS England to manage affordability. If these are unsuccessful, NHS England can request NICE extends the time it has to make a cost-effective medicine available from the 90-day statutory requirement to up to three years from approval.

Apart from objections to perceived delays in making medicines available, there have been concerns behind the fairness of £20 million threshold. As the example of Sofosbuvir demonstrates, even products that are clinically and cost effective per patient can dent the threshold if there is a large population of eligible patients.

There was hostile reaction to the Budget Impact Test from the pharmaceutical industry, which brought a legal challenge on the grounds the test was incompatible with 90-day availability pledge, a challenge which ultimately failed. It is early days for the test so it is hard to measure success: to date only one drug scrutinised by NICE– Pembrolizumab (a lung cancer treatment) – has failed the Budget Impact Test and in the end price negotiations between NHS England and its manufacturer were fruitful enough for NHS England to deem it affordable for routine availability.

The Office for Life Science competitiveness indicators compares UK performance in a series of life science metrics against a range of comparator countries. The most recent indicators suggests the UK lags behind its peers in how quickly recommended medicines are made available, which is why many think streamlining the medicines access pathway should be a priority. The government has attempted to speed up access through a set of reforms recommended by the Accelerated Access Review report. One being the accelerated access pathway, which aims to bring breakthrough medicines to market and then to patients as quickly as possible.

Whether the scheme can actually improve outcomes is another question. The US Food and Drugs Administration has had a number of similar expedited review schemes for decades; however, evidence on the effectiveness and safety of medicines on these schemes compared to non-expedited medicines is mixed, with signs their introduction has incentivised manufacturers to weaken the evidence they submit to regulators to demonstrate clinical safety and efficacy for fast-track medicines. The accelerated access pathway needs to show coherence to differentiate itself in an already crowded marketplace of similar levers available to NHS England/NICE. Furthermore, it needs to ensure only medicines that clearly demonstrate innovative potential are chosen to be fast-tracked.

Recent policies from NHS England indicate that it has clear ideas about what should be routinely provided on the NHS. However, there is concern that its decisions are based on the wider funding issues in the NHS rather than on what NICE believes may be cost effective in the long term and that some NHS England decisions may be detrimental to patient access.

This is all happening as NHS England plans how increased funding settlement is spent. If money can be earmarked to transform medicine spending, the current affordability and access trade-offs NICE and NHS England are implementing for new medicines may be temporary and perhaps NICE guidance can be more strictly adhered to.