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John Appleby on improving NHS productivity

John Appleby, Chief Economist at The King's Fund, looks at why NHS productivity needs to be improved and by how much.

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John Appleby on improving NHS productivity

  1. 1. Why improve productivity and by how much? Prof John Appleby Chief Economist The King’s Fund January 2011
  2. 2. Overview <ul><li>Why improve productivity? </li></ul><ul><li>What is the productivity challenge? </li></ul><ul><li>What drives changes in productivity? </li></ul>
  3. 3. 1: Why improve productivity? <ul><li>Policy choice </li></ul><ul><li>Because the NHS can… </li></ul><ul><li>… and the corollary: Not to do so means more death, pain and lower quality of life… </li></ul><ul><li>Saving money, releasing cash are only part of the productivity challenge… </li></ul><ul><li>The focus needs to be on improving benefits to patients… </li></ul>
  4. 4. 2: The productivity challenge <ul><li>Different ways of expressing the productivity challenge… </li></ul><ul><li>… £15 billion, £20 billion, a billionschmillion….? </li></ul><ul><li>Cash releasing efficiency saving </li></ul><ul><li>Cost improvement programme </li></ul><ul><li>Value for money… </li></ul><ul><li>Cash releasing cost improvement value for money efficiency gains…. </li></ul>
  5. 5. 2010 ~20% increase in outputs relative to inputs..
  6. 6. Clinical governance £28 billion ‘ Value’ of the shortfall if no real rise for next 4 years and no productivity improvement £133 billion NHS funding needed in 2014/15 to meet Wanless NHS ‘Solid Progress vision’ £16.1 bn £2.2 bn £2.5 bn £4.8 bn £1.9 bn £0.5 bn Improve quality Demand drivers Capital Real pay and prices Things Wanless recommended the NHS do…improve quality, pay staff more, reduce waiting, better accommodation…
  7. 7. £28 billion ..around 6% productivity gain each year for three years.. £19 billion ..around 4.3% productivity gain each year for three years <ul><li>Funding gap with: </li></ul><ul><li>no real increase in spending </li></ul><ul><li>no productivity gains... </li></ul><ul><li>Productivity gap with: </li></ul><ul><li>pay freeze </li></ul><ul><li>capital spend freeze </li></ul><ul><li>no further investment in reducing waiting times.. </li></ul>Policy choices can reduce the productivity challenge…but remains a challenge <ul><li>£5 billion equivalent to: </li></ul><ul><li>100,000 extra QALYs </li></ul><ul><li>1,250 babies’ lives saved </li></ul><ul><li>(8 prevented deaths per PCT) </li></ul><ul><li>20,000 extra hip operations </li></ul>
  8. 8. 3: What drives changes in productivity? UK NHS: Per cent annual change in inputs and outputs (ONS) Good news! Spend more, get more…
  9. 9. Good news! Productivity has increased (in some years)..
  10. 10. Productivity improves as the money tap tightened… UK NHS: Per cent annual change in inputs vs productivity: 1997-2010 (ONS) UK NHS: Per cent annual change in outputs vs productivity: 1997-2010 (ONS) Aiming for productivity increases each year for 4 years in this range
  11. 11. Finally… <ul><li>Why improve productivity? </li></ul><ul><ul><li>because patients will benefit </li></ul></ul><ul><li>What’s the challenge? </li></ul><ul><ul><li>get the language right </li></ul></ul><ul><ul><li>obsess less about costs/cuts/savings </li></ul></ul><ul><ul><li>greater clarity about what actions will generate benefits for patients </li></ul></ul>

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