How do you solve the problem with productivity?

Julian Hartley profile picture

24 June 2024

Julian Hartley
Chief Executive

Productivity has become a buzzword in political and NHS circles and a key theme of the election debate around our health service. It's a headline priority facing trust leaders right now. But not every factor affecting productivity is within the control of NHS trusts.

NHS England (NHSE) recently published its own analysis of the acute sector productivity gap, indicating it had slipped by 11% compared with pre-pandemic levels. NHSE has pledged to deliver 1.9% a year productivity growth to 2030. That's a substantial increase compared to historic NHS productivity growth.

At the same time NHS trusts are being asked to find unprecedented savings and to do more with existing, stretched budgets. After a real terms increase of just 0.24% to the NHS budget for this financial year, trust leaders tell us they are really worried about escalating financial pressures.

The NHS ended the last financial year by living – just – within its £171bn means by £30m (or by 0.01%). Those numbers don't tell the whole story, though. While the overall figure came in according to plan, the same can't be said for many trusts and integrated care systems (ICSs).

ICSs overspent, collectively, by more than £1.4bn with more than half ending the year in the red. With virtually flat funding growth and demand continuing to outstrip capacity, many trusts are concerned about the real pressures on the books. It's no wonder that initial submissions from ICSs showed a gap of about £6bn.

The next government needs to break the short-term cycle of brinkmanship funding and focus on infrastructure, prevention and sustainable long-term financial planning.

Julian Hartley    Chief Executive

A new report from NHS Providers shows how trusts are doing their utmost to boost productivity while providing safe, high-quality care – the number one priority. It showcases some of the great initiatives by trusts to cut out waste and increase activity. It's imperative that the next government matches trusts' efforts to tackle some of the most pressing challenges facing the NHS, injecting much-needed long-term thinking and support. 

A range of financial pressures throughout the year, not least the hefty bill for industrial action, drove trusts and systems into deficit. Furthermore, some trusts couldn't manage planned efficiency savings at the required scale and pace to meet financial plans, meaning difficult decisions had to be made at a national level to transfer money from vital capital and digital transformation budgets to top-up day-to-day spending.

High inflation has eroded the value of capital budgets in recent years. Trusts have argued long and loud that current capital budgets are nowhere near enough to tackle the eye-watering £11bn-plus maintenance and repairs backlog while trying to invest in improved facilities and buildings for the benefit of patients and staff and not have to postpone operations and treatment because of safety hazards.

This has a very real impact on trusts' ability to improve productivity. The next government needs to break the short-term cycle of brinkmanship funding and focus on infrastructure, prevention and sustainable long-term financial planning.

NHS England's new financial framework represents a 'carrot and stick' approach to capital funding, incentivising or penalising trusts based on whether they submit balanced plans. There are real concerns that a redistribution of capital towards better performing trusts will only entrench financial pressures on trusts that are already struggling to make ends meet.

A healthy economy supports the NHS and a healthy NHS helps a growing, productive economy.

Julian Hartley    Chief Executive

Our new report shows a range of initiatives by trusts, from bespoke payment models incentivising staff to digital technology that has freed staff to spend more of their precious time looking after patients rather than on admin. To help to boost productivity the next government needs to enable the digitisation of the NHS at pace and ensure there is sufficient focus on empowering and enabling staff to maximise the productivity benefits that new technologies can bring.

NHS spending is good for the economy and for regional growth. Every £1 spent on healthcare returns £4 in increased productivity and employment. A healthy economy supports the NHS and a healthy NHS helps a growing, productive economy. Trust leaders are keen to ensure that the national approach to improving productivity focuses on what matters most to patients – reduced waiting times, wider access to care and better outcomes.

We need the next government to back the 'next generation' NHS, and commit to the picture of health that we all want to see, with improved productivity alongside consistent high quality care. That means investing in vital long-term improvements.

This opinion piece was first published by HSJ.

About the author

Julian Hartley profile picture

Julian Hartley
Chief Executive

Sir Julian Hartley joined as chief executive in February 2023, having been chief executive of Leeds Teaching Hospitals since 2013, where he led a major programme of culture change and staff engagement to deliver improved quality, operational and financial performance.

Julian’s career in the NHS began as a general management trainee and he worked in a number of posts before progressing to a board director appointment at North Tees and Hartlepool NHS Trust.

In 2019 Julian was asked to be the executive lead for the interim NHS People Plan, having previously worked as managing director of NHS Improving Quality, and in 2022 he was awarded Knight Bachelor for services to healthcare in the Queen’s Birthday Honours. Read more

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