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Last Updated: Monday, 27 February 2006, 14:22 GMT
NHS productivity rate 'falling'
Hospital waiting room
The ONS report paints a mixed picture on productivity
NHS productivity is stagnant or falling by most measures, although experts say methods of measuring need refining.

Using the standard comparison of NHS outputs to inputs, productivity has been falling by between 0.6% to 1.3% a year from 1995 to 2004.

This comes after record levels of money have been pumped into the NHS.

But the Office for National Statistics said a debate was needed about how it was calculated as the results differed when other factors were included.

Comparing outputs - hospital activity - to inputs - labour and capital - has to date been widely accepted as the best method of measuring productivity and is used by the Treasury and Bank of England to inform policy.

But attempts are now being made to take into account the quality of treatment by using patient experience and survival rates.

When quality of treatment is included, productivity ranged between a 0.2% increase a year to a 0.5% decrease from 1999 to 2004.

However, the ONS acknowledged that this kind of methodology was in its infancy.

Basic - By comparing outputs (treatment activity) to inputs (labour and capital) statisticians can get a measure of productivity
Quality of treatment - Outputs are adjusted to take into account quality measures such as survival rates and patient experience, before comparing them to inputs
Economic performance - Productivity can also take into account the cost to economy. If earnings are rising as they are currently, the cost of ill-health is greater and by factoring this in on top another measure can be calculated

And then if the rise in real earnings - about 1.5% a year - is also factored in due to the cost of ill-health being more costly to the economy, NHS productivity rose by an average of 0.9% and 1.6% a year.

Productivity has proved a controversial subject following Labour's record investment programme in the NHS. Since 1997, the NHS budget has doubled and by 2008 it will have trebled to bring England up to European levels.

But the NHS has also found itself in the midst of a financial crisis, with one in four trusts failing to balance their books last year.

Critics have argued that while Labour has invested more, the health service is becoming inefficient.

National Statistician Karen Dunnell said the latest results showed there needed to be a discussion over how productivity was going to be measured.


"Measuring value for money in the public services is of major importance to everyone.

"What is now needed is a thorough public discussion of the methodologies involved."

Health Secretary Patricia Hewitt focussed on the methods that showed productivity was increasing, saying government reforms were making the NHS more efficient.

But she added more work still needed to be done to improve the way it is measured.

"The Department of Health is now working with the ONS towards an even more comprehensive measurement."

Nigel Edwards, director of policy at the NHS Confederation, which represents health service managers, agreed measuring productivity was "complex".

"Previous measures of productivity in health have measured health inputs versus outputs and miss a large amount of what the NHS actually does."

And Alan Maynard, professor of health economics at York University, said: "The problem is that we are not very good at measuring the physical and mental outcomes of treatment and therefore, while the results are interesting they are somewhat limited.

"We have to improve the way we measure outcomes, in particular, in regards to primary care, where there is very little data."

But Shadow Health Secretary Andrew Lansley said the measure showing productivity decreasing was the most accurate as it was virtually impossible to determine whether improvements in health were attributable to the NHS or not.

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