Operational productivity in hospitals: part 1

11 July 2016

The NHS is in the middle of the longest and deepest financial squeeze in its history. NHS trusts ended the 2015/16 year £2.45 billion in the red, with almost two-thirds in deficit. It is clear this is a systemic problem that requires all parts of the health and social care system to work together to solve.

NHS trusts know they have a big part to play in turning this round and they are doing everything possible to extract maximum value from every pound they spend.

One of the ways they are seeking to do this is by identifying how they can eliminate any unnecessary variation – both within and between providers (recognising that some variation is necessary). This was at the heart of Lord Carter’s review – a year long, ambitious piece of engagement work across the acute sector.

Lord Carter’s report estimated that if ‘unwarranted variation’ is removed through initiatives, such as shared back office functions, e-rotas for staff and improved benchmarking, up to £5 billion of savings could be made by 2020. While this is less than a quarter of the £22 billion of savings required by 2020, it represents an important component of the efficiency challenge.

To deliver the Carter element of the efficiency cake, factors such as concerted management effort in each NHS trust, a realistic timeframe to achieve efficiencies, and significant central support (as well as grip) were flagged as essential.

Another critical dimension is how the recommendations are practically applied. This is where the manner in which trusts are engaged is crucial. The first part of this has already been a model for other centrally-led programmes as the metrics on which Lord Carter has based his work were co-developed with a group of 32 acute NHS providers. This engagement is what has given the work real value as it has been a genuinely collaborative, bottom-up, approach.

Its implementation will be led by NHS Improvement, who must strike the balance between holding trusts to account and giving the right support. Alongside this, the engagement and leadership of provider boards in this improvement agenda will be crucial. Greater grip, transparency and leadership at the national level alone will be insufficient to deliver lasting change.

Ultimately, the Carter review will get us some of the way in meeting the efficiency challenge, but whole-system transformation will be needed if the NHS is to become sustainable in the longer term.

Chris Hopson, Chief Executive, NHS Providers

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