NHS output rose by 3.8 per cent a year from 1995 to 2006, according to latest estimates from the Office for National Statistics (ONS). By 2006, output was some 50 per cent higher than in 1995, before allowance for quality change. But since inputs grew still faster, productivity fell by an average 1.0 per cent a year.
An article published today, Public Service Productivity: Health Care, sets out changes in health care inputs, output and productivity from 1995 to 2006, using indices which combine a wide range of types of health care and resources used. Measures of change in the quality of healthcare are included in output where available, from 2001 to 2005.
Three time periods can be distinguished:
• From 1995 to 2001, productivity was stable, with growth in the quantity of health care (with no quality adjustments) matching growth in inputs.
• From 2001 to 2005, productivity fell, as high growth in health care was lower than even higher growth in inputs. Even with the available adjustments for quality change in output, productivity fell by 2.0 per cent a year, on average, between 2001 and 2005. Without quality adjustment for output, productivity over the same period would have fallen by 2.5 per cent a year on average;
• From 2005 to 2006, productivity fell less quickly, by 0.2 per cent. Quality adjustments are not yet available.

Karen Dunnell, the National Statistician, said: “The article published today shows that there has been a steady increase in services to patients, but since 2001, the rise in output has not kept pace with the rise in spending, after allowing for inflation. We continue to work with health departments to improve the information which underlies this analysis, particularly on the impact of health care on patients.”
Change in publicly funded health care productivity is estimated by dividing change in the index of health care output (using available measures of quality change) by change in the index of health care inputs (taking account of pay and price changes). The main factors in the rise in output were:
• more patient treatments in hospital and community health services;
• an increase in GP and practice nurse consultations;
• a large increase in drugs prescribed by GPs; and
• a small rise in the quality of health care (based on short term survival, health gain, waiting times and patient experience) from when it is first measured in 2001;
The main factors underlying the (larger) increase in inputs used to deliver health care were:
• increases in the volume of labour, with especially high growth between 2000 and 2004, reflecting the NHS Plan; and

• high growth in the volume of goods and services, particularly in GP prescribed drugs, health care purchased from outside the NHS and other purchased goods and services.
The conclusion that productivity has fallen is broadly consistent with the recent King’s Fund report on NHS funding and performance, which presented evidence of rising unit costs. Sensitivity tests on estimated change in community health services and possible reduction in hours worked by health care staff show that alternative assumptions might reduce the estimated decline in productivity by up to 0.5 per cent a year. Death rates from diseases amenable to medical intervention have fallen considerably over the period, and may suggest that quality improvement might be greater than so far estimated. But none of these uncertainties are sufficiently great to alter the conclusion that productivity has fallen, particularly in the period 2001 to 2005.

1. The health care productivity article is available on the National Statistics website at: http://www.statistics.gov.uk/about/data/methodology/specific/PublicSector/output/health.asp