News / Wanless issues productivity warning ahead of spending review

The King’s Fund senior associate, whose 2002 report led to hikes in health spending, said the NHS had more staff, reduced waiting times and had introduced better care for patients with cancer, stroke and other illnesses. However, he added, the NHS had failed to achieve the modest productivity gains assumed in his original review.

His latest report, Our future health secured?, published by the King’s Fund, said the costs of hospital and other services had risen. While hospital activity had increased, the biggest rise had been in emergency rather than elective admissions. Sir Derek said this raised doubts about demand management and delays in the National Programme for IT could undermine future productivity gains.

Gains that had been made were closer to the ‘slow uptake’ funding scenario Sir Derek named in 2002. Slow uptake was the worst of his three scenarios, followed by ‘solid progress’ and ‘fully engaged’.

Funding increases were the same in all three scenarios over the first five years, but they would then diverge. In the slow progress scenario, he believed funding would have to increase to £184bn a year by 2022/23, compared with £154bn under the fully engaged scenario.

In the solid progress and fully engaged scenario, Sir Derek originally assumed productivity would increase by 2% to 2.5% a year between 2002 and 2012 and 3% in the following decade. Slow progress would see 1.5% and 1.75% respectively.

Official measures of NHS productivity indicated that changes in productivity may have ranged from -7.5% to +8.5% cent between 1999 and 2004. But the report said the 2002 review’s assumptions of annual unit cost reductions of 0.75% to 1% between 2002/3 and 2007/8 had not been achieved. Generally, hospital unit costs had increased and, while lack of data made quantifying movements in costs in mental health and primary care services difficult, the cost per prescription dispensed had fallen, largely because of the availability of generic statins.

Some quality measures, such as patient satisfaction, indicated improvements but no ‘hard’ measures of quality, valued in monetary terms, were available.

Sir Derek warned: ‘We are not on course to deliver the sustainable and world-class healthcare system, and the healthier nation, that we all desire. Without significant improvements in NHS productivity, and greater efforts to tackle obesity in particular, even higher levels of funding will be needed over the next two decades to deliver the comprehensive, high-quality services envisaged by my original review. Such an expensive service could undermine the widespread political support for the NHS and raise questions about its long-term future.’

King’s Fund chief executive Niall Dickson said productivity would be more important as the next comprehensive spending review (CSR) would slow the rate of NHS spending increases. The report said an average of 3% in the CSR would mean a shortfall of £15.2bn by 2011/12 on the slow uptake scenario, £9.2bn on solid progress and £7.2bn for fully engaged.

‘This report suggests there is a case for a rate of growth above 4% in the CSR, but even with that level of investment there would be a need for improved productivity and efficiency,’ Mr Dickson added. ‘Without this, there will be questions raised about the long-term viability of our health service.’