Comment / Measuring productivity during a health crisis

It is important for the government and citizens to know what the NHS does with the resources it receives. Measuring the productivity of the NHS is one possible way to assess this.

Two broad approaches are suggested by the System of National Accounts and the European System of Accounts to measure productivity. The direct approach measures physical units, such as the number of healthcare consultations or the number of NHS staff, and it is recommended when the information is available. When the direct measurement is not possible, expenditure can be used as an indirect method.

The Centre for Health Economics at the University of York regularly produces annual estimates (using the direct approach) of the productivity growth of the English NHS. Our latest report covers the first year of the Covid-19 pandemic, a period during which the NHS faced a major health crisis. Responses to the pandemic also presented some challenges around how productivity growth could be most appropriately measured.

The NHS had to respond quickly to the pandemic to focus on caring for an unknown number of patients with Covid-19. This disrupted both emergency and routine care. Care delivery was adapted to protect the public and the NHS workforce from the virus. This included a move to more remote consultations and the introduction of new safety measures, such as extra cleaning, and the use of personal protective equipment when care was delivered face to face. In addition, completely new services were introduced, such as Covid-19 testing, tracing, and vaccinations. 

NHS productivity compares growth in healthcare outputs and inputs. It is based on the principle that more healthcare – such as operations in hospitals – generates more health for society. This assumption did not necessarily apply during the pandemic. Instead, it was expected that minimising care provision, where possible, would mean greater health overall for society by reducing the risk of Covid-19 infections and allowing hospitals to prepare to treat patients with the virus.

Our productivity calculations cannot capture many of these gains. We do not know what would have happened if routine healthcare had still been in place, which is needed to understand the benefit and cost of reducing care. Further, readiness to care for patients has a value to society and it also cannot be measured as an output from the NHS.

Benefits of other new activities introduced during the pandemic – such as vaccinations and testing and tracing – could not be fully embedded in our measure, even though the costs of providing these services are still included in the calculation if they were delivered by NHS staff.

At the same time, the overall cost of the healthcare inputs – such as staff, beds, and medicines – remained or even increased because the pandemic required the employment of extra staff where possible and also extra spending on new safety measures.

The challenges in measuring many NHS outputs, coupled with the knowledge that NHS emergency and routine care delivery was heavily disrupted during the pandemic year, led us to expect a negative NHS productivity growth between 2019/20 and 2020/21. We find that NHS productivity fell by around 24%, on account of both a substantial decrease in outputs (by 16.05%) and an increase in inputs (10.49%). Although this does reflect a genuine reduction in the number of patients seen and treated during 2020/21, due to the pandemic, it does not mean that the NHS has produced less health than in previous years.

The main challenges the NHS faces going forward in terms of productivity growth are the backlog in patients waiting for treatment, and issues around workforce and wider NHS capacity, including any increased costs for workforce (increase in inputs). Other current challenges affecting the ability to recover are hospital delayed discharges due to insufficient social care supply, with related increases in inpatient hospital stays, and workforce burnout and morale.

On the other hand, it is expected that new initiatives, such as the high volume low complexity surgical hubs (HVLC) and the NHS urgent and emergency care (UEC) recovery plan, will increase hospitals’ throughput and hence the productivity of the NHS. However when NHS productivity growth rates will recover to pre-pandemic levels is unknown.

Dr Castelli worked with research fellows Dr Anastasia Arabadzhyan and Dr James Gaughan on this blog and the Centre for Health Economics’ 2020/21 productivity update