Posts Tagged ‘Productivity’

“Consultants responsible for falling productivity”

By Mike Broad - 17th March 2011 11:04 am

An influential committee of MPs has criticised how consultants’ productivity has declined in recent years despite an increase in pay.

A report by the Commons Public Accounts Committee says a key problem with declining productivity is that national pay contracts have not so far been used to manage the performance of staff effectively.

Over the past ten years government spending on the NHS increased by 70%, from £60 billion in 2000-01 to £102 billion in 2010-11, with 40% spent on services provided by acute and foundation hospitals. This substantial increase in funding enabled hospitals to invest in more, better paid staff and improve their buildings and equipment.

The report acknowledges that there have been significant improvements in the performance of the NHS, particularly in those areas targeted by the Department of Health such as hospital waiting times and outcomes for patients with cancer and coronary heart disease. However, it says, the level of hospital activity has not kept pace with the increased resources as hospitals focused on meeting national targets, but not on improving productivity, and productivity has actually fallen over the last decade.

Productivity is defined as the ratio of the volume of resources to the quantity of healthcare provided, adjusted to reflect their relative costs and quality. Figures produced by the Office for National Statistics estimate that, since 2000, total NHS productivity fell by an average of 0.2% a year, and by an average of 1.4% a year in hospitals.

The report says taxpayers have therefore seen a better quality NHS as a result of the additional investment but, per taxpayer pound, is getting less in return. The trend of falling productivity will need to be reversed if the NHS is to deliver the DoH’s productivity challenge - to deliver £20 billion of efficiency savings by 2014-15 without compromising services.

Dr Paul Flynn, deputy chairman of the BMA’s consultants committee, commented: “Crude measures of productivity fail to take into account some of the most important improvements that have taken place in the NHS. Investment has allowed doctors to spend more time with patients, with major reductions in mortality rates and waiting times.

“Although this report talks about ‘significant pay rises’, consultants’ salaries have been frozen for two years. We agree that new ways of working are necessary if the NHS is to achieve the efficiency savings demanded of it. However, knee-jerk responses - such as cutting the time consultants can spend on the development of new services - are likely to be counterproductive in the long term.”

The report also criticises the coverage of Payment by Results. The DoH promotes efficiency and productivity improvements in hospitals primarily through national pay contracts and by setting a fixed price, or ‘tariff’, for individual hospital procedures. While Payment by Results does seem to have driven some improvements, the report says, the system only covers 60% of hospital activity and there is substantial variation in hospital costs and activity.

Margaret Hodge MP, chair of the Committee of Public Accounts, said: “Over the last ten years, the productivity of NHS hospitals has been in almost continuous decline. Over the same period, the amount spent on the NHS increased from £60 billion to £102 billion a year. The quality of the health service has improved as a result of this increase in spending. But the taxpayer has been getting less for each pound spent.

“The Department of Health will now have to work to reverse the trend of falling productivity if it is to meet its ambitious target of achieving £20 billion of savings. There are, however, risks for the NHS in achieving productivity improvements at the same time as delivering radical reforms.”

Read the full report.

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Raise NHS productivity through pay contracts, NAO study urges

By Mike Broad - 29th December 2010 1:09 am

NHS pay contracts introduced since 2003 have increased costs without driving productivity improvements, a National Audit Office study finds.

The following is a summary of the Management of NHS Hospital Productivity report:

1. In 2000, the Department of Health published the NHS Plan, a ten-year vision for reforming the NHS. The Plan argued that the NHS was failing to deliver because it had been underfunded, and set out to substantially increase funding in order to meet public expectations for: more, better paid staff using new ways of working; reduced waiting times; high quality care centred on patients; and improvements in local healthcare buildings.

2. NHS productivity is the measure that describes the relationship between inputs (such as staff and clinical supplies) and outputs (healthcare activity adjusted for quality). In the NHS the term ‘productivity’ is widely used but often confused with other terms like economy, efficiency and value for money. Between 2000-01 and 2010-11, NHS expenditure will have increased by 70% to £102bn from £60bn. The DoH explained that much of the additional funding was intended to be used to meet the key public expectations and would not initially be matched by a commensurate increase in outputs.

3. As over 40% of NHS expenditure is accounted for by acute NHS and foundation hospital trusts, improving hospital performance is central to achieving the expectations in the NHS Plan. The DoH expected to improve the quality and efficiency of hospital care through: national performance targets to reduce waiting times and improve patient outcomes; national pay contracts involving above inflation pay increases designed, in part, to deliver productivity improvements of between 1.1 and 1.5% a year; and the commissioning of hospital services through a national tariff system called Payment by Results.

4. In November 2009, the NHS chief executive announced that, in response to the economic downturn and increasing demand for healthcare, the NHS would need to deliver between £15 and £20bn of efficiency savings per year by 2013‑14 to be reinvested in health services. Around 40% of these savings are expected to come from driving efficiency in hospitals. To support NHS organisations to improve quality of care while making these savings, the NHS chief executive also launched the national Quality, Innovation, Productivity and Prevention (QIPP) challenge.

5. The most authoritative national measure shows a decline in hospital productivity. Figures produced by the Office for National Statistics estimate that, since 2000, total UK NHS productivity decreased by an average of 0.2% per year; however, productivity in hospitals fell by around 1.4% per year. Over the last ten years, in line with the NHS Plan, significantly more money has been spent in hospitals. This increased funding has paid for more, better paid staff, and extra goods and services. Hospital activity - adjusted to reflect improvements in the quality of care - has not risen at the same rate as these additional resources, indicating that productivity has declined.

6. The DoH has focused on delivering the government’s ambition for improved performance within an agreed budget. The increased money going into NHS hospitals has helped deliver more, better paid staff, reduced waiting times, higher quality care and improved hospital facilities. Until the end of 2009, the DoH has focused on delivering national priorities - through a combination of targets, performance management, incentives and guidance - within a fixed budget. This has resulted in improvements in, for example: inpatient median waiting times and outpatient waiting times. The DoH argues that it has not performance managed measures of productivity directly. It has focused on costing expenditure pressures and performance targets, and requiring the NHS to deliver these within an agreed budget.

7. NHS pay contracts implemented nationally since 2003 have increased hospital costs and are not always used effectively to drive productivity. Since we reported on the consultant contract and Agenda for Change, we have not been able to identify the widespread cultural shift in hospitals that we suggested was needed if the contracts were to be used to optimise productivity.

The DoH intended, for example, that consultant job planning would give hospital managers the opportunity to align consultant activity with hospital objectives; however, few hospitals have used job planning or staff appraisal systems to demonstrably improve productivity. Data show that there have been improvements in the trends for measures of labour productivity since the contracts were introduced, and the DoH believes there is a plausible link between these improvements and the introduction of the contracts.

8. The process of setting prices under the Payment by Results system has promoted some efficient practice. Recent evidence suggests that national tariffs have driven reductions in length of stay and an increasing proportion of operations undertaken as day surgeries. However, the DoH’s own hospital-level efficiency index shows substantial variation, and the tariff adjustment to account for assumed efficiency improvements is offset by uplifts to account for inflationary cost pressures, such as those resulting from the national pay contracts.

There have been delays in rolling out the national tariff to all hospital activity and the quality of information used to pay hospitals is variable. The original intention was that by 2008 all commissioning would use national tariffs; however, in 2010 around 40% of hospitals’ income is not covered by Payment by Results.

9. Hospitals have not focused sufficiently on driving productivity. The hospital managers we spoke to say they have primarily concentrated on meeting national performance targets whilst maintaining financial balance, and not specifically on optimising productivity. The national focus on quality of care has meant that clinical staff have not been performance-managed with regard to the cost or efficiency of their activities.

We found that hospital managers do not always bring performance and financial data together in a way that enables them to fully understand the relationship between the money they spend and the care they provide. There are substantial variations in hospital costs and activity, but not all hospitals use this information effectively to identify efficiency savings.

The DoH is aware of the variations in hospital costs and that they indicate potential efficiencies, with reducing variation one of the sources of savings to meet the QIPP challenge. However, we found that these variations have not been systematically interrogated by senior hospital managers or local commissioners; as a result there is limited consideration of the extent to which a hospital is delivering value for money in comparison to its peers.

The NHS Institute has estimated that the scale of productivity opportunity in hospitals through the reduction of variations in some key hospital activities is around £4.6bn. Our analysis indicates that if all hospitals performed at the level of the top 25% in respect of staff costs, use of estate, control of emergency admissions and bed management, the NHS could save around £1.6bn a year.

10. Year-on-year increases in activity have enabled hospitals to increase their income rather than drive efficiencies and local savings. Increased activity coupled with improved counting and coding of activity paid at the national tariff may have helped many hospitals to maintain financial balance. There are unexplained variations across England in the money spent by hospitals to provide the same treatments, and hospitals we visited did not understand why their costs were higher or lower than the average.

Conclusion

There are challenges to overcome if the NHS is to deliver £15 to £20bn of efficiency savings.

Some hospitals do not effectively control staff costs. Some hospitals have been slow to adopt tighter controls either over managing staff vacancies and the use of temporary and agency staff or in adopting more efficient approaches to managing staff rotas. Some managers also reported that they felt unable to effectively use the provisions within the contract to control some costs, such as recurring clinical excellence awards.

Given the unprecedented scale, there are risks to the delivery of the 2009‑launched Quality Innovation Productivity and Prevention challenge and the expected efficiency savings required by March 2014. There is a risk that SHAs and PCT, which are responsible for driving the delivery of the efficiency savings, will be distracted by their planned closure by March 2013.

The past decade has seen consistent, significant increases in hospital funding. This was designed, in part, to deliver more productive behaviour. However, hospital productivity has fallen. Whilst hospitals have used their increased resources to deliver many of the national priorities, hospitals need to provide more leadership, management and clinical engagement to optimise the use of additional resources and deliver value for money.

Any future national pay contracts should set out the expected productivity gains and efficiency savings that organisations should be obtaining, clearly linking these to the aspects of the contract that are intended to be used to realise the improvements.

Major national initiatives should include a realistic assessment of the costs and benefits, with progress against these expectations evaluated.

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Hospital productivity needs to rise, report says

By Mike Broad - 21st December 2010 2:26 pm

NHS pay contracts introduced since 2003 have increased costs without driving productivity improvements, a National Audit Office study finds.

It says productivity in the NHS has declined by an average 0.2% each year since 2000 in NHS, with productivity in hospitals falling by around 1.4% a year.

Meanwhile, NHS expenditure increased by over two thirds in ten years.

While the study praises the progress made on waiting times, healthcare associated infection rates, patient outcomes, reduced cancer mortality and the patient experience, it says productivity must increase significantly in future.

The NHS announced in 2009 that, in response to the economic downturn and increasing demand for healthcare, it would need to deliver between £15 billion and £20 billion of efficiency savings per year by 2013-14.

With about 40% of these savings are expected to come from increasing efficiency in hospitals, the report suggests that the scale of these savings will require productivity gains of approximately 6% per year.

The report’s authors said: “The Payment by Results system of setting national tariffs has promoted some efficient practice, such as reductions in the length of time patients spend in hospital and more operations taking place as day cases.

“However, there is still substantial variation between hospitals: for example, in the money spent by hospital to provide the same treatment. If all hospitals performed at the level of the top 25% in respect of staff costs, use of estate, control of emergency admissions and bed management, it would save £1.6 billion a year.”

The report warns that other initiatives to increase productivity, such as the ‘Productive Ward’ scheme, are not consistently or comprehensively used.

It also expresses concern over the national initiative (QIPP) to help the NHS deliver annual savings. “There are risks to the delivery of the initiative, which is the responsibility of SHAs and PCTs, whose focus may be distracted by the proposals for their closure by 2013,” it said.

Read the full report.

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Job planning needs to improve to deliver more

By Mike Broad - 5th July 2010 11:15 am

Radiology, pathology and anaesthetics should be more productive considering the “high number” of doctors working in those specialties, an Audit Commission report claims.

The report, called Making the most of NHS frontline staff, urges trusts to take a more disciplined and transparent approach to the consultant contract. It says the number of SPAs assigned each week to consultants ranges from 1 to 2.6, and some consultants are working 15 PAs - equivalent to a 64-hour week.

“The essential problem is the quality of consultant job planning, which often lacks rigour or alignment with service objectives,” it says.

The study, which is based on benchmarking work carried out at more than 50 trusts, suggests there is potential to make significant savings by making better use of doctors and nurses. Hospital doctors, it claims, account for 13% of the acute hospital budget.

It finds that the numbers and grade mix of doctors often does not seem to be the result of careful planning of service and training needs. The average number of trainees supervised per consultant in general surgery varies from less than one to more than six in the hospitals it looked at with no obvious rationale.

Furthermore, the cost of locum doctors in trusts varies from 3% to 20% of medical spending. It says: “Clearly there are concerns abou the quality and continuity of care delivered when such extensive use is made of temporary doctors. In some cases, high spend is focused on particular departments.”

It also highlights the variance in admission rates per doctor. It varies by an “inexplicable” factor of more than two, from 129 per doctor each year to 329. The number of first outpatient appointments per doctor varies from 108 to 380 each year.

In nursing, it finds a wide variation in the cost per occupied bed, the number of nurses per bed and the use of temporary nursing. There’s also an unexplained variation in grade mix. The size of wards is the  most significant factor in nursing costs per bed.

The report concludes: “The number of hospital admissions has continued to rise year on year. However, there will be greater emphasis in the future on treating people earlier and closer to home so, in theory, reducing the demand for hospital care. This will put further pressure on staffing, making knowledge of the workforce and strategies for efficient management even more important.”

Read the full report.

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McKinsey’s vision for raising productivity in the NHS

By Mike Broad - 9th June 2010 9:24 am

The full scale of controversial plans drawn up by management consultants to raise the productivity of consultants across England has been revealed.

A report produced for the previous government by McKinsey has finally been published, revealing plans to slash workforce numbers by 137,000 in order to achieve up to £20bn of savings by 2014.

In February 2009, McKinsey was instructed by the Department of Health to provide advice on how commissioners might achieve greater productivity in the NHS.

The information was presented in March 2009 though not made public. It was partially leaked in September 2009, but released in full last month in response to freedom of information requests.

There are three key themes to the presentation - driving through cost efficiencies in provider organisations; optimising spending and ensuring compliance with standards; and, shifting care into more cost effective settings.

Driving acute provider productivity is a major focus, with a stated aim to provide more care with the same level - or less - of staff and resources.

McKinsey claims that up to £2.4bn could be saved through higher productivity.

It suggests improvements in diagnostic referrals, lowering re-admission rates and improving the cost effectiveness of interventions.

On staffing, the management consultancy urges the NHS to tackle sickness absence and maximise the amount of time clinicians spend with patients.

It calls for a review of patient contact time and processes in ward rounds and clinics, and the recalculation of staffing rotas.

In nursing, it suggests that only 41% of their time is spent with patients and must be increased. And, in primary care, proposes that variations in productivity between GP practices could be reduced drastically by increasing their working hours.

McKinsey criticises most surgical specialties for their lack of progress on day surgery rates. It highlights big gaps in breast surgery, gynaecology, urology, vascular, general surgery, head and neck surgery, ENT and orthopaedics recommended levels of day cases as a proportion of total activity and reality.   

McKinsey also urges the NHS to stop procedures with limited clinical benefit.

Cuts are also important to the McKinsey strategy. And the presentation suggests that they would be felt as much among clinical staff as administrators.

Based on its analysis of different staff group efficiencies, it says the reductions required to full time equivalents for an NHS hospital with a clinical staff of 300 would be: two consultants, one registrar, 10 nurses, 10 healthcare assistants, three allied health professionals and eight non-clinical staff.

In preparation for reducing the head count, the presentation recommends aligning training with reviewed funding. It urges cuts in medical training positions at the next academic year to avoid oversupply. An early retirement programme should be introduced within two years to deal with recessions.

Also, it calls for the introduction of mandatory staffing levels to be limited. “Some royal colleges are recommending introduction of mandatory staffing ratios on safety grounds that will lead to increases in staff required above the activity growth e.g. the ratio of 1:28 per midwife,” it explains. “Review current plans to introduce mandatory staffing costs or investments in quality of care requiring an increase of the staffing levels.”

The presentation also calls for a recruitment freeze, based on stats showing that the average leaving rate is 10.5% for medical staff.

Barriers to progress also need to be removed, it claims, citing the immobility of the workforce, the lack of a failure regime for poor providers and the inability for trusts to embark on mergers and acquisitions.

Other large scale efficiencies that need to be made across the NHS include reducing drug spend, optimising the supply chain and procurement of supplies, and better estate management by trusts.

Shifting care into more cost effective settings is also a major theme, and the presentation calls for greater self-care, significant local health reconfigurations and the shift of acute care to primary, community and home settings.

The leaked presentation was met with great dismay last year and the former government was quick to say it represented advice rather than policy.

Its publication on the Department of Health website follows the release last month of an equally contentious report by McKinsey submitted to NHS London, which formed the basis of proposals to shift work en masse from hospitals to GP polysystems.

And the latest report to emerge makes clear that the London plans, now vetoed by Lansley, were recommended for implementation across the UK.

Read the full presentation into the fiscal future of the NHS.

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Employers squeeze consultants’ SPAs

By Mike Broad - 19th April 2010 9:34 am

Trusts are eroding the time allocated to consultants for supporting professional activities.

Two pieces of research on the time given to consultants to conduct such activities as training, research, audits, teaching and clinical governance, suggest that it’s being compromised in a bid to save trusts’ money and raise ‘productivity’.

A study by the BMA of job adverts reveals that 38% of consultant posts advertised in March had fewer than the minimum recommended SPAs. The 2003 contract suggested that consultants should typically have 2.5 SPAs built into a 10 PA contract. The original allocation was recently re-examined and supported in a position statement by the Academy of Medical Royal Colleges (AMRC).

BMA analysis of a similar sample from 2009 revealed that only 10% had fewer than 2.5 SPAs.

Furthermore, freedom of information requests from 99 trusts by HSJ reveal a fifth of acute trusts have reduced or plan to cut the time consultants spend on SPAs. A further 15% admit to looking closely at the value provided by SPAs.

A recent leaked document from the Foundation Trust Network revealed that many employers will seek to reduce consultants’ SPAs to one per week within their job plans.

Dr Mark Porter, chair of the BMA’s consultants committee, said: “SPAs are central to patient care. This is the time when consultants reflect on their work and improve the quality of their personal work and that of the teams in which they work.”

BMA Scotland recently won an exchange with NHS Scotland’s management steering group over advice issued to employers saying new consultants should be offered just one SPA.

New consultants are being offered less SPAs by some trusts because they’re perceived to be less involved in management and teaching.

The AMRC disagrees. New consultants should be encouraged to get involved in clinical innovation, management, teaching and training not discouraged, it says. A new consultant is likely to need additional time for orientation and being mentored and may need additional CPD to develop any specialist aspects of the post not adequately covered by training to CCT level.

Stephen Campion, chief executive of the HCSA, said that many trusts don’t understand the importance of time being made available to consultants for supporting activities.

He said: “Diluting SPA time in favour of more clinical activity is damaging to the NHS.

“The targeting of SPA time comes at a time of financial cutbacks, a shortage of trainees and as a consequence of the Working Time Directive. Consultants are being expected to pay the price for these underlying deficiencies. I am concerned that unless trusts recognise the importance of SPA time, as typically provided in the 2003 contract, recruitment, retention and goodwill will be the inevitable casualty.”

Read more on protecting your SPAs. 

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How should we measure consultant productivity?

By Dr Umesh Udeshi, chairman of the HCSA Executive - 10th July 2009 10:52 am

As we approach 2011, most pundits say that NHS funding will be severely squeezed.

The real term increases in funding achieved in recent years will not be matched. In a service which needs more, simply to stand still (because of increasing age, complexity, technological advances, regulation, guidelines and standards) this means a real terms cut.

David Nicholson, the NHS chief executive, has already told us to get ready for this.

NHS employers believe that a key factor to consider is consultant productivity. The Audit Commission report on the consultant contract used ‘finished consultant episodes’ as a measure of consultant productivity. This measure counts ‘whole episodes of care’ including an in-patient stay.

FCE’s do not take into account all the extra duties/activities that consultants must partake in which does not result in an increase in numbers of patient episodes. These include attendance at clinical multidisciplinary meetings; increased consultant presence on labour wards; any increase in referrals to pathology or radiology; the need to cancel other activities to be free to attend emergencies, etc, etc.

Nothing that takes consultants away from finishing more episodes counts in this method of calculating productivity.

The Office for National Statistics states that in the 10 years to 2007, health service productivity fell by an average of 0.4% per year.

It is vital that any discussion on productivity takes into account all that we do. The profession needs to challenge these crude analyses which do not take into account the whole picture.

It is not good enough to say that it is too difficult to count everything consultants do and yet claim our productivity is falling.

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NHS trusts could be employee owned businesses

HSJ - 1st July 2009 2:24 pm

NHS organisations could become employee-owned businesses like John Lewis and Kaiser Permanente under proposals set out by health policy experts.

Foundation trusts should also consider developing a “chambers type arrangement” to give clinicians greater control, the Nuffield Trust report suggests.

It says better staff engagement in the NHS could improve productivity, but policies have consistently failed to make a significant impact.

“Policy aspirations have yet to be turned into practice on a consistent basis. This suggests that more than exhortation and guidance are needed to convert policy into practice,” says the report.

Read more at HSJ.

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