It is important to measure the performance of the National Health Service (NHS) and other publically funded healthcare providers. One way to do this is to calculate providers’ productivity by comparing outputs to the volume of inputs.
Output include everything from the number of GP visits and prescriptions dispensed, to hospital services, which have been adjusted for quality relating to patient outcomes and changes in waiting times. Inputs include labour (hospital consultants, nurses, technical staff, etc.), running costs for hospitals and GP surgeries, and contracted services from pharmacists, opticians and dentists.
Healthcare output has risen strongly (by 107% over last 15 years), driven by growth in hospital services, the volume of prescription drugs dispensed to patients, and since 2003-04 services provided by non-NHS organisations which are difficult to measure directly. The methods change introduced by the Office for National Statistics now counts services provided by non-NHS organisations as both an input and an output, where previously they were only included on the inputs side.
The volume of healthcare inputs has also grown strongly (by 95% over the last 15 years). This has been driven by increases in goods and services used by the Hospital and Community Health sector, and services funded by the NHS but provided by non-NHS organisations, such as services for patients with learning difficulties performed by Local Authorities.
Output growth has been slightly greater than inputs growth over the last 15 years. Overall, productivity has grown by 0.4% per year on average, according to ONS estimates.
There have been periods of both positive and negative productivity growth. Between 2003 and 2006, there were four years of growth, but productivity declined in 2009 and 2010. Since 2002/03, a measure of quality as well as volume has been included in the output calculation. This has boosted estimates of healthcare outputs by an average of 0.5% a year since that time.
Figure 1: Healthcare output, inputs and productivity estimates, 1995-2010
UK, Index numbers 1995=100
The chart above shows how healthcare output, inputs and productivity have changed from a base period of 1995. The data is in index form, which shows how the series have changed relative to the data from 1995.
Figure 2: Growth rates for healthcare output, inputs and productivity, 1996-2010
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