Productivity and efficiency in English acute hospitals


James Thompson, Senior Research Analyst at the King’s Fund asks whether the Carter Review guides us to productivity and efficiency in acute hospitals…

In June 2014, at the request of the Secretary of State for Health, Jeremy Hunt, Lord Carter began to look at what could be done to improve efficiency in non- specialist NHS hospitals in England. In February 2016, following 18 months of work, the final report was published. The review takes stock of the productivity and efficiency of English non-specialist acute hospitals as they try to achieve the efficiencies of 2-3% annually until 2020 set out by the national bodies. The review sets out the scale of variation across hospitals in a number of areas and says that the opportunity for the NHS of reducing this variation amounts to around £5bn by 2020. This is the equivalent of 9% of the £55.6bn current budget for acute hospitals.

The findings and the recommendations were certainly the result of an impressive piece of work. Over the 18 months Lord Carter and his team engaged with 136 acute hospitals; the Royal Colleges of Nursing, Surgeons, Pathologists and Radiologists; NHS England; NHS Improvement; the Care Quality Commission and many more. In terms of engagement with local leaders and national stakeholders, this is to be celebrated.

The report puts forward 15 recommendations, though within each of these lots of further work is required to achieve them. For example, there are at least 5 different operational plans each trust will need to develop and have signed off by NHS Improvement. The demands on trusts and NHS Improvement, themselves in the middle of their own internal change programme, to achieve this should not be underestimated. Quick wins, these are not.

The involvement of NHS Improvement on a continuous monitoring basis adds more emphasis on central control of the NHS, a trend we have seen in other recent developments, as summarised in our recent briefing paper. How this central control will balance short-term quality and financial improvements while allowing local areas to strategically plan long-term transformation is yet to be seen.

Nationally the Carter review identifies £5bn of savings, no small number, but it is still less than a quarter of the wider £22bn worth of efficiencies the NHS has identified it needs to make by 2020. Until recently where the rest of the savings were going to come from was up for debate – though NHS England have now spelt this out in their appearance before the Commons Health Committee.

As with these wider savings, the Carter review doesn’t pretend that the savings it identifies can be achieved in isolation. Rather it requires the successful implementation of new care models and achievement of financial turnaround plans to achieve its aims. Whether these can all be achieved as they were first envisaged by 2020 will require both strong NHS and political commitment.

The review acknowledges this by emphasising the need to “significantly improve” leadership capability and capacity from trust boards through to clinical staff, echoing our 2015 report Better Value in the NHS. It recommends a national people strategy to build-up leadership capacity, engagement and inclusion, a welcome ideal to have in an age where NHS executive tenure are too short and turnover too high.

Though set in a challenging environment with concurrent and often competing priorities, the Carter review certainly makes a compelling case for reducing variations in acute hospitals in the NHS in England. Though the NHS has a mixed record on achieving year-on-year efficiency gains, there is enough variation there to aspire to drive these down as far as possible.

Does Carter show us the way forward? He shows us one version of the future but achieving all this at a time when demand and cost pressures leave very little room for strategic foresightedness is perhaps the greatest, and unwritten, aspiration.

James Thompson

Senior Research Analyst

The King’s Fund


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