Current NHS productivity measurement

The University of York’s Centre for Health Economics confidently announced that, despite the government making drastic cuts: “Hard working NHS staff are providing 16.5% more care per £ than they did 10 years before whilst national productivity has only grown by 6.7% over the same period

In particular, they claim that:

  • NHS outputs have continuously increased since they began measuring some 12 years before
  • 5.2 million more patients received planned or emergency hospital treatments over that period – an increase of 42%
  • Outpatient activity shot up by 131% with over 60 million more attendances

The ONS – Office for National Statistics – also joined in the applause with: “NHS England productivity grew by 3% over the last year which was more than treble the 0.8% achieved by the whole UK economy”

Apparently, the NHS has delivered over £6 billion of quality and cost improvements in the last year alone – action taken including:

  • Introducing a cost-per-hour cap on employing agency staff
  • Curbing prescription of medicines that have little or no benefit
  • Stopping routine commissioning of procedures where less invasive, safer treatments were available and just as effective

(Ed: £6bn is an impressive figure, if true, given total annual NHS spend is some £100bn – but, rather than stop there, ask how much more could have been saved)

Unsurprisingly, Simon Stevens, CEO of NHS England, has been quick to say the above findings are proof that: “Taxpayers’ investment in our NHS is money well spent”

Professor John Appleby, chief economist at the Nuffield Trust think tank adds his pennyworth, saying: “This certainly gives the lie to the idea that the health service is some form of backwater of inefficiency missing out on progress – it appears quite the opposite”

So, given this fanfare of good news, one has to ask why Prime Minister Theresa May rains on it all by requiring Simon: “To tackle waste, reduce bureaucracy and eliminate unacceptable variation within the NHS”

And how can the IEA – Institute of Economic Affairs – brand the NHS: “The most overrated and inefficient service in the world”

Both sides can’t be right

We suspect their opposite views depend on the base data they’re using – one might use some bits of the overall jig-saw, the other quite different bits

Whatever the reason, the NHS and associated think tanks seem to focus on patient volumes treated (outputs) and input resource costs – and less so on quality and service levels offered patients, especially the extra costs, wasted time and suffering many patients endure because of NHS system failings

For example, where’s measurement of the following:

  • Attendances (aka episodes) may indeed be going up but how many are repeat visits by the same patient for the same one health problem which was not dealt with right first time
  • How much of this failure demand is caused by the NHS themselves whilst patients are being treated for something else e.g. catching MRSA whilst an in-patient, or HIV/ hepatitis C when injected with infected blood
  • Waiting times are getting longer, forcing many patients to suffer longer as most cannot afford to ‘go private’ at great expense – how often does the same NHS doctor offer the treatment needed on a private basis and nigh immediately, even using NHS facilities

And, when patient queues lengthen, loud cries are always heard for ‘more funding for more input resources’ – last time, the beleagured Theresa immediately leapt in with an extra £20 bn (of our taxes), not least to garner votes at the next general election and outflank Corbyn

Nobody questions the body of senior health managers and experts who assume existing NHS methods are fine so it must be extra resources that are needed – ask front-line staff, however, and a different view emerges

It’s well-known that internal methods/ systems determine most (over 90% according to guru Dr Deming) of the productivity level of any organisation i.e. NOT employee numbers, engagement or incentivising them to work harder

Of course, the piecemeal action being taken, such as above, is most welcome – sadly, however, one never reads about any root-and-branch review of the whole NHS process, from GP gatekeepers through in-and-out patient services at hospitals and then on to social care services – nobody seems to quantify the waste and bottlenecks at each stage, nor identify ways to improve the entire patient flow

This is not to downplay the fact that the NHS has been a great success story – indeed, survey after survey show the vast majority of patients are more than satisfied with the service they receive despite managers having to cope with a constant diet of political reforms and ministerial micro-meddling – nor is it to deny that most staff work hard and long hours despite recent pay freezes and Brexit creating staff supply problems

But the rosy picture of the NHS painted by the University of York is misleading – their cherry-picking of what data does exist is not what hard-pressed tax-payers want to hear

Instead, a comprehensive ‘balanced scorecard’ of performance measures should be agreed by both NHS patients/ tax-payers and ministers/ managers which quantifies those KRAs – Key Result Areas – where the NHS is performing well or not, and where most scope for improvement lies

At present, big improvements that should be staring them in the face are going unseen

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P.S. No sooner had we posted the above than Matt Hancock, UK Secretary of Health launched a new TPA – Tax Payers’ Alliance – report claiming the NHS could save £12.5bn in annual staff time, allowing staff ‘much more time to do the vital things they love’ – and a further £5.9bn in the social care sector

Their secret is increased use of automation – the use of technology to improve the methods and systems used by all NHS staff, help them address shortages and free professionals from repetitive tasks – technology which addresses the areas of biggest improvement potential that we outline above

Hancock explains: “Automation and innovation are changing the way we live our lives – they can transform the way we deliver public services for decades to come – it’s critical for all of us that we seize the opportunities of the future and ensure modern technology benefits staff, patients and our country as a whole”

“Big productivity gains are made when technology is embraced”

Dr Simon Wallace, Chief Clinical Officer at Nuance Communications adds that:

  • “The NHS must encourage a culture shift to ensure technology is properly used to boost efficiency, improve patient care and reduce stress and burnout seen across the healthcare profession”
  • “Technologies like cloud computing are enabling inter-operability, resulting in increased data sharing across Trusts and more complete patient records, whilst AI should reduce the burden of administration and support clinical decision-making”

Maybe everything is preordained?

According to ‘The Science of Fate’ by Cambridge scientist Hannah Critchlow, your future may be more predictable than you think

Everything about you is fated, from your love or hate of garlic, your academic success, your expanding waistline or the cancer that will eventually kill you

Everything is determined by your genes and environment

If you’re fat, that’s not down to your lack of willpower – Hannah says we’re predisposed to overeat for evolutionary reasons when we would guzzle what few calories ever came available – it’s mostly a genetic lottery which determines whether you’re fat or thin – hence, it’s almost impossible for many active fat people to keep a healthy BMI

Environment factors also come into play, examples given being:

  • Kids raised on healthy foods by pious middle-class parents are more likely to eat healthily as adults
  • If mothers eat caraway seeds whilst breast-feeding, their kids will seek out that taste thereafter
  • Kids of parents who starved during WW2 are programmed to hoard calories
  • Mice who are presented with the smell of cherries while simultaneously receiving an electric shock give birth to offspring who are terrified by the smell (vital cruelty to advance science?)

Hence, the idea that we have any conscious control over our lives may be an illusion

Our consciousness is simply superimposed on top of the automatic machinery of our brains – we luxuriate in the illusion of power while unseen subordinates quietly get on with the business of actually running things

Another neuroscientist colleague adds: “I don’t believe in free will – everything is caused by something prior – for example, scientists can forecast the course of human conversations with great accuracy because much of what we say is constrained by our relationship with the person we’re talking to, our background, our social expectations and the rules of language”

Hannah concludes that we’re nothing more than fleshy robots, not least because:

  • There are some genes linked to impulsivity and sensation seeking, even influencing when you will lose your virginity
  • Others which determine whether you will turn out to be liberal, with a greater tolerance for the unknown, or conservative and so more sensitive to perceiving threat

Overall, Hannah says the brain is nothing more than an ‘electro-chemical circuit board’

James Marriott, reviewing Hannah’s book in The Times, admits this view may disturb many who thought they were ‘magnificent, rational beings driven by their indomitable wills’

Leonardo paints knowledge path

According to The 50th Law by 50 Cent and Robert Greene, knowledge in the mid-fifteenth century had hardened into rigid compartments viz:

  • Philosophy and scholasticism
  • The Arts
  • Science
  • The Occult – dark knowledge

Leonardo da Vinci was then a youth, the illegitimate son of a notary so lacking the usual formal education – hence his mind was freed from all the prejudices and rigid categories of thinking that prevailed at the time

He started as an apprentice to great artists, learning the craft of drawing and painting – knowledge in one field however simply opened up in him an insatiable hunger to learn something else in a related field:

  • Painting led to design in general
  • This led to architecture
  • Then on to engineering, making war machines
  • Animals and motion mechanics
  • Birds and aerodynamics
  • The anatomy of animals and humans
  • The relationship between emotions and physiology
  • And on and on – even to the occult

He recognised no boundaries between them – he sought the connections between all of them – in effect, he was the first real Renaissance man

Sadly, today, knowledge has regressed and hardened into rigid categories with intellectuals shut off in various ghettos:

  • Intelligent people are defined by how deeply they immerse themselves in one field of study – their views becoming more and more myopic
  • After school we are all encouraged to specialise – to learn one subject well and stick to it – we strangle ourselves with the narrowness of our interests – polymaths are the white crows of our time

Instead, we should follow Leonardo’s example and develop a new body of knowledge – one where what matters most are the connections between things, not what separates them

All the greatest innovations in history come from an openness to discovery, one idea leading to another, sometimes from quite unrelated fields

We need to encourage and develop Leonardo’s insatiable hunger for knowledge by widening our fields of study and observation, and letting ourselves be carried along by what we discover – that way leads to unexpected ideas, new practices, novel opportunities – whole new and better ways of doing things, to benefit all

Absolute returns

So much capital is misallocated these days, and that continues to drive down trend GDP growth – the term misallocated capital is used by economists to describe capital that is deployed without having any impact on productivity – it’s capital that is deployed unproductively

Niels Jensen of Absolute Return Partners wrote about The Productivity Conundrum and listed five reasons why productivity growth continues to be lacklustre despite all the benefits we reap every day from the digital revolution:

1. Ageing of society at large, as older workers are less productive than their younger peers

2. The rising cost of servicing the elderly in society

3. Excessive indebtedness in all economic sectors and the rising cost of servicing that debt

4. The rising cost of producing the energy we need to spin the wheels every day

5. The fact that the savings freed up by the digital revolution have not been re-invested in reskilling the workers affected to a higher level but have instead been pocketed by capital owners

Reasons 2-4 all have to do with the rising amount of capital being deployed unproductively – capital that could, and should, have been used to enhance productivity

Niels then reminds us of the most fundamental equation in economic theory:

∆GDP = ∆Workforce + ∆Productivity

And given ∆Workforce will turn negative in many developed countries in the years to come, robust productivity growth is pivotal to future economic growth

However, since WW2, the US economy has only enjoyed two long-lasting periods of productivity growth in excess of 2% per annum (the same is true for most of the rest of the developed world):

  • The first unfolded from the mid-1950s to the mid-1960s – Eisenhower had returned from the war in Europe and told Congress about a German phenomenon called autobahns, which allowed Hitler to move his army swiftly around – Congress subsequently decided to establish the interstate highway system – at about the same time, commercial aviation took off and the two new modes of transportation had a meaningful impact on labour productivity over the subsequent 10 years or so
  • The second wave occurred in the early years of the digital revolution – the internet had just been rolled out, and that had a similar impact on productivity

Now, as we are entering the second stage of the digital revolution (advanced robotics, AI, etc.), Niels believes a declining workforce will most likely lead to depressingly low GDP growth

He then cites a paper called Negative Productivity Agents by J.P. Morgan Asset and Wealth Management which deals exclusively with the main negative factors that are holding US GDP growth back viz:

1. A massive war machine

Some wars that the US military has been involved in have improved prosperity whereas others have not – either way, the US war machine is very expensive to run – it siphons capital away from productivity-enhancing investment opportunities like education and infrastructure

2. An inferior infrastructure

Governments all over the world are determined to electrify virtually all heating and transportation as the fight against global warming continues – however, electrification of everything will only work if you have a reliable electricity grid, and the US grid is near the bottom of the international league table for reliability – significant investment to upgrade the grid will therefore have to be sanctioned before the US economy can take full advantage

3. Behavioural quirks

J.P. Morgan says the number of Americans killed by firearms in the last 50 years, including suicides, is more than 1.5 million which equates to more than 30,000 gun-related deaths every year – and the trend for this number is upward – the US is quite simply in a league of its own when it comes to gun ownership and gun-related deaths – hence, it spends a vast amount of money dealing with gun violence, money that could be spent on educating youngsters instead

4. Out-of-control healthcare costs

Gun crime, obesity and other behavioural quirks combined with ageing of the populace at large continue to push US healthcare expenses through the roof

In fact, US public healthcare expenditures are not miles away from the cost of providing public healthcare in Western Europe – it is the US healthcare model, based on private care paid for by insurance companies, that is the culprit

5. A “dysfunctional” legal system

The last negative factor is the excessive level of corporate litigation costs in the US when compared to other OECD countries

Excessive litigation costs siphon capital away from potential productivity-enhancing corporate investments which could benefit all – instead, the money is spent on protecting corporates from ridiculous lawsuits

Productivity versus regulation

Niels quotes Dietmar Meyersiek for concluding that superior economic growth was very much affiliated with greater economic freedom i.e. productivity could be dramatically affected by the extent of regulation

Meyersiek had based his conclusions on work conducted by the Heritage Foundation which defined economic freedom as business, trade and investment freedom, financial and fiscal freedom, size of government, monetary freedom, property rights, freedom from corruption and labour market flexibility


Clearly, despite the above negative factors, the US is still a very free economy so it’s no surprise to see them topping this chart

The chart also suggests there are probably even more negative factors in Europe than in the US

Niels raises just one, for example – in 2009, the EU Parliament passed a new law regulating the shape of bananas – such laws are not just silly, they offer nothing in terms of consumer protection – they also add to the costs of the corporate sector – hence, they impact productivity negatively

Even worse, Niels concludes, they turn many people against the EU

A toast to bananas

AI increases productivity

By 2021, artificial intelligence (AI) will allow the rate of innovation of Filipino companies to increase by 1.7 times, and nearly double employee productivity gains in the Philippines, according to a study titled Future Ready Business: Assessing Asia Pacific’s Growth Potential Through AI

The study made by Microsoft and IDC (International Data Corp.) surveyed 109 business leaders and 100 workers in the Philippines

An article in The Manila Times which reported on the results is reproduced below as it will be of great interest to many businesses in many other nations, East and West

While close to 90% of business leaders polled agreed that AI is instrumental for their organisation’s competitiveness, only 45% of organisations in the Philippines have embarked on their AI journeys – yet those companies that have adopted AI expect it to increase their competitiveness by 1.5 times in 2021

“AI is the defining technology of our time that significantly accelerates business transformation, enables innovation, boosts employee productivity and ensures further growth – economies and businesses that have yet to embark on their AI journey run a real risk of missing out on the competitive benefits that are enjoyed by leaders” said Ricky Kapur, Microsoft Asia Pacific’s Enterprise and Partners Group general manager.

Why adopt AI?

For organisations that have implemented AI initiatives, the top five business drivers to adopt the technology were, in priority order:

  • Better customer engagements (27%)
  • Accelerated innovation (24%)
  • Higher competitiveness (16%)
  • More productive employees (10%)
  • Higher margins (8%)

“Last year, organisations that have adopted AI saw tangible improvements in those areas in the range of 22% to 44%” said Randy Roberts, IDC Philippines head of operations

“They forecast further improvements of at least 1.5 times in the three-year horizon, with the biggest jump expected in higher margins, accelerated innovation, and more productive employees”

The study evaluated six dimensions critical to ensuring the success of a nation’s AI journey – data, strategy, investments, culture, capabilities and infrastructure – it uncovered that the Philippines needs to focus on improving all areas, particularly its investments and data to accelerate its AI journey

“The Philippines needs to substantially improve its readiness – organisations’ leaders should make AI a core part of their strategy and continuously invest in this transformative technology for the long-term success, sometimes without immediate returns” Roberts said

Business leaders who are adopting AI face three top challenges:

  • Lack of thought leadership and commitment to invest in AI
  • Lack of skills, resources, and continuous learning programmes
  • Lack of advanced analytics or adequate infrastructure and tools to develop actionable insights

The study showed that, to move ahead on their AI journeys, businesses have to create the right organisational culture – a significant proportion of business leaders and more than half of workers surveyed believe that cultural traits that support AI journeys, such as risk-taking, proactive innovation, as well as cross-function partnerships among teams, are not pervasive today

“Overall, workers in the Philippines are more sceptical than business leaders about the cultural readiness of their organisations” said Roberts.

The study also found that business leaders and workers in the Philippines hold positive viewpoints about AI’s impact on the future of jobs – the majority (74%) believe that AI will either help to do their existing jobs better or reduce repetitive tasks

Kapur said: “Microsoft’s vision for AI is first and foremost about people – AI technology cannot progress without them – this means that millions will need to transform themselves into skilled workers as well as learners that an AI future needs – it is heartening to see that 88% of businesses prioritise skilling and reskilling of workers in the future – they plan to invest as much, or even more, in human capital than in new technology”

“The jobs of today will not be the jobs of tomorrow, and we have already seen demand for software engineering roles expand rapidly beyond just the tech sector – however, building an AI-ready workforce does not necessarily mean an acute need for technological skills”

The top future skills required by business leaders in the Philippines include digital skills, IT and programming skills, adaptability and continuous learning, as well as analytical skills

At present, the demand for these skills is higher than the existing supply