Introduction: the drive for reform

After rising for the previous two decades, overall productivity began falling by the end of the 2010s and has worsened following the COVID-19 pandemic. [12] Recent increases in staffing have often not translated into increases in volume of activity for many types of care. [13] However the extent of this is not fully clear as current measures of productivity capture volume rather than value of care, so falls in productivity growth are not as large as the data may suggest. Recent high inflation, particularly in energy and medicines prices, have contributed to a lower productivity figure. Nevertheless, significantly increasing productivity is therefore one of the greatest challenges facing the NHS. Improving healthcare productivity has a key role to play in lifting the UK’s overall productivity malaise.

Freedman and Wolf attribute lower productivity to: (a) the lack of capital investment for estate and digital infrastructure, which has made it harder to treat patients and caused inefficiencies; (b) high staff churn, more inexperienced staff and low staff morale; and (c) problems with hospital management and incentives from the centre. [14] This has been compounded by challenges with social care, with increasing numbers of people who are clinically fit for discharge remaining in hospital; the number of people who are in hospital facing delayed discharge has been above 20 per cent since January 2022. [15] There is also debate about whether growing regulatory demands are reducing the proportion of time spent on frontline delivery of care. Difficulties in increasing productivity can also be linked to the slow adoption of digital tools and technological solutions, as well as an outdated workforce model with limited incentives for delivery. However, evidence on the causes of recent NHS productivity trends is not fully clear. 

The NHS Workforce Plan sets a target of between 1.5 per cent to 2 per cent annual NHS labour productivity increases over the coming decade, while the Health Foundation has estimated that funding for healthcare services would need to rise by 3.7-4.3 per cent to keep up with demand in the absence of productivity improvement – and public health, social care and health education funding by even higher rates. [16,17] For acute care services to keep up with rising demand indefinitely, without waiting times and waiting lists ever rising, would require an ever-growing share of national wealth being spent on health and care. [18] This is not sustainable. 

Rather than just spending more money as revenue for day-to-day services and doing more of the same activity, the healthcare sector needs to do things differently and increase overall system effectiveness at keeping people healthier in the first place. Health and care leaders are conscious of the cost of inaction and look to plan services for the future, based on an understanding of the burden of disease in the long-term and not only the year ahead. This is not about changing how money is raised, but how it is spent.

The mission of integrated care systems

To reform how health and care services are provided and make the system more financially sustainable, parliament has created 42 integrated care systems (ICSs) in England. ICSs bring together all partners responsible for health and care, with integrated care boards (ICBs) responsible for commissioning NHS services. ICSs – as a collection of partners – have four core aims: 

1. improve outcomes in population health and healthcare, 
2. tackle inequalities in outcomes, experience and access, 
3. enhance productivity and value for money, and 
4. help the NHS support broader social and economic development. [19] 

To achieve these goals, ICSs need to boost allocative efficiency – that is about spending money on services which improve health outcomes the most for every pound spent – by reducing demand for lower value-adding health care services and treatments in hospitals. This is strategically crucial to driving improvement and delivering better value given the pressures on the healthcare service. One of the ways of achieving this is to shift resources upstream towards primary and community care and earlier preventative interventions which in general, though not always, deliver better health value. By value in healthcare, we use the definition of ‘simultaneously the value delivered to the patient in the form of better health outcomes and the value delivered by the health system in terms of the most efficient use of society’s limited financial and other resources.’ [20] 

If these services can prevent worsening ill health, they are a more efficient approach to improving health outcomes and limiting demand than more expensive downstream services. For instance, systems that invested more in community care saw 15 per cent lower non-elective admission rates and 10 per cent lower ambulance conveyance rates. [21,22] As a whole, a clinical intervention costs four times as much as a public health intervention, to add an extra year of healthy life, while 40 per cent of the burden on the NHS may be preventable through tackling the causes of avoidable chronic conditions. [23,24,25] Ensuring a healthy start to life through services for children and young people is also crucial to ensure they go on to have healthier lives as adults. 

Crucially, this involves ICSs shifting their focus from just delivering healthcare to also taking responsibility, together with the patients, their family and communities, for improving health. Indeed, this was envisaged in the original 1946 Act that established the NHS, which defined the NHS’s roles as ‘a comprehensive health service designed to secure improvement in the physical and mental health of the people of England and Wales, and the prevention, diagnosis and treatment of disease.’ [26] Getting the best return on investment from preventative interventions will take some years and require some double running: meeting the healthcare demand from the population today, while preventing some of the demand for tomorrow. While preventative interventions are likely to reduce the rise in demand for healthcare services to lower than what it would otherwise be, demand is still likely to rise overall in any case. 

It is therefore essential that ICSs also need to increase technical efficiency, delivering a higher volume and quality of activity in any setting at the lowest cost, to deliver timely, high-quality care for all patients. Much work has been done across the NHS to look at opportunities for greater technical efficiency – for example the productive ward work of NHSX’s Digital Productivity Programme and work carried out as part of the Getting it Right First Time (GIRFT) initiative. [27,28] Both found that improvements to core processes can significantly improve technical efficiency in a variety of settings. With most NHS spend in the acute sector, there are likely significant opportunities to improve overall NHS productivity and financial performance by boosting technical efficiency in acute providers. However, technical efficiency opportunities in primary and community care settings should not be overlooked and merit closer analysis. Price-setting is also an important nationally-led component of driving technical efficiency, supporting local efforts. [29] 

Digital technologies and data analytics are now offering further opportunities to improve efficiency and effectiveness of care delivery. Analysis of population-level data, including from wearables that can provide a constant stream of real-time health data, can help to identify households with the greatest need and enable local services to reach out to avoid likely hospitalisation to improve allocative efficiency. Meanwhile, investment in basic technology and artificial intelligence (AI) can improve technical efficiency through automation. [30,31] Digital transcribing on ward rounds can save doctors valuable time on ward rounds. Use of wearables for health monitoring can reduce staff time for health checks on virtual wards. Every £1 spent on technology can generate £4 in savings from time which is freed up. [32] Improving both allocative and technical productivity at the same time is essential, but a significant challenge. 

However, there are obstacles to ICSs delivering such changes which sit outside of their own power to fix. As ICS leaders set out in The State of Integrated Care Systems 2022/23: Riding the Storm, systems need from central government: [33]

• far greater freedom and influence over how money is spent to drive transformation in care
• greater capital funding to improve estate and digital infrastructure [34]
• a workforce fit for the future [35] 
• a functioning social care market [36] and
• more local autonomy to deliver this reform. 

These obstacles, and the opportunities which could be unlocked from addressing them, were addressed in the Rt Hon Patricia Hewitt’s review of ICSs, providing a blueprint for the future. [37] While not a new idea, the review also showed there is substantial consensus across the health and care sector for a fundamental shift from a model of treating ill health to preventing it in the first place – a view also supported by think tanks of different leanings. [38,39]