The Report on Public Sector Productivity issued by the Office of National Statistics on October 18 was widely reported as revealing "slump" in productivity in the National Health Service.
The Financial Times (October 19) headlined its front page "NHS fails all tests on improved efficiency": the article was based on a press release from the ONS, and it has subsequently emerged that some journalists seeking the full report on which this press release was based were told it was not available.
For those looking to stick the boot into NHS staff it seemed too good a story to miss.
Tory Shadow Chancellor Oliver Letwin claimed that the figures were "damning", and that they pointed "health inflation, waste and inefficiency", with spending on hospitals rising five times as fast as the number of hospital treatments.
Although Health Secretary John Reid branded the figures "absurd" and pointed out (as
IN PATIENTS RUNNING OUT J. PATIENCE the ONS specifically admit) that they have excluded any measurement of quality of care, he did not challenge the assertion that somehow NHS staff - even while working under more pressure than ever before - have somehow fallen back in productivity.
But a closer look at the ONS report reveals that the underlying cause of the "health inflation" is not NHS staff, but the many and various private sector suppliers of goods, services and even some elective health care: they now make up a majority and a steadily rising share of NHS spending.
Page 13 of the ONS Report shows (in Table 2) a breakdown of NHS spending between Labour, "Intermediate consumption" [i.e. procurement of goods and services from the private sector, including services from private sector health providers], and "capital consumption".
And the shock finding for those seeking to prove "bureaucracy" or flagging productivity among NHS staff is that while in 1995 labour costs amounted to 57% of spending, and "Intermediate consumption" just 40%, by 2003 this picture had completely changed: then only 46% of spending was on labour and 52% "Intermediate consumption".
Comparing the rate of growth of spending in these two categories shows the situation even more clearly: from 1995-2003, spending labour went up just 44% (from £22 billion to £32 bn), in a period in which the workforce, again according to the ONS report, increased by 22% (as whole time equivalents, p15).
By contrast spending on "Intermediate procurement" rose by a massive 133% - from £16 billion to £37 bn. 50 per cent increase
In other words for every fl spent on staff in 1995 just 7lp was spent on goods and services from the private sector, but by 2003, for every l spent on staff £1.14 was spent on procurement - an increase of 50%.
Over this same period capital consumption as a share of NHS spending fell back from 2.8% to 2.2%, but NHS output (ignoring factors which might be argued as improving the quality of care) increased by 28% according to the ONS.
Since the key factor in expanding health care capacity, and the most frequent causes of bed and ward closures, delays and shortages in health care is staffing levels, it is clear that the efforts of the NHS workforce are the key to the real gains in output and quality of care that the government has been keen to highlight.
Perhaps just as shocking is the ONS admission that its statistics make no distinction between the different skill levels of the NHS workforce and their contribution to patient care: everyone becomes reduced abstract number of hours worked.
The October document admits the standard manual
measuring productivity stresses that:
"... 'an hour worked by a highly experienced surgeon and an hour worked by a newly hired teenager at a fast food restaurant' should be differentiated for productivity analysis, but although desirable, this is difficult"
Without such a breakdown it becomes very difficult to work out where the increased spending on staff has gone, and whether, as the Tory leadership claim, too much is still being frittered away bureaucracy as New Labour recreates the same wasteful market-style system that Thatcher began in 1989-90.
But the figures do suggest that any search for efficiencies should begin with a more rigorous scrutiny of the costs and profit margins of NHS suppliers, and the inflated sums being paid to purchase treatment from private sector providers.
Significantly these aspects of the figures are ignored by the ONS document, its press release and its conclusions, and few, if any, of the journa.ists who have covered the story have had the wit cr curiosity to check further..
Perhaps we should be cal -ing for an independent audit of the ONS, its agenda and i s methods? • The full report is availab e via the ONS websit:, www.statistics.gov.uk/