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Healthcare productivity remains constant for most of last 15 years

Released: 07 December 2012 Download PDF

For most of the 15 year period since 1995, Public Service Healthcare productivity has remained broadly constant.

This is revealed today in an article published by the Office for National Statistics (ONS) which added that the period 2003 to 2006 saw some improvement in productivity which has since levelled off or slightly declined.

Average costs for publicly-funded healthcare are increasing at an average of 2.4% per year, which is slightly faster than the 2.2% seen in the wider economy over the period 1995-2010. 

Over the period 1995 to 2010, the fastest growing area of activity was in services funded by the NHS but provided by organisations in the private, voluntary or local government sector. This has increased by an average of 13.5% per year. 

These organisations provide, for example, Continuing Care services for older people in community settings or private nursing homes; a range of mental health services; and elective surgery procedures. 

The article also reports that:

• the volume of GP-prescribed drugs has also grown strongly, by an average of around 8.4% per year since 1995. 

• the fastest growing component of healthcare inputs is bought-in goods and services, particularly to the Hospital and Community Care sector.  This includes clinical supplies and services. 

Productivity is measured by the extent to which the service delivers outputs against inputs. These outputs are quality-adjusted include measures relating to primary care performance, and to short-term survival rates, health gain following treatment in hospital and changes in waiting times.

Inputs include labour, such as hospital consultants, nurses, technical staff, ambulance staff and support. Also included are goods and services such as pharmaceutical services, dental and ophthalmic services, and intermediate consumption by hospitals and GP practices. This component also includes GP-prescribed drugs and services provided by non-NHS organisations.   

The average cost of healthcare is then calculated by dividing expenditure on healthcare by the volume of healthcare output.  The growth in average costs can be compared to other measures of inflation in the economy such as the GDP deflator.

Full details are contained in the article Estimates of Public Service Healthcare productivity.

Background notes

  1. Productivity is measured by dividing output by inputs.
  2. The latest estimates of Public Service Healthcare productivity cover the period 1995 – 2010.  An updated Quality and Methodology Information (QMI) report will be published shortly on the ONS website.  This describes the intended uses of the estimates, their quality and a summary of the methods used to produce them.
  3. Details of changes to methods applied to the estimates in this release, including a new assumption regarding the measurement of services provided by organisations outside the NHS is given in Methods changes in public service productivity estimates: Healthcare 2010. Available at:
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Content from the Office for National Statistics.
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