The NHS “is a triumphant example of the superiority of collective action and public initiative applied to a segment of society, where commercial principles are seen at their worst”
Aneurin Bevan, In Place of Fear, 1952, page 85

Like a gallant knight, Sir Galahad - sometimes known as Simon Stevens - has galloped forth seeking the Holy Grail of the NHS: the acquisition of increased productivity to ensure its survival.

The good knight’s second NHS Plan, now nuanced for neo-liberal times as the Five Year Forward View, requires massive re-disorganisation of thought, word and deed - if not (yet) of management structure.

Galahad deserves the accolade of Hero Of The Whitehall Swamp, First Class for the clarity of his thought.

He now faces the problem of overcoming a multitude of conservative NHS peasants intent on preserving a quiet life and a nice income at the expense of taxpayers and patients.

Baumol's cost disease
The productivity challenge is aptly named. Two American economists, Baumol and Bowen, noted that the number of players needed to produce a Beethoven string quartet was the same now as when it was first performed.

An analogy to this example from the performing arts is the healthcare sector, in that it takes the same time for a nurse to take blood or re-make my soiled bed now as it did 10 years ago. In service sectors like the NHS and the performing arts, productivity growth may be highly constrained.

Productivity is currently measured in the NHS by relating inputs/expenditure to activity. This work uses a weighted index to link disparate forms of NHS activity. Productivity is (in the car industry) the relationship between the value of inputs and the value of outputs e.g. car sale revenue.

In healthcare there is no single measure of outcome, so activity, a process measure, is used as a proxy. Better summat, rather than nowt - but be aware of what is being used!

Doing relatively more with relatively less
So the NHS productivity challenge is a question: with a broadly static budget relative to demand, can you produce more activity?

This phrasing, of course, assumes that all this activity is valuable and increases the production of health outcomes for patients.

In the period since 2010, NHS funding has grown by circa 0.6% annually in real terms; largely by accident due to poor forecasting of inflation by the Treasury. Productivity-activity adjusted for some measures of quality (e.g. reduced inpatient mortality and improved hospital safety) increased by 10-11 per cent between 2004/5 and 2011/12 with a recent annual rate of circa 2 per cent (Street et al, University of York, Research Paper 94).

There is a general consensus that the NHS will have a potential funding gap of £30 billion by 2020. This eleventh 'commandment' is to be met, sayeth the good Sir Galahad, by increased productivity contributing £22 billion and increased public funding of £8 billion. The latter is a nice challenge to politicians, particularly in a pre-election period, but the former is an even tougher challenge for the NHS.

If real NHS expenditure is constant over the next five years and there is a growth in productivity of 0.8 per cent, the funding gap is £20bn. If productivity gains are 2-3 per cent annually the expenditure gap is bridged, sayeth our gentle knight.

The preceding challenge of Comrade Nicholson requiring economy and productivity gains relied significantly upon good socialist Whitehall-imposed central planning: wage and tariff control. This is unlikely to be sustainable in the next five years. There is a risk of wage 'bounce-back' after recent austerity and this will complicate funding further. The unintended consequences of wage controls are very evident e.g. in the inflation of agency expenditure.

The bottom line is that productivity gains are vital. Our good Knight offers a plethora of proposed interventions to pursue this Holy Grail. He rightly challenges politicians to re-consider their craven subservience to corporate interests that prefer profits to enhanced public health. The sugar, alcohol and tobacco industries are epitomes of regulatory capture i.e. the manipulation of Whitehall village by industry.

Other policy interventions are many and varied. GPs running hospitals and hospitals buying in GPs are 'prototypes' whose merits may take five years to evaluate. They are part of an international movement based on belief rather than hard evidence, such as US Accountable Care Organisations. As ever, there is a concern that 'integration' of fragmented health and social care systems will reveal unmet need and inflate expenditure.

The good Knight asserts he will not let a thousand flowers bloom. However it is possible we may get 999 flowers blooming as NHS managers (ever Pavlovian in their behaviour,) "innovate' energetically with the usual disregard for learning from each other and defining and measuring costs and benefits systematically.

Undoubtedly, the cognoscenti will murmur with pleasure at this second NHS plan from Sir Galahad. Its contents are un-opposably 'motherhood and apple pie' to many; but this belies the problem of successful implementation. Timely and efficient innovations to enhance productivity are elusive internationally.

All healthcare systems are facing similar problems of sustainability. Public healthcare systems always perform better than private systems, as can be seen by comparative analysis e.g. the Commonwealth Fund’s annual performance reports. However, progress may require not only radical and demonstrably efficient innovation but also even more enhanced public funding than in the Forward View.

The silence of the competing political parties about the additional gold demanded by Sir Galahad is ominous. The real Sir Galahad endured a long and difficult search for the Holy Grail, but he eventually found it. This current Sir Galahad will need all his many talents to progress his ambitious agenda through the Whitehall swamp.

As Uwe Reinhardt of Princeton University has argued, “sustainability” is a moral issue, defining the mutual obligations of members of a community. The radical right wonks criticising the NHS are immoral political wolves seeking to undermine Bevan’s inheritance of our collective responsibility for fellow citizens. Let’s keep denying them, by improving the NHS.