Asking the right questions: UK healthcare and the NHS

Health & Education


Efficiency in the NHS – how can it cope?

Healthcare around the globe is facing a funding challenge driven by increasing life expectancy and the associated availability of the new technological and pharmaceutical treatments which are helping to support improved quality of life for longer.

Payment for these new solutions can be increasingly expensive, consummate with the complexity of the research that has supported the development, the technology/equipment needed to deliver them and the extended timeframes under which individuals may be treated.

In many respects, the NHS is facing headwinds no different from the rest of the developed world. However, the sheer scale of the NHS, particularly as a publicly funded organisation, masks inefficiency.

Various studies on listed businesses over time have suggested a 1% loss of productivity per employee for each 10% increase in employee numbers. Public sector organisations unfortunately lack the commercial oversight of an external investor group to instigate and review changes, of the type evident recently as the markets have reassessed value metrics for tech businesses, which had become bloated on the excess finance available to them. This has led to 200,000 job losses since the start of 2022, including cutbacks at both Facebook (13% of its workforce, 11,000 staff), Microsoft and Tesla (10%), among others.

To quote a few metrics on scale: in 2022/3, £152.6bn was allocated to NHS England equating to c.45% of government spending or c.10% of UK GDP. It employs 1.3m directly, one in 26 of the UK workforce, not including suppliers to the NHS not directly employed by it.

A huge behemoth and a national institution. For many reasons it is worthy of support and appropriate funding. But what is appropriate, short term and long term? And what are the demands we should be making now to ensure it is fit for purpose in the future?



What is required?

Every organisation has to evolve and refine its business model over time and work out how best to operate and spend to give the best return to its investors.  In an SME context, each £ invested would be considered for its return and impact on the business, with entrepreneurs continually looking for opportunities to expand what is working and change what is not.

Since being set up 1948, the NHS has expanded its range of treatments, but few would question that it has failed to develop in line with the demands being placed on it, albeit different commentators may attribute this to different sources. Like any large organisation, control of funding is more disconnected, with decision making being inconsistent and based on an incomplete knowledge of the huge amount of potentially helpful data across the organisation.

The core principles of maintaining efficiency are consistent across organisations, albeit that the obstacles to be overcome vary across different sizes of organisations and sectors.

  • Measurement (and inherently, data conformity)
    • Without active, consistent measurement, it is impossible to correctly identify the scale and extent of particular problems and hence to work out where resources should be allocated to reap the best improvements, be those in health, cost or operationally.
    • Concrete statistical data is needed if we are to overcome push back, both from within the NHS and from public opinion, and ensure there are no “sacred cows” impeding rationale decision making.
    • Similarly, we need to be able to assess and monitor on an ongoing basis to ensure that changes made are generating the right results in order that future resources are correctly allocated.
    • Lastly, in order to drive behaviours in the right direction, we need data to support stakeholder incentivisation.
  • Communication (buying efficiencies)
    • Having got consistent data, we need to ensure there is a mechanism to share it and allow gains to be pushed out and monitored across the organisation, be that buying efficiencies, sharing of data on spare resources or new approaches.
    • Like a huge cargo ship, the NHS is slow to change course, so whilst there is recognition that things can be improved, there is rarely a consistent view around priorities or how this should be done.
      • Short-term pre-election points scoring aside, there is cross-party recognition and even committees demonstrating awareness that change is required. However, decision making within the NHS is still largely made locally in pockets, within individual trusts, with consequent divergence of thought around priorities.
      • Changes are being seen to a degree, with some regional groupings showing some signs better communication and sharing of resources, sharing data and adopting similar IT initiatives to build a consensual approach, benefitting from the broader input.
    • Communication and external positioning of e.g.: payments at point of use, other areas where private operation may be more efficient then public
    • Letting people internally as well as externally see the benefits of changes made and ensuring the press and social media is focused on the positives, not just where, inevitably, there are things that do not go so well.
    • Importantly, a comms strategy is required on long term planning v short term imperatives. The NHS is a huge beast in which to drive change and indeed the day to day challenges, the effect of decades of built up short term needs will remain, even as we seek to move it to a more preventative, rather than reactive approach. Communicating the longer term trajectory is key, and perhaps treating some items of expenditure as capital investment for the future may be helpful.
  • Innovation & Scaling (impetus?)
    • The “unjoined-up” nature of the organisation leads to some level of stagnation and an overall culture that is resistant to change, despite, perhaps even a strong willingness/recognition at a more individual level.
    • Covid did prompt some improvement, with many smaller businesses gaining a level of traction within the NHS as change became an imperative. Different players identified and adopted different solutions to similar problems, particularly in the sphere of online consultation. However, spheres of influence within the NHS limit communication around which of these are working best and should be adopted more widely.
    • Prospects for new externally developed solutions: Whilst, overall, there is a willingness to invest in healthcare, some funding has become tighter over the last 12 months as the commercial reality of how these initiatives convert from a good idea with a commercial logic, into actual cash generation. Evidence, or at least visibility of a better risk/reward balance for innovators and consequently potential investors relies on openness and quicker decision making, not always a hallmark of the public sector.
    • Finally, it is inconceivable that talent and ideas “from the coalface” within the NHS, should not play a strong role. These too need nurtured and supported, whilst not detracting from day-to-day operations.
  • Incentivisation
    • The scale of the NHS makes it easy for stakeholders to believe they cannot make a meaningful difference, so a programme of incentivisation is required, from individual level through local groupings through to Regional Trust Groups and the NHS as a whole.
    • Incentivisation also applies to the private sector, where if new technologies are to encouraged into the public health system, businesses need to feel the benefits outweigh the difficulties in winning the business – likely more a case of needing to reduce the barriers and make the decision making process easier rather than any need to reward differently


Final thoughts

In conclusion, change is needed and short term the cost of such changes may have to be financed in parallel with the accumulated health status of the nation and the NHS whilst healthcare (across the globe) moves from a reactive to a more proactive approach.  In a series of short articles, “Asking the Right Questions” will dive into each of the inter-linking elements that drive ongoing efficiency and consider how these might be used across the healthcare environment to support the long term operation of the NHS.



By Richard Hall on 15/05/2023