Hospital Trusts productivity in the English NHS: Uncovering possible drivers of productivity variations

BACKGROUND: Health care systems in OECD countries are increasingly facing economic challenges and funding pressures. These normally demand interventions (political, financial and organisational) aimed at improving the efficiency of the health system as a whole and its single components. In 2009, the English NHS Chief Executive, Sir David Nicholson, warned that a potential funding gap of £20 billion should be met by extensive efficiency savings by March 2015. Our study investigates possible drivers of differential Trust performance (productivity) for the financial years 2010/11-2012/13. METHODS: Following accounting practice, we define Productivity as the ratio of Outputs over Inputs. We analyse variation in both Total Factor and Labour Productivity using ordinary least squares regressions. We explicitly included in our analysis factors of differential performance highlighted in the Nicholson challenge as the sources were the efficiency savings should come from. Explanatory variables include efficiency in resource use measures, Trust and patient characteristics, and quality of care. RESULTS: We find that larger Trusts and Foundation Trusts are associated with lower productivity, as are those treating a greater proportion of both older and/or younger patients. Surprisingly treating more patients in their last year of life is associated with higher Labour Productivity.