Lord Carter publishes Review of Operational Productivity and Performance in English NHS Acute Hospitals: Unwarranted Variations

The Review claims that hospitals are not making the best use of their income and need to improve urgently if the NHS is going to make the £22bn a year of efficiency savings it has pledged to deliver by 2020-21.

The Review draws on Lord Carter's examination of how 136 of England’s 156 acute hospital trusts operate, and will urge trusts to reduce “unwarranted [and] inexplicable variation” in key areas as a way of making savings.

Pathology is one of the areas highlighted by Lord Carter as an area of unwarranted variation and a target for efficiency savings.

While the Review’s Executive Summary states that: "Pathology providers are considered productive if the cost of pathology to the Trust is less than 1.6% of operating expenditure.", the Review estimates that:  “Costs as a proportion of trust operating expenditure ranged from less than 1.5% to over 3.0%.”.

Other variations in pathology services highlighted in the report included: “that the mix and quantum of qualified employees was inconsistent with trust activity.”.

While one of the Review’s key findings was that: “further analysis has confirmed that consolidated pathology organisations are the most efficient in the NHS.”, detailed recommendations to support NHS trusts in England to achieve eliminate unwarranted variations include: 

• Ensuring pathology departments  achieve acute pathology model hospital benchmarks as agreed with NHS Improvement by April 2017, ensuring a consistent approach to the quality and cost of diagnostic services across the NHS
• If benchmarks for pathology are unlikely to be achieved, trusts should have agreed plans for consolidation with, or outsourcing to, other providers by January 2017;

In order to achieve these objectives the Review recommends:

• Trusts introducing the Pathology Quality Assurance Dashboard (PQAD) by July 2016 to assure themselves and others that the pathology service provided to them is and remains of appropriate quality and safety, with NHS Improvement hosting the dashboard;
• HSCIC publishing a definitive list of NHS pathology tests and how they should be counted by October 2016, with NHS Improvement requiring trusts to adopt the definitions from April 2017;
• NHS Improvement publishing guidance notes for forming collaborative joint ventures and specifying managed equipment service contracts for local adaptation by October 2016;
• NHS Improvement introducing metrics that describe relative imaging departmental productivity related to the use of equipment and workforce activity by December 2016.

However, in looking for efficiency opportunities Lord Carter acknowledged the: “difficulty (faced) in extracting national data to understand the costs of these (diagnostic) services, which in turn has led to problems in comparing them across the NHS.”.