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Study finds all English hospitals have scope to improve efficiency to reduce costs

Study finds all English hospitals have scope to improve efficiency to reduce costs

[York, UK/ Medicine] - NHS hospitals have substantial scope to improve their efficiency by adopting best practice, according to research by the Centre for Health Economics (CHE) at the University of York. The study analysed Hospital Episode Statistics for 2007/8 (consisting of 16.5 million records), and costs derived from the Reference Cost database.

With the NHS facing severe funding constraints, it has been suggested that the greatest potential savings may come from increasing efficiencies and by reducing variations in clinical practices. When comparing hospitals, variations in practice of any form are often cited as evidence of inefficiency or poor performance and that the overall efficiency of the health system would improve if all hospitals were able to meet the standards of the best.

The CHE researchers assessed whether or not the higher costs or length of stay (LoS) were due to the type of patients that hospitals treat. For ten conditions, the researchers examined the cost and length of stay for every patient admitted to English hospitals during 2007/8. They looked at three medical conditions (acute myocardial infarction; childbirth; stroke) and seven surgical treatments (appendectomy; breast cancer (mastectomy); coronary artery bypass graft; cholecystectomy; inguinal hernia repair; hip replacement; and knee replacement).

Unexplained high costs and LoS

Even after taking account of age, disease severity and other characteristics, patients in some hospitals still had substantially higher costs or longer length of stay than others. Furthermore, these variations could not be explained by hospital characteristics such as size, teaching status, and how specialised the hospital was. This pattern was evident in all ten clinical areas.

The authors say that the answers for improving productivity are likely to be specific to each hospital. For example, high costs may be due to how a hospital allocates indirect costs or overheads to particular patients. There may be problems with how care is organised in the high cost hospitals, which may need investigation of individual departments to find the sources of high costs.

Co-author Andrew Street said: “Our findings demonstrate that most hospitals have scope to make efficiency savings in at least one of the clinical areas considered by this study. Inexplicable higher costs or lengths of stay suggest room for improvement. Unless hospitals improve their use of resources, they could struggle financially.” [hw]

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