The Innovation Imperative in Health Care Organisations
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The Innovation Imperative in Health Care Organisations

Critical Role of Human Resource Management in the Cost, Quality and Productivity Equation

Edited by Peter Spurgeon, Ronald J. Burke and Cary L. Cooper

Health systems in the western world face increasingly intense pressure to contain or reduce costs, while countries such as China and India move towards universal coverage. The contributors illustrate that radical gains in efficiency and innovative practice are required internationally in health care systems. They argue that the high proportion of health care system costs invested in staffing place the human resource function at the forefront of meeting this challenge. Sustained system change and productivity gains, more effective management of staff and work climate are essential elements of reform and are all covered in this book.
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Chapter 2: Productivity in health care

John Appleby


It may seem surprising, but up to 1998 the entire value of the output created by government spending on the NHS was considered (by convention) to be the same value as the inputs that created these outputs. The volume of resources – capital and labour, plus goods and services – that went into the NHS was taken to be the volume of output created by that service. In such a world where outputs=inputs the ratio of the former to the latter – that is, productivity – would be forever stuck at unity regardless of any improvement in the way the NHS actually delivered its services. The convention that outputs=inputs was neither a willful slight to the NHS concerning its capacity to change its productivity, nor a passive oversight; the same assumption was made across all government spending and activity, not just in the UK but in most other countries. Some countries assumed that government output grew at the average rate for all nongovernment output. Whatever the assumption, the problem had been a practical one: the difficulty in devising and measuring the output of much of what the government produced through activities and services it controlled or funded. Getting to grips with this measurement problem was important not just for the individual sectors of the public services but also for the economy as a whole. Government spending accounts for a large chunk of GDP and if the assumption that outputs=inputs was wrong (and that there was for example similar productivity growth in the public as private sectors) then the measure of overall GDP growth would be an underestimate.

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