Follow the leaders – or waste billions of pounds every year

Competitive pressures mean that companies cannot fall behind and, as a result, whole industries take leaps forward in efficiency. The automotive industry is possibly the best known example.

The wise in the NHS learn from the best, but it is too easy for others to find excuses not to follow suit

Equally, there are some industries that have failed to deal with variability and are struggling as a result. Typically these are sectors which are culturally resistant to standardisation and agreed methodologies for driving out variability - the media sector is a case in point.

One of the first messages I was given on becoming HSJ editor for the first time in 2002 was that if the poorest performing NHS organisations were raised to match the average, the impact would be greater than the introduction of any new innovation.

Two major pieces of research reported exclusively in this week’s HSJ highlight how far the NHS is from achieving this goal.

The Centre for Health Economics was commissioned by the Department of Health to analyse regional performance in the NHS. The conclusions are stark. If the rest of the NHS could perform as well as the South West, the service “could cut expenditure by £3.2bn without reducing the number of patients treated”.

A similarly strong message arrives with EC Harris’s analysis of the NHS estate, where savings of £2bn await. The review of government efficiency undertaken by retail heavyweight Sir Philip Green reaches a similar - if more generalised - conclusion.

Reducing variability was an aspiration during the Labour years and, partly as a result, progress was patchy. It has now become necessity, so what has to change to achieve system-wide change?

There are lessons to learn from the transformation undergone by the most efficient industries. The first is that you ignore best practice at your peril. For example, the Centre for Health Economics work and previous studies have shown that NHS South West has achieved a level of performance well above the average for many years - in other words they have achieved sustainable improvement, not just one-off gains.

The wise in the NHS learn from the best, but it is too easy for others to find excuses not to follow suit. Introducing a greater degree of competition may provide some incentive, but it is only likely to be a small part of the answer for the NHS. The real driver must be a better and more rapidly available set of data which serves as a widely accepted measure of NHS efficiency. The national commissioning board must make it a priority to agree and develop that dataset.

Another lesson is to look everywhere for variability - even those unfashionable areas which boards tend to relegate to AOB. In the NHS that, sadly, often includes estate management. That is strange, especially at this time. Driving efficiencies through the better management of buildings and land should be, relatively, low hanging fruit. It is not without its challenges, but it does not carry the cultural challenges associated with, for example, getting clinicians to change their practice.

Finally, the most telling productivity comparisons are not between the NHS and the private sector as a whole - which are basically meaningless - but between efficiencies achieved elsewhere in the public sector.

While facing the Commons health select committee on Tuesday, NHS chief executive Sir David Nicholson agreed that local government has a better record in delivering efficiencies than the health service. NHS managers can reasonably be irritated by exhortations that they ape the private sector - but when excellence in tackling variability comes from elsewhere in the NHS or the public sector, they have a duty to apply any lessons to be learned.