Measuring What Matters: NHS’s new methodology to measure productivity

NHS England has introduced a trust-level productivity methodology that will fundamentally change how performance is measured and monitored across the health service. From February 2026, every NHS trust in England receives a monthly productivity score that will be publicly reported. The stakes are high: the Spending Review has set a clear target of 2% productivity growth year on year until the NHS returns to pre-pandemic levels.

The methodology attempts to answer a deceptively simple question: for every pound spent in real terms, is the NHS delivering more care than it did the same period last year? Beneath premise lies significant design choices that boards and executive teams need to understand urgently.

Key points: How the methodology works

Ratio-based calculation

Productivity is calculated by dividing activity growth by spend growth, rather than subtracting one from the other. A trust growing activity by 10% whilst costs rise by 5% sees productivity grow by 4.8%, as output growth is expressed relative to the cost base. This mathematical approach affects how changes compound over time.

Value-adjustment for different activity types

The cost weighting mechanism applies national average unit costs to different procedures. A trust performing more complex surgery or treating higher-acuity patients will see this reflected in their productivity score even if raw activity volumes remain constant. This differentiates between types of activity based on their typical resource requirements.

Adjustment for care model changes

The equalisation adjustment accounts for shifts between care settings. Trusts moving patients from inpatient to day case settings would otherwise see productivity fall because day cases have lower unit costs. The methodology assigns equivalent cost weights to equivalent outcomes, which affects how transformation initiatives are reflected in the metric.

Treatment of national factors

Inflation adjustments separate out factors determined nationally. Pay uplifts, changes to high-cost drug prices, and one-off redundancy costs don’t count against a trust’s productivity score. The methodology attempts to focus on operational performance rather than national policy decisions and market factors.

See the full snapshot below:

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Quality and outcomes considerations

The methodology counts activity rather than outcomes. For example, a hip replacement is counted identically regardless of the patient outcome or whether complications require readmission. The methodology cannot distinguish between different quality levels of care delivery. This makes clinical governance and quality monitoring important alongside productivity tracking.

Methodology development

The methodology may evolve over time. NHSE has indicated openness to refinements as implementation progresses. Trusts that engage with the technical design and provide evidence of issues may contribute to how productivity is measured in future iterations.

The productivity metric is now part of the NHS performance framework. Trusts will need to understand both what it measures and what it does not capture, and be able to explain their scores to regulators, boards, and stakeholders.

Why this matters right now

The first estimates were published on 12 February 2026. For every board and executive team, the immediate task is understanding what their number means in context — how their activity mix, care model and cost reporting combine to produce it, and whether it reflects genuine improvement or data artefacts. SDEC reporting changes, EPR implementations and unaudited monthly finance returns can all create distortions at trust level. Estimates are provisional, trusts can raise data notifications, and the number is intended as a starting point for a conversation, not a final verdict.

Read the full Productivity Methodology here.

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Measuring What Matters: NHS’s new methodology to measure productivity