It’s Not Just About the Money

Introduction Shirley Rogers Health Workforce

Future healthcare spending: what are the limits? NHS Scotland Event: Glasgow Prof John Appleby Chief Economist The King’s Fund Improving health care in London: who will take the lead?

Filling the gap

Future UK NHS funding: 2002 Wanless review

If something cannot go on forever, it will stop! Sir Derek Wanless, quoting Herbert Stein (‘Stein’s Law’)

Sir Derek Wanless Wanless D, Appleby J, Harrison A, Patel D (2007). Our future health secured?: A review of NHS funding and performance, London: The King’s Fund.Our future health secured?: A review of NHS funding and performance What outcomes will be possible for our future health? What resources will be needed to achieve them, in health care and elsewhere? How can we minimise the cost and how do we decide how much is justified? How do we create the flexibility to react when inevitably circumstances change? Is there a willingness and an ability, individually or collectively, to pay the cost?

An estimate of the English NHS productivity challenge by 2014/15

New hospital cost returns show 13% rise in weekly cost of treating and caring for patients. Initiates ‘efficiency drive’ to reduce costs ‘Working for Patients’ (DH, 1989) introduced ‘internal market’ with incentives to reduce costs Rayner Scrutiny Programmes from comprised 155 scrutinies of efficiency programmes across government. Around a quarter of the savings identified were realised (NAO 1986) Gershon Review (HMT 2004) recommended savings across government departments of £21.5 bn. Halfway through the programme the NAO reported a quarter were genuine efficiency gains, and a quarter were doubtful (NAO 2007). Public spending agreements introduced in the 1998 Comprehensive Spending Review (HMT, 1998) set out aims and objectives for spending departments including value for money targets QIPP 1 ‘Quality, Innovation Productivity, Prevention’ initiative to generate productivity gains to the value of £20bn QIPP 2 (2013) ‘Call to Action’ (NHSE 2013) identified a further £30bn ‘gap’ to 2021 and urges a step change in the transformation’ of the NHS as a result Guillebaud committee (1955) set up to investigate NHS spending and efficiency with an emphasis on containing spending. In fact found spend had fallen as a percentage of GDP Audit Commission established in First report on the NHS in (1990) argued for expansion of day case activity on efficiency grounds Griffiths’ Report (DHSS 1983) argued that ‘major cost improvement programmes should be initiated within the NHS 1990 National Audit Act (HMG, 1983) established the National Audit Office whose remit included value for money investigations of government departments. Since then numerous reports on vfm in the NHS Payment by Results HRG tariffs equal average national cost plus reductions for efficiency factor as incentives to reduce costs A brief history of productivity, efficiency and value for money drives in the NHS

Filling the gap part 2

NHS spend as a percentage of GDP: % 6.1%?

Latest news: NHS England: Call to Action: £30bn gap by 2020/1 “The broad consensus is that for the next decade, the NHS can expect its budget to remain flat in real terms, or to increase with overall GDP growth at best.” Assumes GDP def=1.7% pa Assumes ‘Need’ growth of 5.4% pa Uses actual GDP def. + guess for 2018 on (+1% 2018 on) Assumes ‘Need’ growth of 4% pa £13bn £30bn

Productivity implications of Call to Action funding assumptions

If something cannot go on forever, it will stop! Stein’s Law

Future funding…

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International trends in health spending: (OECD)

UK health care spending projections (per cent GDP): 2062/3 (OBR variants)

France, Germany 2010 Netherlands, 2010 US, 2010

France, Germany 2010 Netherlands, 2010 US, 2010

France, Germany 2010 Netherlands, 2010 US, 2010

France, Germany 2010 Netherlands, 2010 US, 2010

France, Germany 2010 Netherlands, 2010 US, 2010

France, Germany 2010 Netherlands, 2010 US, 2010

France, Germany 2010 Netherlands, 2010 US, 2010

France, Germany 2010 Netherlands, 2010 US, 2010

Drivers of spending pressures Demographic factors and health status Income Consumer/patient behaviours Treatment practices Technological progress Health prices and productivity Health care system organisation

Ageing….not a major driver of increased spending

Limits to growth?

But… Smith S, Newhouse JP, Freedland MS (2009) Income, Insurance, And Technology: Why Does Health Spending Outpace Economic Growth? Health Affairs October 2009 vol. 28 no Income growth will continue to drive a rising health share of GDP in decades to come, as spending on new medical technologies continues to increase more rapidly than incomes. Ultimately, this effect must diminish as the opportunity cost of additional growth in health spending rises—exacting a growing trade-off in the forgone consumption of all other goods and services.

490% real increase 200% real increase Future UK health care spending? Percentage of GDP OBR, 2013: highest projection

More on health care, but more (in real terms) on everything else too?

490% real increase 170% real increase Future UK health care spending? Percentage of all Government spending OBR, 2013: highest projection

Looking ahead, how confident are you that your organisation will achieve financial balance in 2014/15 and 2015/16?

Spending pressure trends upwards. But where will the resources come from? And are we, in Wanless’s words, willing to pay the cost?

Increase productivity?

Capping the NHS offer: Two tier, part tax part private? “It has been suggested that the NHS should only be available to those on lower incomes. This would mean that contributions could be lower and most people would then take out medical insurance to pay for health care. Do you support or oppose this idea?” BSA surveys Oppose Support

Public’s priorities for extra government spending: Health 1 st and 2 nd priority (BSA survey)

Health priority…but willing to pay more tax? Public attitudes to tax and spend (BSA survey)

In ten years’ time do you think the NHS will still be paid for by taxes and free to all? British Social Attitudes survey: 2010

Want do we want (and when do we want need it?)

More time More money for transformational change and short-term support Measures to support change and value for money.

NHS spend as a percentage of GDP: % 6.1%?

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Now Future? It won’t aways be like now…

@jappleby123

Closing remarks Linda Semple Head of QuEST

Quality and Efficiency Support Team QuEST supports NHS Boards to deliver improvements in quality and efficiency through a number of national programmes. Working in partnership with NHS Boards, QuEST tests and spreads emerging innovations and best practice across NHSScotland to enable delivery of key NHS priorities.

Quality Improvement Hub Website