Aneurin Bevan: “What should be the glory of the profession is that a doctor should be able to meet his patients with no financial anxiety”.
Why Health Spending Matters
In nominal terms, health spending has been increased in the last few years and reached £134.1 billion in 2015, equivalent to 18.2% of total Government spending.
Health Spending, 2010-11 to 2014-15 (£ Million)
Source: HM Treasury
The proportional importance of Government spending on health to the total health spend (including private-funded health care) is one of the highest in Europe. As a proportion of GDP the UK’s health spending is well below that of the major European countries. It is only above the overall average by inclusion of many of the East European countries.
In one international comparison, the UK invested 9.6% of GDP in health care in comparison with Germany at 11.6%, France at 11.9%, while Spain and Italy invested 9.5%. The UK figure is distorted because the health service has high use of Private Finance Initiative projects. These do not reflect the costs which are spread over years. This reduces the effectiveness of future spending as well as passing the next generation the tax bill.
Comparisons with other countries also need to be treated with caution because of differing definitions and scope of health services. Other comparisons with Europe show the UK has significantly fewer doctors per head of population than 30 European countries at 27 per 100,000 of population rather than an average of more than 33. The average for Germany was 36, France 34, Italy 35 and Spain almost 40.
The UK has a higher than 30 European country average number of nurses and midwives per 100,000 of population at 101 compared with the average of 78. The number is much lower than the Scandinavian and Nordic countries such as Sweden (119), Norway (319), Finland (239) and Denmark (161).
International Benchmarks of numbers of doctors and nurses are misleading because of the different roles given to each in different countries.
The ageing population is a testament to the success of past health care provision and a challenge for the future. If health care had not made as many advances as it has, we would not be seeing the steady rise in life expectancy. That success comes at a price: older populations are prone to diseases which typically are more prevalent as longevity increases. These include a roster of chronic diseases, such as cancer, diabetes, heart disease, respiratory conditions, stroke, dementia, and depression. By definition, these diseases do not kill quickly. That means the financial burden of caring for the chronically ill has grown heavier, as have the demands on health care to provide proper treatment and care.
Other reasons the physical and financial demands on health care are increasing include:
- the spread of unhealthy lifestyles
- more technology-based cures
- the increased skills of the workforce needed to give those treatments
- excessively bureaucratic procedures
- increased specialisation in medicine
- the growing demand by an educated public for access to expensive modern medicine
To place public health in the UK into a European context shows a slightly higher spend compared with the EU.
International Benchmarks of Public Spending on Health, 2014 (% of GDP and % of Total Government Spend)
The current spending on health breaks down as:
- Medical services £128,871 million (96% of health)
- Medical research £1,016 million (1% of health)
- Central services £4,221 million (3% of health)
International comparisons indicate that the UK has an above average expenditure on hospitals at the expense of other outpatient services:
International Breakdown of Public Spending on Health, 2014 (% of Total Public Spending)
The Long-term Fiscal Sustainability Review by the Office for Budget Responsibility shows the likely effect of the demographics, income, technology changes and costs. The central forecast has a short-term expectation for reduced health spending relative to GDP. The forecast suggests that under current policies the UK will not devote a similar proportion of spending on health as France already does until 2057.
Not only will demographic change place an upward pressure on care for the elderly, but there even greater implications for long-term care:
Office for Budget Responsibility Expectations for Long-term Care Issues, 2010-2060 (Years)
Source: Office for Budget Responsibility
Based on these the Office for Budget Responsibility expects increasing levels of GDP will be needed to fund long-term care:
Office for Budget Responsibility Central Projections on Long-term Care Spending, 2013-2063 (% of GDP)
Source: Office for Budget Responsibility
In England, the structure of the NHS is complicated after the 2013 changes:
NHS England (previously The NHS Commissioning Board) is an independent body, at arms’ length to the Government. Its main role is to improve health results for people in England. It:
- provides national leadership for improving results and driving up the quality of care
- supervises clinical commissioning groups (CCGs)
- awards funds to CCGs
- commissions primary care and specialist services
CCGs replaced primary care trusts (PCTs) on April 1, 2013. CCGs are clinically led statutory NHS bodies responsible for the planning and commissioning of health care services for their local area. CCGs members include GPs and other clinicians such as nurses and consultants.
England’s 211 CCGs are responsible for £65 billion of the £95 billion NHS commissioning budget. They now plan and commission hospital care and community and mental health services. All GP practices must be members of a CCG, and every CCG board must include at least one hospital doctor, nurse and member of the public. They commission most secondary care services such as:
- planned hospital care
- rehabilitative care
- urgent and emergency care (including out-of-hours)
- most community health services
- mental health and learning disability services
CCGs can commission any service provider that meets NHS standards and costs. These can be NHS hospitals, social enterprises, charities or private sector providers. However, they must be assured of the quality of services they commission, considering both National Institute for Health and Care Excellence (NICE) guidelines and the Care Quality Commission’s (CQC) data about service providers.
Both NHS England and CCGs have a duty to involve their patients, carers and the public in decisions about the services they commission.
Every “upper tier” local authority has set up a health and well-being board to act as a forum for local commissioners across the NHS, social care, public health and other services. The boards are intended to:
- increase democratic input into strategic decisions about health and well-being services
- strengthen working relationships between health and social care
- encourage integrated commissioning of health and social care services
Public Health England (PHE) provides national leadership and expert services to support public health, and works with local Government and the NHS to respond to emergencies. PHE:
- co-ordinates a national public health service and delivers some elements of this
- builds research to support local public health services
- supports the public to make healthier choices
- provides leadership to public health delivery
- supports developing the public health workforce
Following the scrapping of strategic health authorities, the NHS Trust Development Authority is responsible for overseeing the performance management and governance of NHS trusts that have not yet achieved foundation status. This includes clinical quality and managing trusts’ progress towards foundation trust status. Ministers want all trusts to achieve foundation status.
Monitor is the sector regulator for health care, responsible for licensing health care providers, regulating prices for NHS services and addressing restrictions on competition that act against patients’ interests.
Health Education England (HEE) leads education, training and workforce development nationally. It promotes high-quality education and training that is responsive to the changing needs of patients and local communities. Professional regulators are still responsible for setting and upholding standards. HEE has six professional boards. Its medical board is responsible for:
- ensuring that training posts are filled by high-quality candidates
- that curriculum-based training is delivered
- that academic medicine’s needs are recognised
- there is enough capacity in the health service to deliver high-quality training
Local authorities have a new set of duties to protect and improve public health. These include commissioning and providing public health services.
Local education and training boards (LETBs) are now responsible for workforce planning, education and training locally. They bring together all health care and public health providers of NHS-funded services, education providers, professional bodies and local Government and universities or research centres. They are accountable to Health Education England and will host postgraduate deaneries and their roles.
New patient and public bodies, known as local Healthwatch have been established. Local Healthwatch acts as a point of contact for individuals, community groups and voluntary organisations when dealing with health and social care and has a representative seat on the health and well-being board.
Health and well-being boards have been established in each upper tier local authority to promote integrated working across health and social care. With representatives from local authorities, health and social care, public health and patient groups, health and well-being boards produce the Joint Strategic Needs Assessment (JSNA) and Joint Health and Well-being Strategy (JHWS) identifying local priorities for commissioners.
GPs and other clinicians involved in clinical commissioning groups (CCGs) need support to commission effectively. Commissioning support encompasses many roles, from transactional services such as payroll and IT services, to equipping CCGs with the complex population level data required to inform commissioning decisions.
Primary care trust (PCT) clusters are currently developing commissioning support organisations, to be hosted by the NHS England until 2016. CCGs may choose to host their own, internal support services, or contract from the PCT-cluster developed bodies, private or third sector organisations.
Clinical networks are hosted and funded by NHS England, and advise on specific conditions or patient groups where improvements can be made through an integrated, whole-system approach. The networks advise local commissioners, help reduce variation in services, and encourage innovation.
Clinical senates are led by clinicians to provide multi disciplinary input to strategic clinical decision-making. The groups, 12 of which are being created, should help ensure that clinical commissioning groups, local authorities and the NHS England have access to a broad range of clinical input to inform their decisions. Senates include medical, nursing and allied health care professional representation as well as patients, volunteers and other groups.
In October 2014 the NHS published its Five-Year Forward View. That vision called for:
- a radical upgrade in prevention and public health. The NHS will now back hard-hitting national action on obesity, smoking, alcohol and other major health risks and help develop and support new workplace incentives to promote employee health and cut sickness-related unemployment
- patients to gain far greater control of their own care – including the option of shared budgets combining health and social care. The 1.4 million full-time unpaid carers in England will get new support, and the NHS will become a better partner with voluntary organisations and local communities
- the NHS will take decisive steps to break down the barriers in how care is provided between family doctors and hospitals, between physical and mental health, between health and social care. The future will see far more care delivered locally but with some services in specialist centres, organised to support people with multiple health conditions, not just single diseases
- different local health communities will be supported by the NHS’ national leadership to choose from a few radical new care delivery options, and then given the resources and support to carry them out where that makes sense
- suggests that one new option will allow groups of GPs to combine with nurses, other community health services, hospital specialists and perhaps mental health and social care to create integrated out-of-hospital care – the Multispecialty Community Provider
- suggests a further new option will be the integrated hospital and primary care provider – Primary and Acute Care Systems – combining for the first time general practice and hospital services, similar to the Accountable Care Organisations now developing in other countries
- across the NHS, urgent and emergency care services will be redesigned to integrate between A&E departments, GP out-of-hours services, urgent care centres, NHS 111, and ambulance services
- smaller hospitals will have new options to help them remain viable, including forming partnerships with other hospitals further afield, and partnering with specialist hospitals to provide more local services. Midwives will have new options to take charge of the maternity services they offer. The NHS will provide more support for frail older people living in care homes
- the number of GPs in training needs to be increased as fast as possible, with new options to encourage retention
The report states that to provide comprehensive and high-quality care. Monitor, NHS England and independent analysts have all suggested that growing demand will create a shortfall of nearly £30 billion a year by 2020/21. This assumes no further annual efficiencies and flat real terms funding. To preserve the quality of the service, there will need to be initiatives on three fronts:
The report states the NHS’ long run efficiency has improved by an average of 0.8% each year. Efficiency improvements have been nearer 1.5%-2% in recent years. It is now targeting a 2% net efficiency or demand saving across its whole funding base. This would be a strong improvement compared with its previous performance and other countries’ health systems.
The report suggests these improvements could rise to 3% by the end of the period. This relies on greater prevention, investment made in new care models and that social care services are sustained. In time the report suggests a bigger share of the efficiency will come from system improvements.
NHS spending on agency nurses and staff has grown to more than £5.5 billion in the past four years. Foundation Trusts spent £4.3 billion between 2010-11 and 2013-14 on agency and temporary staff. Other Trusts spent a further £1.2 billion in 2013/2014. Figures are not available for these trusts in previous years, This means the total bill for the last four years could be closer to £10 billion.
Estimates show that industry and commerce loses 130 million working days every year because of sickness. Working age illness alone costs the economy £100 billion each year.
One of the most scandalous examples of public sector inefficiency relates to the health sector. Under the European Health Insurance Card countries can claim back health costs from other EU countries if their citizens use medical services abroad. The latest figures indicate that the UK paid £670 million to other EU countries to cover the costs of British citizens’ healthcare abroad, yet it only claimed back £50 million from the EU, despite the fact that there are significantly more EU citizens in the UK than UK citizens in the EU.
Forward Thinking Health Policies
The Health service is one of the most popular issues for political over promising and squabbling. Promised increases in spending (which often fail to take account of population changes or cost issues), ring-fencing, promises of more doctors, or more nurses abound. Of course this reflects how important the service is to the electorate, so politicians become ‘experts’ in how best to deliver cures, even without medical training. Even more politically arrogant is singling out a particular illness for specific funding by politicians. There can be no doubt the only people with the skills to decide such important issues are the services themselves.
Free at the point of delivery is the principal of the UK health service. It has to remain nonnegotiable, but there needs to be greater public responsibility in attending of appointments and taking responsibility for their health. In return the health service needs to move to a much more considerate system that gives a specific time for each appointment. It also needs to offer education and guidance to encourage people to choose healthy alternatives and make lifestyle decisions that do not add costs to the health service.
Other European countries fund health care differently. They often use a mixture of tax and insurance income. It does not matter how finance is raised for health care, but the consumer has to pay for it either through tax or insurance premiums. By financing health care through tax the profits of the insurance companies are avoided. Tax is therefore the efficient method of funding.
The health service is so large, and after years of politicians meddling with it, so complex there is little prospect of making it run efficiently within the five-years of any Government. The health service needs organising regionally. This allows integrating social care into the network without creating too large a body.
There is a case for studying the methods of other countries to examine the most cost-effective methods of delivering services. Long-term funding needs can be reduced by regular screening and early stage diagnosis. A “prevention rather than cure” culture improves efficiency through reducing demand. This demands a change in nutritional standards of the population, but this needs the removal of poverty. Health education needs integrating with other public services. Social services need integrating with health care to provide true cradle to grave service. If England is to enjoy holistic health care, then the Government must use holistic policies to help that health service.
Private vs Public Supply
The major parties both claim to be the ‘protectors of the NHS’. However, privatisation of the NHS has grown irrespective of the party in power. Besides, the speed of privatisation has hardly changed.
Proportion of NHS Budget Spent on Commissioning Private Providers, 2007-2014 (% by value)
Source: Office for National Statistics
These figures are for front-line services. They exclude the further £14 billion each year directly spent with the private pharmaceutical industry and £3.3 billion spent on private agency staff or staff providers. This further 14% of the NHS spend is excluded in debates over the private role in the health service.
Politicians argue over, and stigmatise, ‘back door’ privatisation of the NHS. This concerns health care put to competitive tender and then placed with either a private company or charity. It is an irrelevant issue. If the objective is to provide an excellent service, free at the point of delivery, then it does not matter if the service is provided by people who are employed privately or by the NHS. The important issues are the patient has been given the best service and it has been financed through tax. The issue then comes down to the taxpayer who has the right to expect the best use of their money.
Private companies have a profit motive, and therefore should not be able to compete with the NHS on price. This depends on the public service being efficient. Either the tender document wrongly allows the private company to use short cuts (and so reduce the quality of service) or the NHS is inefficient. By sorting the efficiency of the public service there can be no ‘creeping privatisation’.
Integration of Social Services/Regional Supply
What we define as a health service is at best a cure service, and falls far short of delivering health. By definition to deliver health the service needs to prevent the need for cure wherever possible. To deliver prevention there needs to be:
- the removal of poverty
- education on nutrition
- education in disease prevention
- promotion of healthy lifestyles
- regular check-ups to develop early stage detection
It is ironic that to legally drive a motor vehicle, that vehicle is checked for mechanical well-being every year, yet there is no equivalent for the driver. We value the well-being of the vehicle above people.
With working age illness alone costing the economy £100 billion every year, there is a major incentive to further prevention rather than cure policies. Potentially there are opportunities to deliver true health care for people while improving the economy.
Social care has a significant crossover with health care. There is an obvious synergy with services such as nursing and care homes, but NHS continuing care often blurs the boundaries between health and social care. There are areas where care crosses over, but is provided in the social care setting, the most prominent examples are care for dementia, Parkinsons and end of life care. The current split of care between providers results in unequal financial loads on some patients depending on which condition they have. To compare cancer and dementia; both conditions have similar burdens on the patient and their families from a health care perspective. However, financially those suffering from dementia will pay a large contribution to their care while cancer sufferers will not.
To separate health provision from social care is wasteful. It potentially creates a blame culture that fails to place the patient at the forefront of concern. A regulator needs to review the entire health and social care budget, and service. A central organisation will undertake research and development and other central work without involvement in day-to-day administration. The major part of the service is split into nine regional providers serving the local community. People within an area should be able to select a service from another area, with the cost met in the persons’ region. This introduces ‘competition’ to the health and social care service to encourage excellence rather than ‘postcode lottery’ use of specific treatments.
Efficient practice needs to be at the forefront of the regulator’s review. Costs would be reduced by the central buying department for all public services. The review needs to take far greater account of the ideas and opinions of nurses and doctors to reduce administration and redirecting that spending to front-line services. The regional network should create better staff flexibility, helping to restrict agency staff use.
The UK health spend is roughly in line with other European countries as a proportion of GDP. Spending will need to rise to take account of the ageing and growing population. Attention needs to further prevention in suitable areas to keep control over longer term costs. However, there are other finance areas for the regulator to consider:
- Added funding needed to offset the previous use of PFI. PFI and the more recent PF2 are flawed for public service investment. It is merely a way whereby Governments can take praise for delivering more hospitals and other facilities, while placing the burden of repayment on future generations. It is the crowning example of credit card thinking designed to deliver more while holding tax low without consideration of the cost to future taxpayers. It is good for winning votes but at the cost of public services
- An increased focus on early stage screening and regular health checks to reduce overall long-term spending on pharmaceuticals
- A major contribution to both public awareness and education (to address the longer term) on nutrition and healthy lifestyles
- Financially encouraging companies offering occupational health because this reduces the demands on NHS spending
Health and social care are labour-intensive areas. The part of the population trained to provide that care needs to increase.
The current deficit of claims made against the health services in other EU countries (around £620 million per year) despite the fact that there are significantly more EU citizens in the UK than UK citizens in the EU is estimated to be costing the UK up to £1 billion per year. This is an absolute outrage and an example of an inept attitude to public funding that must be sorted instantly. Whatever the reason of administration mismanagement it is an insult to the British taxpayer.