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Spending on Health 2011-2015
Anita Charlesworth
Chief Economist
The Nuffield Trust
May 2011
© Nuffield Trust
Overall Government Spending Plans
Government Spending Plans (£ billion)
2014-15
2010-11
£114
Health
£104
£389
DEL
£394
£384
AME
£302
£740
TME
May 2011
£697
© Nuffield Trust
Health in a privileged Position
• Overall Health Funding increasing by 0.1% per annum on
average over CSR
May 2011
2010-11
2014-15
Real terms
change
Resource
DEL
£98.7bn
£109.8bn
1.3%
Capital DEL
£5.1bn
£4.6bn
-17%
Overall DEL
£103.8bn
£114.4bn
0.4%
© Nuffield Trust
The Scale of the Challenge
Annual real terms growth in UK public spending on health
14.0%
Real terms growth
12.0%
10.0%
population growth
growth in 80 plus population
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
Source: Nuffield Trust (IFS and HMT data)
© Nuffield Trust
Health Spending
UK Public Health Spending as a share of GDP
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
% of GDP
© Nuffield Trust
Source: Nuffield Trust (IFS and HMT data)
What is the money buying?
Primary Care,
11%
Prescribing, 12%
General and acute, 44%
Other, 4%
Community health
Services and learning
difficulties, 12%
A%E, 3%
Maternity, 3%
Mental Health,
11%
© Nuffield Trust
Source: Nuffield Trust analysis of DH data
The Efficiency Challenge (£ million)
© Nuffield Trust
The Productivity Story so far
Productivity growth in health and the general economy
4.00
3.00
2.00
1.00
0.00
-1.00
-2.00
-3.00
1998
1999
2000
2001
2002
Health
2003
2004
2005
2006
2007
2008
Whole Economy
Source: ONS
© Nuffield Trust
What will the NHS do?
2010-11 to 2013-14
• Control pay with the settlement freeze for all staff earning more
than £21,000
• Bear down on hospital efficiency through a tight framework for
prices (PBR)
• Implement the QIPP programme
• Reduce management costs
Reduction
11-12
12-13
13-14
14-15
Cumulative real
terms savings
£600m
£1.1bn
£1.4bn
£1.4bn
33%
© Nuffield Trust
NHS Costs
Share of HCHS Expenditure
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
staff
Source: Nuffield Trust analysis of DH data
M&D
non pay
capital charge
© Nuffield Trust
Spending Pressures
A comparison of Health Service Pay and Price Inflation
and the GDP Deflator
6
5
4
3
2
1
0
1999-002000-012001-022002-032003-042004-052005-062006-072007-082008-092009-102010-112011-122012-132013-142014-15
NHS Pay and Prices
Source: DH and HMT
GDP Deflator
© Nuffield Trust
Quality, Innovation, Productivity and Prevention (QIPP)
Commissioning
and pathways
Provider
efficiency
System
enablers
• Safe care and right care (e.g. reducing pressure
sores)
• Long-term conditions
• Urgent and emergency care (aim for a 10%
reduction in A%E attendances)
• End of life care (Birmingham pilot £1m pa saving)
• Back office efficiency and optimal management (£600m)
• Procurement
• Clinical support (Pathology services £500m p.a.)
• Productive care (focused on lean production
techniques)
• Medicine use and procurement
• Primary care commissioning
• Technology and digital vision
© Nuffield Trust
Better Care, Better Value Productivity Savings Estimates
Managing 14 Day Readmission Rates
£99,560,000
Reducing Follow-up Appointments
Reducing DNA Rate
Percentage of Low Cost Statin Prescribing
£232,070,000
£190,000,000
£72,740,000
Managing Variations in Outpatient Appointments
£335,600,000
£91,300,000
Reducing Pre-Operative Bed Days
Increasing Day Case Surgery Rate
Reducing Length of Stay
(NHS Institute for
Improvement)
£260,000,000
Managing Varitaion in Emergency Admissions
Managing Variations in Surgical Thresholds
Productivity
savings of
£3 billion a year
possible
£712,000,000
£17,000,000
£1,005,000,000
© Nuffield Trust
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May 2011
© Nuffield Trust