NHS Finances – mission impossible?Anita Charlesworth, Director of Research and
Economics, The Health Foundation
22 September 2016
Annual change in total NHS spend in England,2010/11–2020/21
Sept 2016 NHS Finances – mission impossible?
Annual change in NHS spend per head in England,2010/11–2020/21
Sept 2016 NHS Finances – mission impossible?
2015 Spending Review
Sept 2016 NHS Finances – mission impossible?
Source: The Spending Review: What does it mean for health and social care?
Expected breakdown of the 2020 £22bn efficiencyprogramme remaining after 2016/17
Sept 2015 NHS Finances – mission impossible?
£21.6bn
6.7
14.9
1.0
13.9 (2.9 in 16/17
plans)
4.3
8.6
1.0
NHS Efficiencies
Of which nationallydelivered
To be delivered locally
Of which already secured
To be secured
Activity related- care redesign
- demand offsetsSecondary care providerproductivity improvement
2%
Other commissioner
Source: NHS England, Recap briefing for the Health Select Committee on technical modelling and scenarios
NHS provider surplus/deficit, 2013/13–2015/16
Sept 2016 NHS Finances – mission impossible?
Source: Briefing: NHS Finances outside the EU, Health Foundation analysis of the impact on NHS finances of the UK leaving the European Union (July
2016)
Cost Uplift factor estimates
NHS Improvement estimates of cost pressures for
providers
Sept 2016 NHS Finances – mission impossible?
Source: NHS Improvement 2016
NHS England cash increase waterfall.
Sept 2016 NHS Finances – mission impossible?
University of York NHS productivity estimates
Total Factor productivity
Growth (mixed method)
Total Factor
productivity Growth
(indirect method)
Trust-only productivity
measure
2009/10 - 2010/11 3.2% 3.7%
2010/11 - 2011/12 2.1% 2.4%
2011/12 - 2012/13 0.4% -0.3%
2012/13 - 2013/14 2.2% 2.1% -0.5%
Annual average 2004/05
to 2013/141.4% 1.4%
Annual average 2009/10
to 2013/142.0% 2.0%
Sept 2016 NHS Finances – mission impossible?
Source: Bojke et al 2016
University of York England NHS input and output growth
Sept 2016 NHS Finances – mission impossible?
Source: Bojke et al 2016
Annual change in hospital productivity index
Sept 2016 NHS Finances – mission impossible?
Source: Briefing: Acute hospital productivity (2016)
A comparison of estimates of NHS efficiency and productivity improvement
Sept 2016 NHS Finances – mission impossible?
NHS Improvement results
Estimate
Trend efficiency: 1.4%
Variation in efficiency:
Median to 60th centile 2.0%
Median to 70th centile 3.6%
Median to 80th centile 5.6%
Median to 90th centile 7.6%
Sept 2016 NHS Finances – mission impossible?
Factors associated with financial difficulty in 2014/15
NHS Finances – mission impossible?
• A higher proportion of its staff spending is accounted for by
agency staff
• A higher proportion of income is paid through the national PbR
tariff
• Staff at the hospital are less happy for a friend or relative to be
treated there
• The trust received a rating of ‘inadequate’ following an inspection
by the CQC
• Not being a specialist provider
• Providing services from fewer sites
(Sample is 151 acute and specialist trusts, r^2 = 0.4597)
Sept 2016
Sept 2016 NHS Finances – mission impossible?
Source: A perfect storm: an impossible climate for NHS providers’ finances? (2016)
Net agency staff spend
Sept 2016 NHS Finances – mission impossible?
Source: A perfect storm: an impossible climate for NHS providers’ finances? (2016)
Association between 66 hospitals’ financial position and their CQC risk inspection rating, 2014/15
Sept 2016 NHS Finances – mission impossible?
Source: A perfect storm: an impossible climate for NHS providers’ finances? (2016)
Relationship between staff satisfaction with standard of care and financial performance
OBR projections for economic growth, March 2016
Sept 2016 NHS Finances – mission impossible?
NIESR forecasts for economic growth following the decision to leave the EU:
• Economic growth forecast 1.5% a year between 2015/16 and 2019/20.
• 0.6% lower than OBR forecast.
• A total loss to the economy of £43bn in 2019/20 (£835m a week).
2015 2016 2017 2018 2019
GDP real terms annual growth 2.2 2.0 2.2 2.1 2.1
Public sector net borrowing as % GDP 3.8 2.9 1.9 1.0 -0.5
Inflation (CPI) 0 0.7 1.6 2 2.1
GDP deflator 0.3 1.1 1.9 2.0 1.9
Source: Briefing: NHS Finances outside the EU, Health Foundation analysis of the impact on NHS finances of the UK leaving the European Union
(July 2016)
Impact of lower growth on the planned budget surplus, and the impact of £100m a week increase in NHS funding
Sept 2016 NHS Finances – mission impossible?
Source: Briefing: NHS Finances outside the EU, Health Foundation analysis of the impact on NHS finances of the UK leaving the European
Union (July 2016)
How to share deficit reduction – the estimated fall in health funding if the government chooses to balance the budget and share the pain
Sept 2016 NHS Finances – mission impossible?
Source: Briefing: NHS Finances outside the EU, Health Foundation analysis of the impact on NHS finances of the UK leaving the
European Union (July 2016)
The public-private hourly pay differential for workers with similar characteristics
Sept 2016 NHS Finances – mission impossible?
Figure L: Qualified nursing and midwifery staff and finished consultant episodes, NHS England, 2004/05–2014/15
Sept 2016 NHS Finances – mission impossible?
Number of training places commissions for clinical staff, 2004/05 to 2014/15
NHS Finances – mission impossible?Sept 2016
Qualified nursing and midwifery – leavers 2011/12 to 2014/15
Source HSCIC Health Education England (HEE), (2016) HEE Commissioning and investment plan
NHS Finances – mission impossible?Sept 2016
Potential funding gap for adult social care in 2019/20 with likely impact of new living wage
Sept 2016 NHS Finances – mission impossible?
UK health spending is about average in the EU
Sept 2016 NHS Finances – mission impossible?
Source: Organisation for Economic Co-operation and Development (OECD ) health statistics, 2016
The UK is about average for government/SHI spending
Sept 2016 NHS Finances – mission impossible?
Source: Organisation for Economic Co-operation and Development (OECD ) health statistics, 2016
Countries allocate their spending very differently
Sept 2016 NHS Finances – mission impossible?
Source: Organisation for Economic Co-operation and Development (OECD ) health statistics, 2016
UK comparative health performance
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NHS Finances – mission impossible?Sept 2016
The view from OECD
“there is room in all countries surveyed to improve the
effectiveness of health care spending;
there is no health care system that performs systematically
better in delivering cost-effective health care –
big-bang reforms are therefore not warranted; increasing the
coherence of policy settings, by adopting best
policy practices within a similar system and borrowing the
most appropriate elements from other systems
will likely be more practical and effective to raise health care
spending efficiency.”
Sept 2016 NHS Finances – mission impossible?
Health care systems: efficiency and institutions. Economics department working papers no. 769. Isabelle Jounard, Christophe
André and Chantal Nicq OECD 2010
Conclusions
£22 billion of efficiency savings is technically possible
BUT there are big unresolved risks:
Workforce and pay
Social care
Public Health
Focus of leadership and depth of support for transformative
change within and across the organisations
Sept 2016 NHS Finances – mission impossible?