Transcript Economic Issues in the NHS

Economic Issues in the NHS
John Appleby
Chief Economist
King’s Fund
What issues?
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Spending
Waiting lists
Choice
Efficiency, competition and incentives
Determining NHS spending
Current spend
Realistic spending range?
£0
£1,000 bn
Full range of spending options
How much should we spend?
Benefit
Total resources available
C
Fast cars (£z-y)
B
Health care (£y-x)
Education (£x)
A
x
y
z
Cost
…and now with real data..
Benefit
Total resources available
?
Cost
Pledge/promise…er..aspiration
Total Health care spending as % of GDP $PPP
12.00
Austria
10.00
Belgium
Denmark
Finland
France
Germany
Greece
6.00
Ireland
Italy
4.00
Luxembourg
Netherlands
Portugal
2.00
Spain
Sweden
U.K.
0.00
19
60
19
62
19
64
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66
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68
19
70
19
72
19
74
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76
19
78
19
80
19
82
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84
19
86
19
88
19
90
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92
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94
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96
19
98
Per cent
8.00
TOT EU
Will we get there?
Total health care spending as a proportion of GDP:
actual and projected
EU (excluding UK) projections
12
UK spend
10
UK projections
9
8
7
6
Projected
UK spend
5
Planned
UK spend
4
3
2
1
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
0
1963
Per cent GDP
Projected EU spend
EU (excluding UK) spend
11
Spend what we can afford?
Projected health care spending per head and GDP
per head: EU countries: 2001
Total health spending per capita
(US$PPP)
3500
y = 0.0841x0.9949
3000
R2 = 0.7618
2500
2000
EU average: $1.834
1500
UK
1000
12000
17000
22000
27000
32000
GDP per capita (US$PPP)
37000
42000
Wanless Review of NHS
funding
• Defined a ‘vision’ of the NHS in 2022
• Costed vision (ie, reductions in waiting times,
increased quality, better infrastructure etc)
• Crude sensitivity analysis produced three possible
spending pathway scenarios
• Cost by 2022 (today’s prices)
– ‘Fully engaged’: £154 bn (10.5% GDP)
– ‘Solid progress’: £161 bn (11.1% GDP)
– ‘Slow uptake’: £184 bn (12.5% GDP)
Wanless recommends….
Total UK health care spending
13
12
Per cent GDP
11
10
9
Historic
8
Slow uptake
7
Solid progress
6
Fully engaged
5
4
1977/8
1982/3
1987/8
1992/3
1997/8
2002/3
2007/8
2012/13 2017/18
2022/23
...Brown accepts
Percentage change in UK NHS real and volume
spending
Real change: Per cent
10
2.1% pa
Thatcher/Major
4.1% pa
Major
Blair
2.6% pa
4.8% pa
Blair
7.4% pa
10
9
9
8
8
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
83- 84- 85- 86- 87- 88- 89- 90- 91- 92- 93- 94- 95- 96- 97- 98- 99- 00- 01- 02- 03- 04- 05- 06- 0784 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Volume change: Percent
Thatcher
Issues for Wanless II
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Cause and effect
Health  health care spending
Improving health is the objective
Better sensitivity analysis
Evidence base for assumptions
More of the same?
Patient/public satisfaction
Cause and effect
• Wanless assumed relationships between variables
that were:
– Fixed (constant over time)
– Linear (A determines B)
– Bivariate (only A determines B)
• But, relationships change over time, have ‘feedback’
loops and tend to be multivariate: eg
• Technological advance influences supply and demand
• Reduced waiting times creates more demand...
Healthhealth care spending
• Differences in assumptions about population’s future
health generates the three ‘scenarios.
• Level of health assumed rather than generated by
Wanless
• Increased spending > improved health: not part of
Wanless’ approach
• Health influences demand (and hence spending
levels) but is also a desired outcome of higher
spending
Improving health is the objective
• Is the ‘vision’ for the NHS in 2022 the best (eg most
effective and cost effective) way to achieve actual
goal: ie improving population health?
Better sensitivity analysis
• Most important cost drivers: delivering high quality
services and meeting rising expectations (common to
all three scenarios).
• But how sensitive are predictions about changing
quality and expectations?
Evidence base for assumptions
• Need for systematic review of the evidence
supporting Wanless Review recommendations
More of the same?
• Wanless had a tendency to assume the NHS in 2022
would look similar to the NHS in 2002 - but bigger.
• Different structures, different ways of working?
Patient/public satisfaction
• What are the determinants of satisfaction?
• How do these change over time?
• Patient/public involvement in determining spending
levels?
Why do we wait?
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Not enough resources?
Demand > supply?
Poor management?
Private practice?
Clinical variations?
No prices?
Wait for Grommet insertion operation: Variation within
and between trusts
60
Weeks
50
40
30
20
10
0
Trust
I
D
K
N
C
L
G
M
E
F
Targets, Targets, Targets
• Numbers
• Maximum waiting time
• Average waiting time
• Variations in waiting list/maximum/average time
• …a fair waiting list process?
Reduce total waiting
NHS Plan targets: Maintain 100,000 reduction in total waiting lists
1,400,000
1,200,000
Numbers waiting
1,000,000
800,000
Maintain target: 100,000 less
than March 1997 list
600,000
400,000
200,000
0
1997
MARCH
1997
SEPT
1998
MARCH
1998
SEPT
1999
MARCH
1999
SEPT
2000
MARCH
2000
SEPT
2001
MARCH
2001
SEPT
2002
MARCH
2002
SEPT
2003
MARCH
2003
SEPT
2004
MARCH
2004
SEPT
2005
MARCH
How was it achieved?
1997 manifesto pledge: reducing waiting lists by 100,000 - local
achievement
Percentage change in waiting lists:
March 1997 - March 200
80
60
40% of authorities reduced
lists by more than the
national average target of
9.5%
42% of authorities reduced
lists - but by less than the
national average target of
9.5%
40
20
0
-20
-40
-60
Health authorities
18% of
authorities
increased
numbers
waiting
Reduce maximum wait
NHS Plan targets: By 2005, no one to wait longer than six months
for admission to hospital
Patients waiting more than six months
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1997
MARCH
1997
SEPT
1998
MARCH
1998
SEPT
1999
MARCH
1999
SEPT
2000
MARCH
2000
SEPT
2001
MARCH
2001
SEPT
2002
MARCH
2002
SEPT
2003
MARCH
2003
SEPT
2004
MARCH
2004
SEPT
2005
MARCH
Reduce average wait
Mean and median waiting times: Inpatients+Day cases: England
10
9
Mean
Median
8
7
Months
6
5
4
3
2
1
0
1988 1988 1989 1989 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001
Reduce variations in waiting
5 (i) SIX MONTH INPATIENT WAITS
Percentage of patients w aiting less than 6 months f or an inpatient admission, 2001/02 (Q2)
ENGLA ND
Do rset
Sand well
Do ncast er
Ro t herham
Walsall
B arnsley
Cald erd ale & Kirklees
Dud ley
B irming ham
Glo ucest ershire
Kensing t o n, Chelsea & West minst er
West Pennine
Wo lverhamp t o n
Gat eshead & So ut h Tynesid e
No rt humb erland
No rt h West Lancashire
Newcast le & No rt h Tynesid e
St Helens & Kno wsley
Co vent ry
Leicest ershire
No rt h St af f o rd shire
Camd en & Isling t o n
Warwickshire
B rad f o rd
Wirral
Sund erland
No t t ing ham
Shro p shire
Co unt y Durham & Darling t o n
So lihull
So ut hern Derb yshire
B ury & Ro chd ale
Liverp o o l
No rt h No t t ing hamshire
No rt h Y o rkshire
Wig an & B o lt o n
East Lo nd o n & Cit y
Tees
Sef t o n
East Lancashire
Ealing , Hammersmit h & Ho unslo w
So ut h Lancashire
Camb rid g eshire
No rt h Derb yshire
Linco lnshire
M anchest er
No rt h & M id Hamp shire
No rf o lk
So ut h Essex
M o recamb e B ay
So merset
Hilling d o n
So ut h Humb er
M ert o n, Sut t o n & Wand swo rt h
So ut h St af f o rd shire
B erkshire
So ut hamp t o n & SW Hamp shire
Shef f ield
Wakef ield
Oxf o rd shire
No rt h Cumb ria
I o f W, Po rt smo ut h & SE Hamp shire
Wo rcest ershire
Leed s
B ucking hamshire
King st o n & Richmo nd
No rt hamp t o nshire
Salf o rd & Traf f o rd
St o ckp o rt
Hert f o rd shire
Heref o rd shire
B rent & Harro w
Wilt shire
No rt h & East Devo n
So ut h Cheshire
East Rid ing & Hull
No rt h Essex
B ed f o rd shire
B arking & Havering
Suf f o lk
So ut h and West Devo n
Co rnwall & Isles o f Scilly
Cro yd o n
B arnet , Enf ield & Haring ey
Lamb et h, So ut hwark & Lewisham
A vo n
West Kent
B exley , Greenwich & B ro mley
No rt h Cheshire
East Kent
East Sussex
East Surrey
Red b rid g e & Walt ham Fo rest
West Sussex
West Surrey
0%
20%
40%
60%
Percentage waiting les s than 6 m onths
80%
100%
...a fair process?
• Clinical need (urgent, soon…er…never?)
• Scoring system?
Choice
• Economics: study of behaviour of people with
choices
• Sociology: study of behaviour of people with none
Choice: current policy
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New policy objective for the NHS?
National cardiac care choice scheme
London patients choice project
How did we get here?
Implications for financial flows
Choice in the NHS: some issues
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Choice vs other system goals (eg equity, efficiency)
Choice of what?
Limits to choice?
Information (eg asymmetry and knowledge)
Relationship between principle and agent
Efficiency, competition,
incentives
• Target to reduce waiting times...
• ...Patient choice...
• ...Financial flows….
= Fixed price contract market!?
Fixed (HRG) price market
• Implementation?
– What tariff?
– What period?
– Rules of engagement?
Fixed (HRG) price market
• Benefits
– Incentive to increase volume
– Reduce private sector prices
– Cut costs/improve efficiency
Fixed (HRG) price market
• Costs
– Quality/cost trade off
– Exit from market
– Mergers
– Cross subsidisation within hospitals
– Unavoidable costs/inefficiency
– Regulation/monitoring/transaction costs