Wanless voices concern for NHS future

 
What was spent
Additional UK NHS funding since 2002/3 broadly matched the recommendations of the 2002 review for the first five years of its spending trajectories, taking total healthcare spend to within striking distance of average European Union spending as a proportion of GDP, the latest review says. Such a rate of increase cannot be sustained indefinitely, but spending would have to increase by at least 4.4% a year in real terms if the NHS were to follow the 2002 review’s most optimistic scenario and by more than that in the other scenarios, it is argued. If funding growth in the health service slows to its long-term average of around 3% by 2010/11, the NHS would fall short of the “slow uptake”, “solid progress” and “fully engaged” spending paths. This would place the United Kingdom near the bottom of future estimates of the average total EU healthcare spend as a proportion of GDP, it is stated. The latest review says that, overall, actual increases in input costs in the NHS have broadly matched assumptions made by the 2002 review, with actual pay inflation slightly higher than assumed but non-pay inflation slightly lower. Pay and contract modernisation for all NHS staff groups over the past five years have contributed to higher input costs, with benefits yet to be fully realised. This places the NHS between the slow uptake and solid progress spending paths in terms of input costs.

 

Examining productivity
A crucial issue for the 2002 review, with a significant impact on its funding projections, was the ability to do more (in both volume and quality terms) with each healthcare pound. Higher productivity offered the potential to restrict growth in the longterm costs of delivering the healthcare outcomes likely to be sought by 2022. The 2002 review made an important distinction between two aspects of productivity it assumed would improve over time: those relating to inputs (that is, reductions in unit costs) and those related to outputs or outcomes (that is, improved quality). The latest review attempts to clarify the meaning of productivity, as distinct from efficiency, and goes on to track recent changes in NHS productivity, taking account of quality outcomes as well as unit costs. It was assumed that under the solid progress and fully engaged scenarios, productivity would improve by 2%–2.5% a year in the first decade and 3% in the second.

The slow uptake scenario predicted lower productivity improvements of 1.5% and 1.75% a year respectively. The importance of these assumptions becomes evident when they are converted into monetary terms. In the fully engaged and solid progress scenarios, the value of the productivity gains by 2022/3 (at 2002/3 prices) amounts to £46.5 billion – around half of the additional forecast growth in spending over and above the 2002/3 level of £68 billion.

The latest review considers that official measures of NHS productivity are inconclusive and indicate that changes in productivity may have ranged from -7.5% to + 8.5% between 1999 and 2004.

The 2002 review’s assumptions of annual unit cost reductions of 0.75%–1% between 2002/3 and 2007/8 have not been achieved and, broadly, unit costs have increased for all hospital services. Lack of data makes it impossible to draw reliable conclusions about movements in unit costs in mental health and primary care services. However, the cost per prescription dispensed in the community has fallen significantly, largely because of reduced unit costs for lipid-regulating statins, which were available in new generic forms from 2003.

Some attempts to quantify changes in quality over time (in relation to the increased use of statins, for example) suggest significant gains. However, the development of precise measures is hampered by a lack of routinely collected data on changes in patients’ health status arising from NHS interventions.

Although indicative measures of quality, such as patient safety, waiting times and satisfaction with the experience of care, suggest improvement, “hard” measures of quality, valued in monetary terms, are not available to compare with the 2002 review’s assumption that the quality of care would improve year on year.