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3 - Health and care funding at 75
- Edited by Mark Exworthy, University of Birmingham, Russell Mannion, University of Birmingham, Martin Powell, University of Birmingham
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- Book:
- The NHS at 75
- Published by:
- Bristol University Press
- Published online:
- 03 April 2024
- Print publication:
- 30 October 2023, pp 40-70
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Summary
Introduction
Public spending on health has increased substantially over the past 75 years. In 1949– 1950, the first financial year after the founding of the National Health Service (NHS), UK public spending on health was £16 billion (2022–2023 prices; HM Treasury, 2022b). This was 3.5 per cent of national income and accounted for 9.2 per cent of total public spending. By 2019–2020, just before the COVID-19 pandemic, publicly funded health spending had increased more than tenfold to almost £180 billion (2022–2023 prices), accounting for 18.6 per cent of overall public spending, 7.3 per cent of GDP.
Throughout the last 75 years, funding for the NHS has risen by more than inflation and by more than GDP, and, on average, healthcare spending has increased by 3.6 per cent in real terms (Figure 3.1). Reductions in real spending have been rare. Spending fell in the early 1950s as budgets fluctuated sharply in the early years of the NHS and prescription charges were introduced. In the late 1970s health spending fell as part of widespread cuts to public spending under the terms of a loan from the International Monetary Fund.
As the NHS marks its 75th anniversary, health service funding is under pressure and the outlook is hugely challenging. The health service has experienced comparatively low funding growth for more than a decade, and now faces the pandemic’s legacy of major backlogs, questions over the service’s resilience to future health shocks and the pressures of an ageing population with rising multi-morbidity and inequality.
The pressures on NHS funding are not happening in isolation: Office for Budget Responsibility and OECD forecasts for the UK economy and public finances for 2023 are bleak (Office for Budget Responsibility, 2022b). The performance of the economy is very important for healthcare. In 2019 before the pandemic health spending as a share of GDP was broadly in line with that of the 14 major European countries (9.9 per cent compared to the EU14 average of 9.8 per cent). But when we look at spending per head over the decade 2010 to 2019, UK spending was almost a fifth lower than the EU14.
three - NHS finances under the Coalition
- Edited by Mark Exworthy, University of Birmingham, Russell Mannion, University of Birmingham, Martin Powell
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- Book:
- Dismantling the NHS?
- Published by:
- Bristol University Press
- Published online:
- 05 April 2022
- Print publication:
- 28 July 2016, pp 39-64
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Summary
The English NHS faced a number of challenges over the five years of Coalition Government. Some were new and unique to the period, such as the major system reforms introduced with the Health and Social Care Act (HSCA) 2012 (The Stationery Office, 2012). Others were a continuation of underlying challenges such as the growing and ageing of the population, along with the rising burden of chronic disease. All were affected by a substantial shift in the financial pressure facing the NHS, however, as it had to adapt from a decade of real-terms budget increases of 7% each year on average, to five years of receiving budget increases of less than 1%. With demand for services rising, the NHS in England faced the daunting task of making efficiency savings of £20bn in five years.
The NHS was not alone in facing austerity – many other European health care systems faced similar challenges in the aftermath of the 2008 recession (OECD, 2015). The policies implemented in the English NHS mirror those used elsewhere. There was national action to reduce input costs through mandated reductions in administrative budgets, a national public sector pay policy which reduced real wage increases and measures to constrain drug prices. Alongside this, the NHS was asked to deliver improved technical efficiency through a reduction in the prices paid to hospitals under the national tariff system and attempts were made to improve system efficiency with policies to better integrate health and social care (NAO, 2011; Department of Health and Department for Communities and Local Government, 2014).
The Nicholson challenge
The global economic crisis in 2008 would have a substantial impact on public finances, and therefore the budget for the NHS. In 2009 Sir David Nicholson, the head of the English NHS, anticipated the forthcoming period of austerity, suggesting that the NHS would need to make around L15–20 billion of efficiency savings over the coming 5 years (Nicholson, 2009). This was then turned into a more specific objective of L20 billion of efficiency savings over the 4 years from 2011/12 to 2014/15 (Gregory et al, 2012), which came to be known as ‘The Nicholson Challenge’. The NHS established a programme, Quality, Innovation, Productivity and Prevention (QIPP), to deliver these efficiency savings (NAO 2011).
Improving productive efficiency in hospitals: findings from a review of the international evidence
- Benedict E. Rumbold, Judith A. Smith, Jeremy Hurst, Anita Charlesworth, Aileen Clarke
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- Journal:
- Health Economics, Policy and Law / Volume 10 / Issue 1 / January 2015
- Published online by Cambridge University Press:
- 07 August 2014, pp. 21-43
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- Article
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At present, health systems across Europe face the same challenges: a changing demographic profile, a rise in multi-morbidity and long-term conditions, increasing health care costs, large public debts and other legacies of an economic downturn. In light of these concerns, this article provides an overview of the international evidence on how to improve productive efficiency in secondary care settings. Updating and expanding upon a recent review of the literature by Hurst and Williams (2012), we set out evidence on potential interventions in the policy environment, hospital management, and operational processes. We conclude with five key lessons for policy makers and practitioners on how to improve productive efficiency within hospital settings, and identify several gaps in the existing evidence base.