What does the CSR mean for Health?
December 2010
Anita Charlesworth Chief Economist
The Nuffield Trust
t: 0207 631 8450
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Health in a privileged Position
• Overall Health Funding increasing by 0.1% per
annum on average over CSR
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%
The Scale of the Challenge
Annual Real Terms Growth in UK NHS Expenditure
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
Real terms growth
population growth
Source: Nuffield Trust (IFS, ONS and HMT data)
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growth in 80 plus population
Health Spending
UK 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
Source: Nuffield Trust (IFS and HMT data)
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e: [email protected]
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% of GDP
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%
Source: Nuffield Trust analysis of DH data
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Mental Health, 11%
The Efficiency Challenge (£ million)
£25,000
£20,000
£15,000
£10,000
£5,000
£0
2011-12
2012-13
Saving
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2013-14
Admin Cost saving
2014-15
The Productivity Story so far
Productivity Growth in Health and the General Economy
4.00
3.00
2.00
1.00
0.00
1998
1999
2000
2001
2002
2003
2004
-1.00
-2.00
-3.00
Health
Source: ONS
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e: [email protected]
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Whole Economy
2005
2006
2007
2008
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 by 33% (cumulative
real)
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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
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e: [email protected]
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M&D
non pay
capital charge
Spending Pressures
A comparison of Health Service Pay and Price Inflation and the GDP
Deflator
6
5
4
3
2
1
0
1999-00
2000-01
2001-02
Source: DH and HMT
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2002-03
2003-04
NHS Pay and Prices
2004-05
GDP Deflator
2005-06
2006-07
2007-08
2008-09
Better Care, Better Value Productivity
Savings Estimates
Managing 14 Day Readmission Rates
£99,560,000
Reducing Follow-up Appointments
£232,070,000
Reducing DNA Rate
Percentage of Low Cost Statin Prescribing
£190,000,000
£72,740,000
Managing Variations in Outpatient Appointments
£260,000,000
Managing Varitaion in Emergency Admissions
Managing Variations in Surgical Thresholds
Reducing Length of Stay
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Institute for Improvement)
£335,600,000
£91,300,000
Reducing Pre-Operative Bed Days
Increasing Day Case Surgery Rate
Productivity
savings of
£3 billion a year
possible (NHS
£712,000,000
£17,000,000
£1,005,000,000
What happens from 2013 – from
managerialism to system change
The NHS is reformed ‘ Liberating the NHS’
• Reformed commissioning – GP consortia replace PCTs
• Competition and choice
• Performance management by outcomes not process
targets
• Providers become Foundation Trust and greater scope
for private and not for profit entry
• New economic regulator established
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Will it work?
• Technical efficiency improvements on their own
probably not big enough to bridge all of the gap.
• System reforms offer scope to improve allocative
efficiency but:
– Unlikely to deliver change to scale in the timescale;
– May not be radical enough in some areas to really drive
major allocative efficiency gains (pricing, integration across
services, scale of new entry)
• Workforce costs are critical.
t: 020 7631 8450
e: [email protected]
www.nuffieldtrust.org.uk
www.nuffieldtrust.org.uk
t: 0207 631 8450
e: [email protected]