OECD Financial sustainability of healthcare systems Healthcare Productivity in the UK
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1 OECD Financial sustainability of healthcare systems Healthcare Productivity in the UK Anita Charlesworth Chief Economist, Nuffield Trust 26 March 2013
2 This presentation covers: The budget outlook for publicly funded healthcare The productivity challenge Progress on controlling health spending and improving productivity
3 Government spending on health in the UK billions 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 Cash terms Share of GDP 6.5% 6.8% 7.0% 7.0% 7.1% 7.7% 8.3% 8.2% 7.9% Real terms (2011/12) Real terms % change % +5.9% +2.7% +5.4% +4.7% +5.9% -0.2% -2.2% Source: HMT, 2012
4 Total Health Real Spending ( bill) English Health Budget (2011/12 prices) Year Source: HMT, 2012
5 NHS PCT Expenditure 2011/12-89bn Maternity 3% Community 10% Mental Illness 10% Other Secondary 5% GPs 9% Prescribing 9% Other Primary 6% Acute and A&E 48% Secondary Care Primary Care Source: Roberts and others, 2012
6 Funding ( billion) The financial gap by 2021/22, assuming English NHS funding rises as set out in the 2010 Spending Review to 2014/15 and is frozen in real Funding pressures on the NHS in England Freeze in NHS funding beyond 2015/ bn ( 54 bn) / / / / / / / / / / / /22 Year Source: Roberts and others, 2012
7 Funding pressure on hospitals in England ( Bn) Funding pressures on acute services in England attributable to population change and to the rising probability of admission for chronic conditions 68 Additional spending due to pay increases 63 Additional spending due to rising probability of admission for chronic conditions 58 Projected spending due to population growth Pay (additional 9bn) 53 Chronic Conditions (additional 8bn) 48 Population (additional 6bn) / / / / / / / / / / / /22 Year Source: Roberts and others, 2012
8 Funding ( billion in 2010/11 prices) Closing 13 billion Funding Gap: 2010/11 to 2014/ Funding pressures on the NHS in England Funding pressures after for pay restaint 100 Funding pressures after pay restraint and managing hospital activity for chronic conditions Funding pressures after pay restraint, managing hospital activity for chronic conditions, and productivity savings Funding allocation based on 2010 spending review Pay reduction: 5bn 95 Disease management: 3bn 90 Acute QIPP Actions: 4bn / / / / /15 Year
9 Meeting the Challenge the NHS approach Reducing input costs National public sector pay policy Reducing administrative costs Improving technical efficiency Real terms reduction in the unit prices paid for hospital care Medicine management Improving allocative efficiency Shifting care from hospital to community settings Better integration of care Demand management
10 Productivity index (2006 = 1.00) Changes in UK healthcare productivity (NHS and non-nhs providers) ONS measure: 1995 to Output Input Productivity Source: Source: Massey,
11 Change in sectoral job share and level of productivity Source: ONS, OBR 2012
12 Real aggregate workforce spend ( billions) Spending changes by staff numbers and cost per head: 2003/04 to 2011/
13 Staff Changes in (Whole-time equivalents) Change % Change Total NHS workforce - 19, % Medical and Dental +3, % Qualified Nursing -4, % Scientific, therapeutic and technical +1, % Support to clinical staff -8, % NHS infrastructure -15, %
14 Spending on pharmaceuticals per person is also falling 260 Annual prescribing spend per person (in real terms at prices) England Scotland Wales N Ireland
15 Variation in labour productivity at selected providers in England: 2006/07 to 2011/12
16 Percentage changes in spending by type of care: 2010/11 to 2011/12
17 Per cent of GDP Impact on the proportion of GDP spent on health care under different assumptions of productivity growth 30% 25% Annual productivity growth in health care keeps pace with whole economy growth rate of 2.2 per cent Annual health care productivity growth of -0.2 per cent Annual health care productivity growth of 0 per cent 20% Annual health care productivity growth of 0.8 per cent 15% 10% 5% 0% Year Source: OBR, 2012
18 Conclusions Public health spending across the UK has fallen over the last 2 years There is a cap on spending to which limits growth in the English NHS (flat in real terms) The NHS has been able to maintain services in the initial years of austerity. The public sector pay policy has been a significant contributor. But there is no evidence of underlying productivity improvement raising concerns about the long-term fiscal sustainability of health.
19 Sign-up for our newsletter Follow us on Twitter: Twitter.com/NuffieldTrust Insert presenter s address here 26 March 2013
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