nhs finances mission impossible? - hfma

NHS Finances – mission impossible?Anita Charlesworth, Director of Research and

Economics, The Health Foundation

22 September 2016

Annual change in total NHS spend in England,2010/11–2020/21

Sept 2016 NHS Finances – mission impossible?

Annual change in NHS spend per head in England,2010/11–2020/21


2015 Spending Review


Source: The Spending Review: What does it mean for health and social care?

Expected breakdown of the 2020 £22bn efficiencyprogramme remaining after 2016/17


£21.6bn

6.7

14.9

1.0

13.9 (2.9 in 16/17

plans)

4.3

8.6

1.0

NHS Efficiencies

Of which nationallydelivered

To be delivered locally

Of which already secured

To be secured

Activity related- care redesign

- demand offsetsSecondary care providerproductivity improvement

2%

Other commissioner

Source: NHS England, Recap briefing for the Health Select Committee on technical modelling and scenarios

NHS provider surplus/deficit, 2013/13–2015/16


Source: Briefing: NHS Finances outside the EU, Health Foundation analysis of the impact on NHS finances of the UK leaving the European Union (July

2016)

Cost Uplift factor estimates

NHS Improvement estimates of cost pressures for

providers


Source: NHS Improvement 2016

NHS England cash increase waterfall.


University of York NHS productivity estimates

Total Factor productivity

Growth (mixed method)

Total Factor

productivity Growth

(indirect method)

Trust-only productivity

measure

2009/10 - 2010/11 3.2% 3.7%

2010/11 - 2011/12 2.1% 2.4%

2011/12 - 2012/13 0.4% -0.3%

2012/13 - 2013/14 2.2% 2.1% -0.5%

Annual average 2004/05

to 2013/141.4% 1.4%

Annual average 2009/10

to 2013/142.0% 2.0%


Source: Bojke et al 2016

University of York England NHS input and output growth


Source: Bojke et al 2016

Annual change in hospital productivity index


Source: Briefing: Acute hospital productivity (2016)

A comparison of estimates of NHS efficiency and productivity improvement


NHS Improvement results

Estimate

Trend efficiency: 1.4%

Variation in efficiency:

Median to 60th centile 2.0%





Factors associated with financial difficulty in 2014/15

NHS Finances – mission impossible?

• A higher proportion of its staff spending is accounted for by

agency staff

• A higher proportion of income is paid through the national PbR

tariff

• Staff at the hospital are less happy for a friend or relative to be

treated there

• The trust received a rating of ‘inadequate’ following an inspection

by the CQC

• Not being a specialist provider

• Providing services from fewer sites

(Sample is 151 acute and specialist trusts, r^2 = 0.4597)

Sept 2016


Source: A perfect storm: an impossible climate for NHS providers’ finances? (2016)

Net agency staff spend



Association between 66 hospitals’ financial position and their CQC risk inspection rating, 2014/15



Relationship between staff satisfaction with standard of care and financial performance

OBR projections for economic growth, March 2016


NIESR forecasts for economic growth following the decision to leave the EU:

• Economic growth forecast 1.5% a year between 2015/16 and 2019/20.

• 0.6% lower than OBR forecast.

• A total loss to the economy of £43bn in 2019/20 (£835m a week).

2015 2016 2017 2018 2019

GDP real terms annual growth 2.2 2.0 2.2 2.1 2.1

Public sector net borrowing as % GDP 3.8 2.9 1.9 1.0 -0.5

Inflation (CPI) 0 0.7 1.6 2 2.1

GDP deflator 0.3 1.1 1.9 2.0 1.9

Source: Briefing: NHS Finances outside the EU, Health Foundation analysis of the impact on NHS finances of the UK leaving the European Union

(July 2016)

Impact of lower growth on the planned budget surplus, and the impact of £100m a week increase in NHS funding


Source: Briefing: NHS Finances outside the EU, Health Foundation analysis of the impact on NHS finances of the UK leaving the European

Union (July 2016)

How to share deficit reduction – the estimated fall in health funding if the government chooses to balance the budget and share the pain


Source: Briefing: NHS Finances outside the EU, Health Foundation analysis of the impact on NHS finances of the UK leaving the

European Union (July 2016)

The public-private hourly pay differential for workers with similar characteristics


Figure L: Qualified nursing and midwifery staff and finished consultant episodes, NHS England, 2004/05–2014/15


Number of training places commissions for clinical staff, 2004/05 to 2014/15

NHS Finances – mission impossible?Sept 2016

Qualified nursing and midwifery – leavers 2011/12 to 2014/15

Source HSCIC Health Education England (HEE), (2016) HEE Commissioning and investment plan


Potential funding gap for adult social care in 2019/20 with likely impact of new living wage


UK health spending is about average in the EU


Source: Organisation for Economic Co-operation and Development (OECD ) health statistics, 2016

The UK is about average for government/SHI spending



Countries allocate their spending very differently



UK comparative health performance

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[1] The UK is one of several countries where adult obesity data is based on measured height and weight, which results in more accurate data and higher obesity rates than countries that

use self-reported height and weight.[2] All countries report childhood obesity using measured data, but do not all measure the same age groups.[3] Of the EU15, Greece does not report data on asthma and COPD hospital admissions, diabetes hospital admissions or case fatality rates for AMI and ischaemic stroke.[4] Of the EU15, France, Greece, Luxembourg and Spain do not report survival rates for cervical, breast and colorectal cancers.


The view from OECD

“there is room in all countries surveyed to improve the

effectiveness of health care spending;

there is no health care system that performs systematically

better in delivering cost-effective health care –

big-bang reforms are therefore not warranted; increasing the

coherence of policy settings, by adopting best

policy practices within a similar system and borrowing the

most appropriate elements from other systems

will likely be more practical and effective to raise health care

spending efficiency.”


Health care systems: efficiency and institutions. Economics department working papers no. 769. Isabelle Jounard, Christophe

André and Chantal Nicq OECD 2010

Conclusions

£22 billion of efficiency savings is technically possible

BUT there are big unresolved risks:

Workforce and pay

Social care

Public Health

Focus of leadership and depth of support for transformative

change within and across the organisations


nhs finances mission impossible? - hfma

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