by Shimeon Lee, policy analyst
This Saturday marks 77 years since the founding of the NHS. Introduced in 1948, it represented a major shift in the organisation of British healthcare. Yet it is important to remember that healthcare did not begin with the NHS. Before 1948, the British healthcare system was possibly the best in the world, well ahead of most other countries.
Since then, the system has transformed beyond recognition into the NHS we have today. More than seven decades later, with the health secretary himself suggesting the system was “going through the biggest crisis in its history”, has the British health system retained its preeminence over global peers?
Our recent report comparing healthcare productivity internationally paints a less than encouraging picture. While spending as a percentage of GDP ranked 3rd against a list of 13 OECD countries, the UK ranked second last on the amount of healthcare resources and 9th on the amount of healthcare activity in the system.
There were some bright spots. For example, when taking into account the level of resources, the UK’s ranking for healthcare activity improves considerably to second best. However, the overall picture is of a health system that does not know how to spend efficiently. Part of this is down to its design. Because it is a publicly run system, it is subject to the whims of politicians who regularly cave to political pressure, raiding much needed capital spending to fund day to day expenditure, including inflation busting pay rises for an ever growing number of staff. This creates a vicious cycle where lack of productivity leads to the need for even more day to day spending.
Spending is also constrained by a lack of economic growth on one hand and population growth on the other, with high spending as a percentage of GDP translating into little in per capita terms. These, and other factors, means simply spending more is not the way to get better outcomes. What the system needs is to spend existing budgets better.
Inefficiencies do not just exist at the national level, but also at the level of individual trusts. The NHS was not created because of a crisis in pre-1948 health services, but rather because of a desire to reduce the gaps in the system caused by uneven coverage and geographic inequalities. It is disappointing then that disparities continue to dog the system.
While the NHS today is free to everyone at the point of use, the performance and financial sustainability of trusts delivering these services can vary considerably, with variations between trusts costing taxpayers considerable sums. This was the focus of another recent piece of TPA research that looked into electricity costs, missed appointments, postage costs and laundry costs of English NHS trusts.
Looking at appointments for example, while the average missed appointment rate was 5.9 per cent, ten trusts had a missed appointment rate of over ten per cent including one trust that had a missed appointment rate of 16.5 per cent. If all trusts were able to reduce their missed appointment rate to the average, it would amount to a saving of £166 million.
We also found that electricity costs rose by 22.8 per cent in a single year, with some trusts paying nearly double the average price per kWh. Bringing trusts on the extremes closer to the average would increase spending efficiency and mean better value for taxpayers.
Key to achieving these improvements are NHS management, who often have far more granular control over services than politicians, and are often paid significantly more as well. Following the health secretary’s admission that poor performance is too often tolerated in the NHS and his promise that there will be financial implications for senior managers if trusts do not improve, we published our first ever NHS rich list comparing the remuneration of senior managers to the performance of their trusts.
The results were concerning, with nearly 300 senior managers receiving over £200,000 in salary alone, including 17 receiving over £300,000. Yet performance was often not up to par, with many on above average paychecks delivering below average outcomes. The senior manager who topped the list with a salary of £382,500, for example, led a trust ranked 95 of 136 on A&E waiting times.
Our research shows that poor productivity, cost variations, and misaligned incentives at the top are costing taxpayers dearly, leading to a health system that is drifting ever further from what was originally promised in 1948. Bringing underperforming trusts up to standard, tackling waste, and ensuring accountability for senior managers must be top priorities. On this anniversary, what the NHS needs is not more empty platitudes but firm action that rejects the status quo, delivers better outcomes for patients and better value for taxpayers.