The UK NHS: After a decade of growth, prepare for austerity

After almost a decade of unprecedented growth, Britain's National Health Service faces one of the biggest challenges in its 60-year existence.

Since 2000, the NHS has seen waiting times fall, new services introduced, outcomes improve and distinct - if unspectacular - improvements in patient satisfaction. This has come at a time when spending has doubled in real terms on a health care system that is largely tax-funded, and generally free at the point of use.

This massive spending increase followed a deliberate decision to try to get the UK's expenditure on health up to the European average after a long period of underinvestment.

That has more or less been achieved.

But the UK's ballooning public debt in the wake of the financial crisis and subsequent recession means the service is set to face a period of marked austerity lasting some years, as spending is cut to help reduce debt.

The two main political parties - both the Labour government and the Conservative opposition - are promising that the service will be protected, at least up to a point, from the big public spending cuts to come.

But that is unlikely to mean much more than expenditure being held constant in real terms - after allowing for inflation - when, over its 60-year history, it has risen on average by something over 3 per cent a year.

Given an ageing population, the cost of medical advances and rising patient expectations, all of which are unlikely to be diluted by a spending squeeze, this will still feel like a severe cut, as the service will expected to do more for some years to come, with broadly the same amount of money.

David Nicholson, the NHS chief executive for England, has said the service looks likely to have to find £15bn to £20bn ($24bn to $32bn) of savings over the coming years, within a budget of about £100bn, to meet these changing demands. That amounts to the most sustained squeeze on NHS expenditure in its history.

To date, however, health service analysts have found it far easier to define the problem than prescribe solutions.

That does not mean there is a shortage of potential answers.

A very short-term one will undoubtedly include a pay freeze, or something close to it, that will apply across the public sector and include NHS staff.

But such expedients barely dent a problem that will require far-reaching changes in the way that services are delivered.

There are - and have been for years - huge quantities of data that show that, just as in any other health system, there are widespread variations in performance and the use of resources between hospitals and among Britain's family doctor practices.

In theory, improving the lowest performers in these league tables to the level merely of the average would produce big improvements in productivity that would help plug the potential funding gap.

Better use of drugs, more efficient back-office services and disposing of unneeded hospital estate could all contribute.

Much will also ride on the current drive to raise the quality of care.

In some parts of the NHS, at least, there is good evidence that higher quality produces lower unit costs.

Avoiding errors and organising services for the fastest possible throughput of those in hospital reduces length of stay, improves outcomes and reduces the need for unnecessary admissions and treatment later.

Providing cancer chemotherapy at home, rather than in hospital, has been shown to cut costs and improve patient satisfaction.

Better prevention and early intervention outside hospital can cut costly admissions. And so on.

Matthew Swindells is a former NHS manager and health department civil servant, who is now managing director for health for Tribal, a private sector consultancy and service provider to the NHS.

He says that knowledge of all these things that could produce a big improvement in performance already exists. "Either within the NHS or internationally, someone is already applying the approaches the NHS needs to adopt universally," he says.

The big question is whether the service can make changes fast enough across the board, particularly given that it operates in an environment where almost any alteration in the way services are delivered is politically controversial.

Previous squeezes on spending - which have been less severe and protracted than the one likely in a year's time - have led to fiercely-debated questions over whether the UK model of a minimal charges and tax funding is sustainable. To date, the answer has been yes.

But as the NHS Confederation, which represents the commissioners and providers of services noted this summer, the answer may not be the same this time round if the service fails to deliver productivity improvements.

© The Financial Times Limited 2009. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation