1. Austerity and quality?
Anita Charlesworth
Chief Economist
Nuffield Trust
23 October 2013
© Nuffield Trust and Health Foundation
© Nuffield Trust

2. Public and private UK healthcare spending,
1997-2011
160
20%
140
120
10%
100
80
5%
60
0%
40
-5%
20
0
-10%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Years
1997 to 2011
© Nuffield Trust and Health Foundation
Average annual real growth in Average annual real growth in
public spending
private spending
4.9%
3.7%
Growth rate
£ billions, 2012 prices
15%
Private
Public
Private growth
rate
Public growth
rate

3. Average annual growth rate in health spending across the
OECD
15%
10%
5%
0%
-5%
-10%
2000-09
-15%
Source: OECD 2013
© Nuffield Trust and Health Foundation
2009-11

4. 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
£137
Funding pressures on the NHS in England
£132
Freeze in NHS funding beyond 2015/16
Funding (£ billion)
£127
£122
£44 bn
(£54 bn)
£117
£112
£107
£102
£97
£92
£87
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
Year
Source: Roberts and others, 2012
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5. Funding pressures on acute services in England attributable to
population change and to the rising probability of admission for
chronic conditions
Funding pressure on hospitals in England (£Bn)
£68
£63
£58
Additional acute spending due to pay increases
Additional acute spending due to rising probability of admission for chronic
conditions
Projected acute spending due to population growth
4.1% a
year
£53
£48
2.7% a
year
£43
1.3% a year
£38
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
Year
Source: Roberts and others, 2012
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6. Closing £13 billion Funding Gap: 2010/11 to
2014/15
£105
Funding pressures on the NHS in England
Funding (£billion in 2010/11 prices)
Funding pressures after for pay restaint
£100
Funding pressures after pay restraint and
managing hospital activity for chronic conditions
Pay
reduction:
£5bn
Funding pressures after pay restraint, managing
hospital activity for chronic conditions, and
productivity savings
Funding allocation based on 2010 spending review
Disease
management:
£3bn
£95
Acute QIPP
Actions: £4bn
£90
£85
2010/11
© Nuffield Trust and Health Foundation
2011/12
2012/13
Year
2013/14
2014/15

7. Funding gap in 2021/22 under three scenarios from the IFS
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8. 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
© Nuffield Trust and Health Foundation

9. Staff Changes in 2011-12 (Whole-time equivalents)
Change 20102012
% Change 201112
Change April
2012-April 2013
Total NHS
workforce
- 19,669
-1.7%
-8,423
Medical and
Dental
+3,263
+3.3%
-1,878
Qualified Nursing
-4,028
-1.24%
-1,650
Scientific,
therapeutic and
technical
+1,558
+1.2%
-1,921
Support to clinical
staff
-8,383
-2.8%
-4,061
NHS
infrastructure
-15,368
-7.6%
+1,050
© Nuffield Trust and Health Foundation

10. The link between overall spending and outcomes
Source: Joumard and others 2010
© Nuffield Trust and Health Foundation

11. Potential gains in life expectancy at birth through
efficiency
© Nuffield Trust and Health Foundation
Source: Joumard and others 2010

12. The relationship between quality and cost at the patient or
provider level – results of a systematic review of US evidence
Quality measure
Positive
Negative
Imprecise,
indeterminate, mixed
or no difference
Access
0
3
1
Composite
0
1
1
Outcomes
17
10
14
Patient experience
2
3
3
Process
6
5
8
Structure
3
2
0
All
28
24
27
Source: Hussey and others 2013
© Nuffield Trust and Health Foundation

13. Healthcare productivity growth rates: comparison of ONS UK
estimates and York University England estimates
5%
4%
3%
2%
1%
0%
2006
2007
2008
2009
2010
-1%
-2%
-3%
CHE Productivity
© Nuffield Trust and Health Foundation
ONS Productivity
ONS productivity 1995-2010
Annual average
growth

14. UK Review – Does improving quality save money?
•Poor quality is both common and costly – hospital acquired
infections cost the NHS £1 billion a year. 25% of radiological
procedures are unnecessary
•Some interventions to improve quality do work but cost more
than they save.
•Some interventions to improve quality do work and save
money.
•Cost and benefits are spread over time and between different
organisations.
•Contextual factors influence whether a provider saves money
by improving quality
Source: Ovretveit 2009
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23 October 2013
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