Claims about the health service's world-beating productivity rates are overblown. But so are pessimistic views that argue extra spending has not been worthwhile
It has been claimed that the NHS is the most, or second most, efficient health service in the world. This seems at odds with ONS calculations that productivity fell 2.7 per cent from 1995 to 2009 (though there has been at least one forceful critique of its methodology).
The statistics are in part confusing because four different sets of questions have been asked. First, are costs low, and do health system processes tend to work reasonably effectively? Second, what improved outcomes were gained for a given increase in health spend relative to the level of health spend? Third, what improved outcomes were gained for a given increase in health spend? And fourth, what health outcomes are achieved for a given health spend as a percentage of GDP?
The first question was the focus of a 2010 Commonwealth Fund comparison of Australia, Canada, Germany, Netherlands, New Zealand, UK and USA. Using various indices (including the 2007 spend on health as a proportion of GDP, and the time spent on paperwork for bills), the study ranked the UK as best for efficiency. This fits with intuition that the NHS has historically been relatively inexpensive, with low administration costs. However, the measure omits the link to the outcomes achieved for the resources; and this is a major draw-back.
The second question was reviewed in an article in the Journal of the Royal Society of Medicine, assessing trends in mortality rates and the health spend between 1980 to 2005 in seventeen western countries. When assessing improvement divided by health spend, the UK came second only to Ireland. Yet, the rationale for dividing by health spend is far from clear, and the measure is geared towards those countries ‘catching up’ in health outcomes, while spending much more. In today’s context, the crucial issue surely is: which country can achieve better outcomes within tight budgets?
The third question is a more intuitive measure of improvement: what percentage improvement in health was achieved from what percentage increase in cost? OECD data for the period 1980 to 2005 show that UK health spend as a percentage of GDP rose by 50%, compared to an international (OECD) average of 37%. Also that, premature years of life lost in the UK fell by 43%, compared to the international (OECD) average of 45%. Countries such as Ireland, Israel and Sweden achieved similar or better improvements in health outcomes for a far slower increase in share of GDP.
Where does this leave the UK in terms of efficiency and effectiveness for health care – the fourth question? Data for 2008 suggests that the UK continues to make very welcome improvements in outcomes – with premature years of life lost per year falling by an additional 6.4% compared to 2005. However, this still represents a level 14% worse than the average of countries for which up to date comparable data exists, at a level of spend on a par with them.
This analysis is not comprehensive. The increased level of spending may well have future effects that have not yet become apparent; while improvements in the patient experience are not included in the analysis, but may well be significant.
What must also be kept in mind is that health outcomes at a population level are often as much to do with social factors, such as diet and attitudes to exercise, as they are to do with the efficiency of health systems.
Even so, the comparison of spend on health and health outcomes suggests that claims about the UK's world-beating performance are overblown; just as much as others’ pessimism that the recent boom in spending on the NHS has not resulted in better results for patients.
Neil Reeder is director of Head and Heart Economics and a Fellow of the Young Foundation. He was head of analysis to the 2004 Gershon Efficiency Review.
