Guest Blogspot: Management Priorities in the NHS under the Health and Social Care Act

Basic economics relating to the pressures on the NHS led to the need for reform culminating in the Health and Social Care Act. The financial challenges faced by any healthcare system are strongly influenced by rising life expectancy without a corresponding increase in the working population. Children, the elderly, the unemployed and infirm need to be supported by the workforce.  This fact cannot be altered by financial means alone. For example, however much a person saves for his retirement, once he stops working the goods and services that he needs must be physically provided through the efforts of people in work or by volunteers.

A straightforward calculation with simplified inputs makes the position clear. If on average everyone were to start working at the age of 21, work until they were 65 and live to 70, 44 years of work would effectively be needed to subsidise 26 years of non-work. If people who do not work are to receive the same as those who do, 37% (26/70) of the output of workers would have to go to non-workers.

The following table sets out the results of the same calculation for different life expectancies, with everything else remaining the same so that everyone still works between the ages of 21 and 65.

Life Expectancy Proportion of Output Going to Non-Workers
                               %
           70                                      37
           80                                      45
           90                                       51
         100                                       56
         110                                       60

In  1901  UK  life expectancy at birth was 47. When the NHS was formed and the state pension introduced in 1948 life expectancy was 68. Today it stands at 80. However, two other factors contribute to make the pressure greater than the above table alone suggests. First, average healthcare spending on elderly people is much higher than on younger persons.  NHS expenditure per person is approximately twice as high in people aged 65 to 74 as in younger adults. It is about five times higher in persons aged 75 or higher than in adults aged below 65. Secondly, improved treatments emerge that are generally more complex and expensive than what they replace.

Over the rest of this decade (to 2020) the NHS can realistically aim to meet its targets of providing high-quality healthcare that is generally free at the point of delivery. To do so NHS funding will need to continue to grow in real terms and drastic improvements in efficiency will be needed. Whether or not the promise is actually fulfilled will depend on whether medical professionals work energetically to benefit from the opportunities provided by the Health and Social Care Act and on the calibre of advice that is made available.

In the long term (beyond 2020) no government will be able to sustain the free provision of the best healthcare for everyone unless the ground is prepared over the rest of this decade. Some of the following will need to happen well before 2020 if the current values of the NHS are to be preserved beyond 2020:

  • Higher economic growth.
  • Reduced allocation of resources to selected areas outside healthcare so as to divert money to the NHS.
  • Healthy people working well beyond the age of 65.
  • Women being encouraged to return to work.
  • Starting work at a younger age, for example instead of studying subjects of limited relevance to employment at university.

If choices from the above list are not made and successfully implemented, problems will arise for our children looking beyond 2020. This decade’s neglect would force the next generation to abandon some of the core values of the NHS. There would come to be no choice but to adopt some of the following sad alternatives:

  • the introduction of charges into the NHS possibly linked to the ability to pay or to the lifestyle of patients.
  • the strong encouragement of private medical insurance and the implementation of measures to ensure that it is structured so as to help the NHS.
  • declining to offer expensive treatments under specified circumstances.

A common fallacy is the claim that healthier lifestyles would always reduce the financial pressure on the NHS. The effect of a healthy lifestyle is similar to that of medical advances, which increase life expectancy and so generally add to eventual medical costs.

My most immediate suggestion to improve the NHS is that medical professionals should work to make the most of the new opportunities, whether they agree with the Health and Social Care Act or not. All three major UK parties have the objective of seeing the best affordable treatment for patients.  The Act should enable decision-makers to see what works well and what does not. As this becomes established decisions can be based on evidence and taken out of the realm of politics. I fear that continuing opposition to the Act may wreck its implementation and cause the very failures that many responsible protestors are seeking to avoid. Success in the NHS is about aligning the interests of medical professionals, patients and Government. If these three partners in shaping the NHS fight one another disappointment is almost inevitable, irrespective of how good or bad the legislative framework is.

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About Barbara Arzymanow

Barbara Arzymanow is a Research Fellow at 2020health and is a founding director of an independent healthcare consultancy firm. She has been an investment analyst specialising in Pharmaceuticals for 25 years, prior to which she carried out academic medical research in university laboratories. Her experience, obtained entirely from outside the pharmaceutical industry, gives her a unique, political perspective independent of commercial lobbies. She has extensive experience in financing the biotechnology industry, which is vital for the long-term standing of medical research in the UK. She has always been inspired by the scientific excellence within the UK and would like to see collaborations between industry, the NHS and academia strengthened. For more information about Barbara's research and writings including submissions to Government Departments please visit http://www.researchideas.co.uk . Barbara also tweets as @barbararesearch .
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2 Responses to Guest Blogspot: Management Priorities in the NHS under the Health and Social Care Act

  1. Rob Anderson says:

    Hi Barbara, you are right to raise the issue of future funding for healthcare and the NHS in particular. Some of your ideas regarding payment for services are valid and I think some are not developed. For instance you say “Starting work at a younger age, for example instead of studying subjects of limited relevance to employment at university.”. With unemployment at record levels in the 16-25 age group, how does this work? Two (actually three) things: The NHS needs to be more of a safety net for non-discretionary issues – we just need to accept it and get on. The second point is that in order for improved economic growth then we need to train our young people to do valid activities. Plumbers anyone? So the third point is that – with NHS being considered as a core part of our social fabric politically – the allocation of resources can’t be dealt with singly. So the debate becomes “what is the NHS for?” and at least as important “what is our education systems supposed to deliver?”. Two sacred cows methinks.

    • Hi Rob, thank you for your comment. I fully endorse what you say.
      You are right that I have not developed my ideas to the stage of knowing how to stand the best chance of overcoming the NHS’ long-term funding problems. I am simply highlighting the issues and pointing out the kinds of difficult choices that will have to be made.
      I have four sons aged 15 to 26 and fully recognise the difficulty in finding jobs in that age group. Starting work earlier is clearly not realistic for most young adults today. However, the situation may change if the economy picks up later in the decade. Furthermore, I feel that high-quality vocational training would often help more than much purely academic work at university.

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