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Doubling expenditure on the NHS between 1997 and 2010 had a variable impact on health system performance

A report published today (Wednesday 16 March)reveals that while public expenditure on health care in England more than doubled between 1997 and 2010, the impact on health system performance has been variable.

The Health System in Transition report on England, by Seán Boyle at the London School of Economics and Political Science (LSE), is the most comprehensive overview of the health and social care system in England produced this century. It provides a wealth of detail about all aspects of the health care system, as well as developments in the health of the population.

Drawing on a detailed analysis of the changes to health care introduced by a series of Labour governments between 1997 and 2010, the report's author gives his assessment of the impact that these changes have had in terms of access, equity, efficiency, quality and health outcomes.

Between 1997 and 2008 health expenditure in cash terms more than doubled from £55.1 billion to £125.4 billion. Expenditure on health care per capita increased from £231 in 1980 to £1,168 in 2000, and by 2008 it was £1,852.

This spending was accompanied by a continuous programme of transformation of the NHS in England. Chief among the changes introduced since 1997 are: the introduction of Payment by Results, an activity-based payments system mainly used in hospitals; the expanded use of private-sector provision; the introduction of more autonomous management of NHS hospitals through Foundation Trusts; the introduction of patient choice of hospital for elective care; new GP, Hospital Consultant and Dental Services contracts; the establishment of the National Institute for Health and Clinical Excellence (NICE) and the expansion of its remit to include the development of comprehensive guidelines for all services; and the establishment of the Care Quality Commission to regulate providers and monitor quality of services.

Expansion of the NHS workforce has been a key focus of government policy since 2000. Thus, there are over 50,000 more doctors, including 10,000 more GPs, and almost 100,000 more nurses and midwives.

However, NHS productivity did not increase over this period. The most recent measure, which includes an element for quality improvements, shows NHS output increased rapidly between 1997 and 2008, at over 4.5% per annum, but the increase in inputs was even greater at almost 4.75% per annum

Nevertheless, the NHS made substantial progress in some areas, particularly improving access to elective care, and, to a lesser degree, outcomes.

Waiting lists have halved and people wait less time for treatment. The 1.3 million people on NHS waiting lists in 1998 fell to under 600,000 in 2008. Median average waiting times for elective treatment (e.g. hip replacements, heart surgery) fell from 12.7 weeks in 2002 to 4.3 weeks in 2010. There is also evidence that, for example, stroke care improved between 2000 and 2009, with a 25% improvement in mortality rates following admission to hospital.

Reducing health inequalities was another key target, but despite various policies introduced to meet that target, the position has worsened, even though the health of the population overall has improved.

Seán Boyle said: 'Perhaps the single most significant factor between 1997 and 2010 was the large increase in public expenditure on health care. However, much of this increase was taken up by more staff, pay rises, increased capital costs and increases in costs associated with improvements in care through, for example, the implementation of national service frameworks and NICE recommendations. Although there is evidence that the NHS failed to achieve improvements in productivity, there was substantial progress in some areas, particularly in improving access to elective care.'

'The Coalition is already making significant changes to the structure of the NHS and it is clear that the financial framework that the NHS faces in the next five years will be very different from that of the last ten years. The key question is whether an NHS that found improvements in productivity so difficult to deliver at a time of record increases in expenditure will find it any easier as spending begins to fall back. The new government's instinct to introduce yet more structural change to the NHS at a time of financial stringency may prove the undoing of both.'

Download The Health System in Transition

A launch event with the report's author and a panel of experts on the NHS will take place at the King's Fund in London on 23rd March 2011. Please contact Hinal Patel-Bhuya on telephone 020 7307 2513 or Email h.patel-bhuya@kingsfund.org.uk for more information.


Seán Boyle, Senior Research Fellow, LSE Health, 020 7955 6251, s.boyle@lse.ac.uk

Sarah Thomson, Research Fellow, European Observatory on Health Systems and Policies at LSE, 020 7955 6474, s.thomson@lse.ac.uk

Willy Palm, dissemination development officer, European Observatory on Health Systems and Policies, WHO European Centre for Health Policy, WHO Regional Office for Europe, +32 (0)2 525 0926, wpa@obs.euro.who.int

Viv Taylor Gee, regional adviser, Communications, WHO Regional Office for Europe, +45 39171231, VGE@euro.who.int


Background Information

This comprehensive description of the English health and social care system is part of a series of Health Systems in Transition (HiT) country reports, covering the entire European region as well as key OECD countries outside Europe.

Health services in England are financed mainly from public sources, primarily general taxation and national insurance contributions (NICs); some care is funded privately either through voluntary health insurance (VHI) schemes, some user charges, cost-sharing and direct payments for health care delivered by NHS and private providers.

Health expenditure has increased significantly in recent years, with total spending on health care as a proportion of GDP increasing from 5.6% in 1980 to 8.7% in 2008. In particular, spending increased rapidly between 1997 and 2008, from 6.6% to 8.7% of GDP. Of this, the proportion that came from public funds fluctuated from 89% in 1980 to 79% in 2000, and back to 83% in 2008.

Major changes to the structure of the NHS have been announced by the new Conservative-Liberal Democrat coalition government elected in May 2010.

European Observatory on Health Systems and Policies

The European Observatory on Health Systems and Policies supports and promotes evidence-based health policy-making through comprehensive and rigorous analysis of the dynamics of health care systems in Europe and beyond. It engages directly with policy-makers and experts and works in partnership with research centres, governments and international organizations to analyse health systems and policy trends.

The Observatory is a partnership that reflects the dynamic nature of policy-making. It includes national governments and decentralised authorities (Belgium, Finland, Ireland, Netherlands, Norway, Slovenia, Spain and Sweden, the Veneto Region, the French Union of health insurance funds); international organizations (the World Health Organization Regional Office for Europe, the European Commission, the World Bank, and the European Investment Bank); and academia (London School of Economics and Political Science and London School of Hygiene and Tropical Medicine).