Why health should be considered part of the UK’s social infrastructure
The Productivity Institute
The Productivity Institute aims to better understand, measure, & enable improvements in productivity across the UK
Health expenditure and output forms 10% of UK GDP and the NHS is the country’s biggest employer, with 1.2 million Full Time Equivalent staff, so improving productivity of the service has long been a focus. But it’s not often got it right. ?
Diane Coyle , co-director of The Productivity Institute and of the Bennett Institute for Public Policy , explored the impact of the past emphasis on cost efficiency in the NHS during the COVID-19 pandemic in research published by The Productivity Institute.
The impact of the COVID-19 pandemic on NHS productivity
The pandemic placed health services of all countries under great strain as waves of illness led to increased hospitalisations, but the UK’s experience was unique in two ways.
Firstly, almost everyone in the UK relies on the directly government-funded NHS for treatment, receiving their core health services free at the point of need. This compares with the mixture of private and public provision financing in other countries in the Organisation for Economic Cooperation and Development (OECD).
Second, is that compared to other OECD countries, there were particularly large declines in measured health output in the UK, even as the number of COVID-19 patients surged. Differences in system structures and statistical methodologies explain part of the contrast with countries such as Germany or Italy; but another part of the explanation is that the UK system was operating so close to capacity that the number of non-COVID-19 treatments declined very sharply.
These increased COVID-19-related activities and reduced primary care and hospital services led to a 25% decline in productivity figures in 2020. This decline was because of the way health service activities were measured by the Office for National Statistics. Critical care and pandemic-related activities became the focus of the NHS more than other areas such as GP visits, cancer care, dental care, and routine operations, which normally make up the bulk of measured health activity.
The ONS is reviewing its productivity measures for the health service as part of the Public Service Productivity Review.
How past efficiency reforms created conflicting incentives
Since the 1980s, the NHS, in England in particular, has been subject to a series of reforms generally aimed at increasing efficiency and introducing private sector management practices.
This included the creation of an internal market within the NHS, which mandated a distinction between NHS organisations buying services and those providing the healthcare services. Criticism grew through the 1990s concerning the fragmentation of healthcare, however, as competition was in tension with the need for collaboration. For example, the desire to introduce digitisation to improve services and productivity, requiring collaborative efforts to standardise and interoperate systems and data, has been hampered by the organisational changes.
The ‘multiple, overlapping, and often contradictory reforms’ of the NHS in recent decades have been criticised for creating conflicting incentives for both collaboration and competition between NHS organisations. In 2021, another proposed reform created a duty for the NHS and local authorities to co-operate to integrate care and reduce bureaucracy, including by amending competition law to enable joint provision of services.
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Frequent organisational change, along with structurally rising demand, formed the backdrop to continuing financial pressures and cost-cutting, especially after 2010.
International comparisons show that on many core dimensions the UK health system has little spare capacity. As the pandemic hit in early 2020, the pressures manifested themselves as bed shortages and staff shortages, exposing the vulnerability of the NHS.
Reframing the health system as social infrastructure
The experience of the pandemic illuminates the need to consider the health system as social infrastructure, rather than as a service to be driven for maximum short-term efficiency. This perspective implies that provision should – like any part of the nation’s infrastructure – take into account the need to deliver resilience, to accommodate demand peaks, and to consider its contribution to whole economy growth and productivity in determining investment levels.
In some of its official documentation, particularly its critical national infrastructure assessments, the UK government does treat the health system as such. However, the experience of the COVID-19 pandemic made clearer than ever the costs, in terms of lack of resilience and productivity losses, of running the NHS too close to capacity. The lens of good infrastructure planning, including resilience, system and whole life approaches, governance and transparency, should be applied to future plans for NHS expenditure.
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The Productivity Institute??
The Productivity Institute is a UK-wide research organisation exploring what productivity means for business, for workers and for communities - how it is measured and how it truly contributes to increased living standards and well-being. It is funded by the ESRC: Economic and Social Research Council .
Retired Specialist Physician, Medical Advisor
6 个月How one measures productivity in the delivery of health services must recognise the ‘social contract’ and the ‘human element as well as the complexity involved. This article is very useful in indicating the dilemmas. Continuing to do more with less resources is no longer tenable for many of our health system services.