The NHS is about as old as India since independence and the Chinese Communist State. Next July it turns 70. Celebrations will be a mix of warm sentiment, rightful pride and soul searching as to its future. But how to navigate the gush of facts, alternative facts and emotion? Is the NHS in a "doom loop" of out-of-control demand and costs, or in good health but with a short-term cold?
Clearly there are problems. The squeeze on funding growth, particularly since 2010, is real and hurting. In England the average real growth of 1.2 per cent this decade is around a quarter of what the NHS is used to. Ironically the biggest funding pinch comes in anniversary year 2018. Unsurprisingly the cracks are showing: workforce shortages, hospitals full to bursting, longer waits, tighter eligibility for care, poor access to mental health services, and scanty investment in infrastructure. Add to that the effect of cuts to social care, particularly on older frail people, and the mix is toxic. Over the last 20 years health care spending in the UK, as across the OECD, has outpaced GDP growth, and is a rising share of public spending.
Given all this, the question of how we can best finance the NHS will be hotly debated as we move into that anniversary year. But there is another question which must be addressed—one less widely considered, but which is just as important. How can we improve the NHS’s performance to cope with lower growth, if GDP growth is anaemic? In other words, how can we improve the productivity of the health service?
“Health systems using different funding models show no superior performance. It would be best for countries to work with what they have”It’s no surprise that funding always gets more air time. The main assumption is that more investment will either solve the challenges ahead, or at least kick them down the road. The most pressing issue for the NHS is how to secure more investment for social care. For the NHS itself various options will be argued for: new patient charges, like £10 to see the GP; hypothecated taxes; changing the funding model completely, for example through employer-based social insurance as in Germany or The Netherlands; or encouraging the well off to go private and relieve pressure on the NHS.
Different models have their pros and cons. Examining alternatives is always valuable, although "fresh" thinking too often veils vested interests. But here’s the thing: a recent OECD analysis concluded that health systems using different funding models show no consistent superior performance, and it would be best for countries to work with what they have. In other words, the pursuit of alternative funding models is a largely diversionary activity from the more important and harder business of improving performance, and in particular productivity.
You might think that productivity in health care would be a dry technocratic subject, free from ideological fetish. Or that it’s an issue to which, given the NHS is the UK’s biggest industry (annual budget of circa £140bn), a great deal of careful attention is paid. You would be wrong on both counts.
One enduring question in play in this debate is does the NHS need a big external prod to work more efficiently? If yes, then depending on your world view, this will be the external bite of competition in a market, for example between hospitals, GP practices or community services. On another world view the prod-of-choice is a combination of command from the top, regulation, and central targets.
Clearly competition is hugely contentious, still more the purchase of privately provided clinical services, which has grown over a decade to consume nearly eight per cent of the Department of Health budget. Expect the usual public spats on this in the coming months. But competition wasn’t what it was cracked up to be, and with hindsight now looks like a fad. As a health minister said to me not so long ago, “we won’t bet the farm on competition.” On the other hand, top down approaches are over-blunt and collateral damage is severe if they are applied in excess. What we’ve learned is a blend of approaches is needed, arrived at through ongoing monitoring and course correction, not dogma. Easy to say, hard to do.
“For every complex problem there is an answer that is clear, simple, and wrong”How else to improve productivity? Can technology save the day? Any visit to the NHS will reveal numerous opportunities for automation and digitisation. But this terrain is also populated by the “techno-ecstatic” (to borrow a term from Thomas Frank) closely followed by investors and politicians anxious to support UK enterprise plc. What’s not to like? All well worth trying, but note three things. Over the past 20 years the impact of new technology on productivity across the wider economy has been far less than hoped for. Health care is above all a people business not a production line. And of course many of the moonshot investments will turn out to be, well, moonshine. Expensive moonshine.
Of all the pet solutions to the productivity conundrum you are likely to hear, one will be strangely absent from public debate. The NHS employs over a million people—one of the most highly trained and intrinsically motivated workforces in the world. It sees a large share of the British population every year. How to harness all that energy to make improvements everyday? Polling reveals 50 per cent of the public report seeing waste in the NHS. Studying a range of organisations in the US, Steve Spear at MIT concluded that future progress will depend not on solutions designed by experts at the top, but discovered by workers at the front line—whether at Toyota, or on the wards—who have the wherewithal to implement them.
Ah, so this is more complex than just applying incentives, regulation or new technology. It’s about human management, ceding more power to the clinical front line, involving patients, and changing mindsets from “That’s a problem. Somebody should fix it” to “That’s a problem. How can I help fix it?” Those minded to duck this agenda might start by reading Bloom and van Reenen’s innovative empirical study of 732 firms (manufacturing and medium sized) across the Europe and the US: good management practice and productivity unsurprisingly go hand in hand.
As we approach the anniversary day of 5th July, enjoy the emotion and pride at the act in 1948 which gave us universal health care, free at the point of use. But as to the future don’t be fooled by those peddling simple answers. To quote HL Mencken “for every complex problem there is an answer that is clear, simple, and wrong.”
