The document summarizes government spending plans and health spending in the UK from 2010-2015. It finds that overall health funding is increasing by an average of 0.1% per year over this period. However, it also notes that annual real terms growth in public health spending needs to be around 2% just to maintain current services, representing a significant efficiency challenge. It outlines some strategies for improving efficiency in the NHS, including the Quality, Innovation, Productivity and Prevention program which aims to achieve over £3 billion in annual productivity savings through various means.

1. Spending on Health 2011-2015
Anita Charlesworth
Chief Economist
The Nuffield Trust
May 2011 © Nuffield Trust

2. Overall Government Spending Plans
Government Spending Plans (£ billion)
2014-15 2010-11
£114
Health
£104
£389
DEL
£394
£384
AME
£302
£740
TME £697
May 2011 © Nuffield Trust

3. Health in a privileged Position
• Overall Health Funding increasing by 0.1% per annum on
average over CSR
2010-11 2014-15 Real terms
change
Resource £98.7bn £109.8bn 1.3%
DEL
Capital DEL £5.1bn £4.6bn -17%
Overall DEL £103.8bn £114.4bn 0.4%
May 2011 © Nuffield Trust

4. The Scale of the Challenge
14.0% Annual real terms growth in UK public spending on health
12.0% Real terms growth
population growth
10.0% growth in 80 plus population
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
© Nuffield Trust
Source: Nuffield Trust (IFS and HMT data)

5. Health Spending
UK Public Health Spending as a share of GDP
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
% of GDP
© Nuffield Trust
Source: Nuffield Trust (IFS and HMT data)

6. What is the money buying?
Primary Care,
11%
Prescribing, 12%
General and acute, 44%
Other, 4%
Community health
Services and learning
difficulties, 12%
Mental Health,
A%E, 3% 11%
Maternity, 3%
© Nuffield Trust
Source: Nuffield Trust analysis of DH data

7. The Efficiency Challenge (£ million)
© Nuffield Trust

8. The Productivity Story so far
Productivity growth in health and the general economy
4.00
3.00
2.00
1.00
0.00
-1.00
-2.00
-3.00
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Health Whole Economy
Source: ONS
© Nuffield Trust

9. What will the NHS do?
2010-11 to 2013-14
• Control pay with the settlement freeze for all staff earning more
than £21,000
• Bear down on hospital efficiency through a tight framework for
prices (PBR)
• Implement the QIPP programme
• Reduce management costs
11-12 12-13 13-14 14-15 Cumulative real
terms savings
Reduction £600m £1.1bn £1.4bn £1.4bn 33%
© Nuffield Trust

10. NHS Costs
Share of HCHS Expenditure
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
staff M&D non pay capital charge
Source: Nuffield Trust analysis of DH data © Nuffield Trust

11. Spending Pressures
A comparison of Health Service Pay and Price Inflation
and the GDP Deflator
6
5
4
3
2
1
0
NHS Pay and Prices GDP Deflator
© Nuffield Trust
Source: DH and HMT

12. Quality, Innovation, Productivity and Prevention (QIPP)
• Safe care and right care (e.g. reducing pressure
sores)
Commissioning • Long-term conditions
and pathways • Urgent and emergency care (aim for a 10%
reduction in A%E attendances)
• End of life care (Birmingham pilot £1m pa saving)
• Back office efficiency and optimal management (£600m)
Provider • Procurement
• Clinical support (Pathology services £500m p.a.)
efficiency • Productive care (focused on lean production
techniques)
• Medicine use and procurement
System • Primary care commissioning
enablers • Technology and digital vision
© Nuffield Trust

13. Better Care, Better Value Productivity Savings Estimates
Managing 14 Day Readmission Rates £99,560,000
Reducing Follow-up Appointments £232,070,000
Productivity
Reducing DNA Rate £190,000,000
savings of
Percentage of Low Cost Statin Prescribing £72,740,000 £3 billion a year
possible
Managing Variations in Outpatient Appointments £260,000,000 (NHS Institute for
Improvement)
Managing Varitaion in Emergency Admissions £335,600,000
Managing Variations in Surgical Thresholds £91,300,000
Reducing Pre-Operative Bed Days £712,000,000
Increasing Day Case Surgery Rate £17,000,000
Reducing Length of Stay £1,005,000,000
© Nuffield Trust

14. www.nuffieldtrust.org.uk
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May 2011 © Nuffield Trust