Austerity, healthcare and the Autumn Statement

Last week’s Autumn Statement, delivered by George Osborne, makes little direct reference to health, but serves to underline the challenges confronting publicly funded health services in the England. There is to be no respite from the financial pressure on services, and the constraints placed on other parts of the public sector – notably social services and welfare benefits – will, if anything, serve to intensify future demand pressures that are already being felt. Austerity is here to stay.

Much of the austerity debate has hitherto focused on expenditure savings. The real challenge however is that of productivity – finding ways of doing more for the money available – and most commentators have their own favoured solutions for the productivity challenge.

Many of these – such as reorganisation of services, imaginative use of information technology and reconfiguration of health service providers – will involve investment, and possibly duplication of services, in the short term. Financially straitened times are therefore an inauspicious moment to be testing new approaches to service delivery.

There is, however, little alternative. To get industrial-scale productivity improvements we need system-wide interventions that put in place the preconditions for the micro-level reforms that are needed. Evidence from around the world suggests there are a small number of truly promising possibilities:

• Information system transformations – countries such as Estonia have shown how it is feasible to introduce viable electronic health records with very modest expenditure.
• Payment mechanisms – abandonment of payment for treatments and a move towards financial responsibility for a patient’s entire health needs, as practised in some successful US health systems.
• Measuring performance – relentless monitoring of quality and efficiency of all parts of the system, with rigorous follow-up of poor performance. In the past, England has led the way internationally, but the Care Quality Commission needs to re-establish authority. Furthermore, there needs to be scrutiny of efficiency as well as quality, a persistent blind spot in the English NHS.
• True integration of health and social care, with a single locally accountable entity charged with organising the reform, probably local government, as in the more successful Scandinavian systems.
• Outstanding clinical leadership at local and national levels, which recognises that inefficiency is immoral, as it diverts resources away from patients who could benefit from treatment. Sweden is a world leader in this respect.
• Limiting the range of the health basket provided by the NHS. Politically, this will be the most challenging area of action, but it is difficult to avoid the logic that a limited budget leads to the need for a more limited range of services, and the elimination of activities that provide limited health gains. In different ways, countries such as Chile and Thailand are grappling explicitly with this core issue for all publicly funded health systems, but high income countries have so far shied away from the challenge.

In contrast, whilst remaining valuable buttresses of any high-performing health system, I do not believe some of the solutions frequently advocated are necessarily priorities for improving productivity:

• Health services that seek to promote health and prevent disease: there appear to be relatively few actions that will demonstrably save money and improve outcomes in the short term. The most important will be those that target patients at high risk of adverse events and admission to hospital, such as recent stroke patients.
• Competition: it is an important precondition for high performance, but the English competition debate has focused too heavily on hospital services (rather than community or primary care), and the gains are likely to be long-term rather than immediate.
• Service reconfiguration: whilst there is sometimes a clear case for closure and merger, NHS planners have often been too ready to reach for merger as a solution to service delivery difficulties, with poorly argued business cases and predictably disappointing results.

Countries around the world are grappling with the same difficulties confronting the NHS, often in much more straitened circumstances. The European Observatory on Health Systems and Policy has been especially active in assembling evidence on actions to date, in its financial crisis monitor, available at http://www.hfcm.eu/.

There is much to be learned through such international sharing and comparison. Whilst no system offers a template for improvement, there is a wealth of experience emerging from the crisis that will help to improve the robustness of our health systems in the future.

Peter is Professor of Health Policy at Imperial College Business School & Centre for Health Policy