Why is demonstrating value for money in healthcare so difficult?

The health service is faced with a £20bn funding shortfall by 2015 and an increasing demand for services. The key challenges for the sustainable health service of the future are to save money without compromising patient safety, and to continuously improve the quality of care. 

It seems intuitive that improving quality should lead to reduced waste and therefore save money, however there is little robust, published evidence to demonstrate this, as Dr John Ovretveit concluded in his review of the evidence, Does improving quality save money?. We’re working to build up this evidence base by encouraging those of you involved in improvement initiatives to accurately measure costs, identifying if and where savings have been made.

So why there is so little evidence? One reason is that because quantifying cost savings in the NHS is so complicated, it’s hard to generate robust data on costs and savings. Finance systems are often unable to drill down to the level needed to accurately cost interventions, and costs may be shared across departments, or even organisations.

Case studies of successful local quality improvement initiatives are often used to show the potential financial benefits to the whole system through scaling up the findings. While this is an appealing approach, the reality is often more complicated and questions remain about these savings being achievable across UK health services.

It’s also easy to forget that change comes with a cost, and estimating savings alone isn’t enough to create a successful case for a quality improvement initiative. The effect on overall service delivery costs from most front-line quality improvement projects is likely to be small: these small-scale changes impact on part of a bigger service, which in turn is just one part of a highly complex local health economy. Inevitably, small scale improvement changes are being introduced alongside a myriad of other changes, which can confound the collection of accurate cost data, when such data can be accessed at all.

So, while we can make estimates about the potential savings that a quality improvement initiative might generate – for example, by reducing the average length of stay, or the average amount of time per patient for treatment – these alone do not generate any cash savings.

Cash can only be saved by reducing the number of staff working in the service or the number of inpatient beds (by at least a four-bed bay, a bed here and there doesn’t have any overall effect). In closing a ward, the savings will only be a fraction of the income that an acute trust could generate from patient episodes that keep the beds filled, so the commissioning and payment systems can act as a disincentive to change, as trusts could lose funding. Changes to the commissioning framework have made it hard to pin down which organisations will save money in the future. As a result, projected savings, based on spread or longer term outcomes, are difficult to substantiate.

We know that saving money alone is not a strong motivator for clinicians – they’re more inspired by improving services and better outcomes for patients. But when these can be linked to create better value health services it makes sense for everyone: patients, clinicians, commissioners and the community as tax payers. We believe it’s essential to future-proof the service for the tough times ahead.

Helen is Assistant Director of Research & Development at the Health Foundation.