Sam Thurgood is the Deputy Chairman Political of London South East Area.
The NHS is the closest thing that the English have to a national religion. So said Nigel Lawson, but as a result, politically it is often viewed in a silo. This can generate problems – one of which is how to get more value from our healthcare spending.
For a long time, spending on healthcare has increased both in nominal terms, but also as a percentage of the overall government budget. It now accounts for £230 billion of the annual budget, and the direction of travel appears to only be upwards. At the same time, healthcare and the NHS has also grown in significance to voters, now consistently voted as one of the top, if not the number one issue that voters care about at elections.
Therefore, it is more vital than ever that we really think about how our healthcare money is spent – ensuring that we get the most bang for our buck. This isn’t just in terms of efficiency –the Commonwealth Fund’s findings in this area are well documented. Instead, we also need to think in terms of the outcomes that we want to see. Given the significance of the volume of spending on the NHS, can we also help use it to achieve wider aims, such as the Government’s programme of levelling up?
At present, healthcare spending is, by its very nature, reactionary. A huge chunk of the NHS budget is spent based on interventions, that is where individuals visit the doctor. Spending based on activity levels means that the worse the overall health of an area, the more the number of interventions and the greater the level of spending.
With ill-health being inextricably linked to poverty and social needs, this means that spending is greater in areas of deprivation. Diabetes is the most prominent example of this, now accounting for 10 per cent of the NHS budget alone. The link between this condition and poverty is clear, and therefore this will drive increased spending in areas where poverty is highest.
Now if health spending is being driven mostly to areas of poverty, surely this is a good thing. Though the answer is yes, we must consider whether that spending is being used to greatest effect.
At present, the spending can generate little economic gain in the area where it is spent. Though it pumps in money, it doesn’t necessarily get to the people that most need it or generate the right kind of economic growth. The employment opportunities provided by the NHS can have a significant impact, but it can also make the area reliant on the public sector, crowding out private sector investment and reducing productivity.
In addition, with more and more spending in any intervention going on pharmaceuticals, this is a huge chunk of spending which leaves the local economy instantly – generating little direct economic benefit. Hospital construction has also been touted as a significant boost to the economy. Though these ‘targeted interventions’ do have significant impacts in local areas, their effects are not long-term, and indeed are relatively localised.
So we need to consider how to use the healthcare budget to better level up our communities. The first part of this process is to not see healthcare spending as separate to economic development – the wider economic benefits of improved health definitely should not be ignored. The King’s Fund report into the NHS’s role in tackling poverty highlights that “purely by its existence, it plays an important role in directly preventing poverty by avoiding potentially ruinous medical bills, as well as by keeping people well and able to work”.
Therefore we should see a focus on including economic improvement into our decision-making processes when thinking about how to improve healthcare. For example, as we shift care into the community, why are our health centres not becoming anchor tenants in our new high streets? Not only can we realise better facilities for health care, with treatments where the patients are, but also attract more people back to our high streets, generate business and helping in their revival.
Can we also not transform our hospitals into centres for healthcare education, and in doing so we can better train and retain skills within local communities? Hospital sites could incorporate training schools to ensure that the community can access education and employment opportunities right there, in their communities. This will also help to improve wider training in the NHS, which is known to be an issue.
To make levelling up a reality, we need to best use our resources. We need to ensure that embedded into decision making across the NHS and government is a focus on how wider aims can be achieved through spending decisions. Crucially, these benefits shouldn’t be seen as ‘nice to haves’, but should be vital to any spending decision.
The impact of changing decisions to better improve our local economies may not yield instant results, but as the benefits flow through the system, they will be reflected in better economic output, and better health outcomes – ultimately saving money. Breathing new life into our communities.
I don’t claim to have all the answers: indeed the question over how and whether activity-based spending can be reformed to better incorporate the impact on local economies and communities remains unanswered. A better focus on this issue, however, will not only improve healthcare outcomes and local economies in the long run, but will also ensure that we are getting increasing value from NHS spending. Let’s make healthcare spending more pro-active, and in doing so, deliver for communities up and down the United Kingdom.