February 28, 2017    5 minute read

Why the NHS Is No Longer Working

Time for a Change?    February 28, 2017    5 minute read

Why the NHS Is No Longer Working

Healthcare provision is often a divisive issue in the United Kingdom. The principles of the National Health Service (NHS) are fiercely protected against any erosion: that it meets the needs of everyone, is free at the point of use and based on clinical need, rather than the ability to pay.

However, the NHS now functions in a very different world to that of its formation in July 1948. Over two-thirds of trusts in England are now in deficit, and their total deficit has trebled since 2015, to £2.45bn. The National Audit Office believes financial problems are “endemic and not sustainable.” The current state of the NHS is structurally flawed, financially unsustainable and health indicators show its performance is well below those of many other European countries. Change is needed. This highly politicised institution needs rationality and economics to save itself, thus ensuring its financial security and that high-quality healthcare is provided.

The Demographic Timebomb

Firstly, to explain why the NHS is structurally flawed, it is important to look at the demographic makeup of the United Kingdom, as well as future projections. The UK’s ageing population means healthcare demand is relentlessly increasing.

By 2039, the number of people aged 75 and over is projected to rise to 9.9 million, whilst the number of people aged 85 and over is projected to more than double, reaching 3.6 million. An ageing population is also leading to a host of issues with the dependency ratio. The dependency ratio was 3.2 people of working age per pensioner in 2008, whilst this is projected to fall by 12.5%, to 2.8 people by 2030.

An Unsustainable Ratio

Although unpredictable, issues regarding the dependency ratio are likely to include the combination of firstly lower tax return (with greater strain on the relatively smaller working population) and, secondly, higher levels of government spending, due to commitments to state pensions and indirect spending.

Higher taxes, lower levels of productivity and running increased deficits with higher levels of national debt could easily follow, especially if the root causes of our growing dependency problems not addressed. The inflexibility of the NHS means that an ageing population coupled with a rising dependency ratio really is a ticking time-bomb.

Simply put, patient demands are only going to rise, costs are only going to rise, and the problems of the NHS are only going to be exacerbated unless a whole-system rethink is made now.

Is Anyone Accountable?

The inflexibility stems from the overly bureaucratic nature of the NHS and also its short-termist agenda. Rather than being judged on healthcare outcomes and financial performance, instead decisions are made on ideals and principle. Management knows that the government will not allow the NHS to fail and the healthcare system is one of the areas seeing annual rises to their budget.

Centralism and bureaucracy have led to a lack of accountability, exacerbated by its scale – the NHS employs over 1.5 million people and had a net spending of £117bn in 2015. It is very difficult to hold organisations and trusts to account, let alone individuals. Politicians? NHS England? Regulators? Clinical commissioning groups? Care quality commission? Multiple power centres lead to a conflict of strategy and interest, as well as an escalation of costs.

Trust Issues

The deficits of NHS trusts continue to rise year on year. The NHS in its entirety had a combined deficit of £1.85bn in 2014/2015. The financial situation is no longer salvageable via cost efficiency savings, renegotiating contracts or placing a greater emphasis on prevention. Instead, a wholesale rethink is needed, as ambitious as the original plans for the NHS.

A rethink is not needed just because of its finances’ and structure. A report by the Institute of Economic Affairs shows that some health indicators put the NHS in line with the systems of Slovenia and the Czech Republic. For example, they note that the UK has one of the highest rates of avoidable deaths in Western Europe. If this rate were reduced to the level observed in Belgium, more than 10,000 extra lives would be saved every year. A reduction to Dutch levels would see an extra 13,000 lives saved.

The Swiss Alternative

The social health insurance system of other Western European countries – Switzerland, Belgium, the Netherlands, Germany – simply outclass the UK. They are ahead in terms of outcomes, quality, efficiency and contrary to popular opinion, provide high-quality healthcare to the poor. In Switzerland, for example, if one cannot pay their healthcare premium then it is paid for them.

These systems combine the market forces of competitive insurance providers with the needed government regulation to ensure high standards are always met. Competition brings innovation and technology, leading to higher standards and better health outcomes.

The competitive insurance providers are naturally decentralised and cost-efficient due to profit incentives. The providers are also transparent with clear insurance premiums for the various insurance packages.

It is surely common sense to learn from those more successful than oneself. The UK healthcare system has the ability to shift to a financially stable, competitive and innovative system, leading to higher healthcare indicator outcomes, rivalling Switzerland and the Netherlands. Realism needs to beat idealism.

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