Abstract
BackgroundIn England, rises in healthcare expenditure consistently outpace growth in both GDP and total public expenditure. To ensure the National Health Service (NHS) remains financially sustainable, relevant data on healthcare expenditure are needed to inform decisions about which services should be delivered, by whom and in which settings.MethodsWe analyse routine data on NHS expenditure in England over 9 years (2008/09 to 2016/17). To quantify the relative contribution of the different care settings to overall healthcare expenditure, we analyse trends in 14 healthcare settings under three broad categories: Hospital Based Care (HBC), Diagnostics and Therapeutics (D&T) and Community Care (CC). We exclude primary care and community mental health services settings due to a lack of consistent data. We employ a set of indices to aggregate diverse outputs and to disentangle growth in healthcare expenditure that is driven by activity from that due to cost pressures. We identify potential drivers of the observed trends from published studies.ResultsOver the 9-year study period, combined NHS expenditure on HBC, D&T and CC rose by 50.2%. Expenditure on HBC rose by 54.1%, corresponding to increases in both activity (29.2%) and cost (15.7%). Rises in expenditure in inpatient (38.5%), outpatient (57.2%), and A&E (59.5%) settings were driven predominately by higher activity. Emergency admissions rose for both short-stay (45.6%) and long-stay cases (26.2%). There was a switch away from inpatient elective care (which fell by 5.1%) and towards day case care (34.8% rise), likely reflecting financial incentives for same-day discharges. Growth in expenditure on D&T (155.2%) was driven by rises in the volume of high cost drugs (270.5%) and chemotherapy (110.2%). Community prescribing grew by 45.2%, with costs falling by 24.4%. Evidence on the relationship between new technologies and healthcare expenditure is mixed, but the fall in drug costs could reflect low generic prices, and the use of health technology assessment or commercial arrangements to inform pricing of new medicines.ConclusionsAggregate trends in HCE mask enormous variation across healthcare settings. Understanding variation in activity and cost across settings is an important initial step towards ensuring the long-term sustainability of the NHS.
Highlights
In England, rises in healthcare expenditure consistently outpace growth in both Gross Domestic Product (GDP) and total public expenditure
The settings are grouped into three broad categories: Hospital Based Care (HBC), Diagnostics and Therapeutics (D&T) and Community Care (CC)
This study of trends in English healthcare expenditure (HCE) reveals how much was due to changes in the activity and how much was due to cost, and how this varied across care settings
Summary
In England, rises in healthcare expenditure consistently outpace growth in both GDP and total public expenditure. Since the NHS was established in 1948, healthcare expenditure (HCE) has risen faster than both GDP and total public expenditure [1], a trend that is echoed in most OECD countries [2]. Between 2008 and 2018, government expenditure on healthcare in England rose 25% in real terms, substantially more than the 13% real terms growth of the economy (GDP), and faster than every other category of government expenditure [3]. Known drivers of overall growth in HCE include behaviours and lifestyle factors such as smoking, diet or physical activity [4], wealth and income effects [5] and prices [6]. Macro-level studies of US expenditure have identified strong positive relationships between HCE and technological progress [5, 9], the impact of new technology appears to vary across the distribution of expenditure [10]
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