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Trends in and drivers of healthcare expenditure in the English NHS: a retrospective analysis

Author

Listed:
  • Idaira Rodriguez Santana

    (HCD Economics, The Innovation Centre)

  • María José Aragón

    (University of York)

  • Nigel Rice

    (University of York)

  • Anne Rosemary Mason

    (University of York)

Abstract

Background In 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. Methods We 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. Results Over 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. Conclusions Aggregate 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.

Suggested Citation

  • Idaira Rodriguez Santana & María José Aragón & Nigel Rice & Anne Rosemary Mason, 2020. "Trends in and drivers of healthcare expenditure in the English NHS: a retrospective analysis," Health Economics Review, Springer, vol. 10(1), pages 1-11, December.
    • Handle: RePEc:spr:hecrev:v:10:y:2020:i:1:d:10.1186_s13561-020-00278-9
    DOI: 10.1186/s13561-020-00278-9
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 6th July 2020
      by Chris Sampson in The Academic Health Economists' Blog on 2020-07-06 11:00:00

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    1. Rachet-Jacquet, Laurie & Rocks, Stephen & Charlesworth, Anita, 2023. "Long-term projections of health care funding, bed capacity and workforce needs in England," Health Policy, Elsevier, vol. 132(C).
    2. Dimitrova, V.; & Sameen, H.;, 2022. "Static regulation and technological change: Prescribing cost-effective treatments under financial constraints in the English NHS," Health, Econometrics and Data Group (HEDG) Working Papers 22/15, HEDG, c/o Department of Economics, University of York.

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