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Health Spend At the Blair Benchmark

The Blair milestone has been reached. In a celebrated TV interview in the autumn of 2000 the then Premier Blair committed the government to raise NHS spending up to internationally comparable levels with our European partners or more widely with the OECD. Now our spending is over the OECD average –9.8 per cent of GDP compared to an average of 9.6 per cent. This is more than among others Finland, Australia and Italy. Spending on health per person is also now slightly above the OECD average at $3847 per person compared to the average of $3233.
For decades the problems of the NHS have been blamed on underfunding. It was said that the NHS may not have been the envy of the world but it was the envy of Finance Ministers. Now there are no more alibis. For the future there seems little chance of any large bail out where funds rise faster than inflation. The OBR Report paints a picture of falling tax revenues and might have said more about the forward commitments on public spending especially for an increased number of retired who expect improved public sector benefits and may not get them The NHS has its own forward commitments for PFI schemes and technical improvements.
The NHS and the private health sector are now much more important for the productivity of the whole economy than they were when the health service accounted for 3 per cent of GDP as was the case in 1950. There is also the potential for further drag on the economy as demand expands. Health services have a hidden economic and human opportunity cost in that they employ a large proportion of the most highly qualified personpower. How can we create conditions which would ensure that these abilities are fully used?
The key lies in a new drive for redesign of services. We have to improve quality and patient access for a level of funding which will be at best static in real terms. Yet we have a high cost, high tech model where spending has been growing by 4.8 per cent p.a. in real terms. Volterra is committed to working with health partners to make a creative and effective response to this rather large and threatening challenge.
There is an emerging model of healthcare which can deliver better services for patients. The model has four stages in prevention, early diagnosis, ambulatory treatment and care programmes. There is clear evidence from Scandinavia and from HMOs in the US that such a model can deliver better health for populations while containing costs.
Premier Blair in fact came to realize that his commitment to Euro level of spending was not enough for a good health service—for this were needed incentives and competition and patient choice. The agenda is still there and now inescapable.

(1)OECD Health at a Glance 2011. Key Findings United Kingdom.

By Nick Bosanquet, Director Volterra Health

1 Comment
  1. What I see on the frontline, however, is axing of many preventative measures, despite your arguments that these are the way forward.

    Many micro savings are pseudo savings that do and will cost more in the long run. The "efficiency" savings that i can see from the coalface are headsmackingly ridiculous at times.

    Furthermore, the NHS is propped up on a very large pillar of good will from staff. This is treated as an endless resource, and not factored into any economic analysis I have ever seen. In the mean time it is eroded daily and will soon come to a crisis point.

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