01 Future Health Secured 4/9/07 11:42 Page i Our Future Health Secured? A REVIEW OF NHS FUNDING AND PERFORMANCE Derek Wanless John Appleby Anthony Harrison Darshan Patel 01 Future Health Secured 4/9/07 11:42 Page ii © King’s Fund 2007 First published 2007 by the King’s Fund Charity registration number: 207401 All rights reserved, including the right of reproduction in whole or in part in any form. ISBN 978 1 85717 562 2 A catalogue record for this publication is available from the British Library. Available from: King’s Fund 11–13 Cavendish Square London W1G 0AN Tel: 020 7307 2591 Fax: 020 7307 2801 Email: [email protected] www.kingsfund.org.uk/publications Edited by Isabel Walker, Eminence Grise Text typeset by Andrew Haig & Associates, tables and figures by Grasshopper Design Company Printed in the UK by Hobbs the Printers Limited 01 Future Health Secured 4/9/07 11:42 Page iii Contents List of figures and tables v About the authors xiii Acknowledgements xv Summary xvii Foreword xxxiii Preface xxxv Part 1: REVIEW AND RECOMMENDATIONS 1 Chapter 1 Overview 3 Closing the gaps: the 2002 review 3 Public health and inequalities: the 2004 review 8 Where the money went: the current review 9 Chapter 2 Summary of NHS funding and performance since 2002 11 Introduction 11 Funding: how much was spent? 11 Input costs: the impact of the new staff contracts 13 Resources: staff, premises and equipment 15 Outputs: use of NHS services 21 Productivity: unit costs and quality 25 Health outcomes and determinants of health 31 Implications for long-term resource needs 38 Chapter 3 The policy framework 41 Policy development: moving away from central direction 41 Organisational change: a costly process 48 Service redesign to improve performance 52 Support programmes: from workforce to research 56 How effective is the policy process? 61 Chapter 4 Recommendations 69 01 Future Health Secured 4/9/07 11:42 Page iv Part 2: THE EVIDENCE 79 Introduction 80 Chapter 5 Funding: what was spent 81 Funding recommendations of the 2002 review 82 Actual health care spending since 2002 83 Health care spending beyond 2008/9 85 Chapter 6 Input costs: why they rose 89 Pay and the new contracts 92 Chapter 7 Resources: investment in staff, buildings and equipment 105 Changes in staffing levels 106 Taking a long-term view on workforce capacity building 110 New hospitals and premises 116 Information and communication technology 123 New scanners 129 Chapter 8 Outputs: the services delivered 133 Hospital services 133 Mental health 155 Primary care: general practice and prescribing 158 Other services: NHS Direct, walk-in centres and ambulance services 161 Chapter 9 Outcomes and determinants of health 165 Health determinants: smoking, obesity, exercise and diet 165 Process outcomes: safety, choice, access and satisfaction 182 Health outcomes: life expectancy, mortality and cancer survival 195 Chapter 10 Productivity: efficiency and quality 215 The 2002 review’s productivity assumptions 218 How has NHS productivity changed since 2002? 220 Unit costs of NHS services 227 Quality: changes in health outcomes 244 Appendix 1 Key drivers of overall spending paths in the 2002 review scenarios 251 Appendix 2 2002 review recommendations 257 Appendix 3 Achieving full engagement: securing good health for the whole population 261 References 263 Index 279 01 Future Health Secured 4/9/07 11:42 Page v List of figures and tables Figure 1 2002 Wanless review: UK health care funding scenarios, 1977/8 to 2022/3 5 Figure 2 2002 Wanless review : impact of cost drivers under fully engaged scenario for first five years, 2002/3 to 2007/8 6 Figure 3 2002 Wanless review : impact of cost drivers under fully engaged scenario for first ten years, 2002/3 to 2012/13 7 Figure 4 2002 Wanless review : impact of cost drivers under fully engaged scenario for first 20 years, 2002/3 to 2022/3 7 Figure 5 NHS production pathway 11 Figure 6 Projected demand for FTE doctors (based on 2002 Wanless review growth rates), 2000 to 2020,compared with actual supply 16 Figure 7 Impact of productivity assumptions on the 2002 Wanless review’s final spending recommendations under the fully engaged scenario, 2002/3 to 2022/3 25 Figure 8 Estimate of changes in NHS productivity using different measures, 1999 to 2004 26 Figure 9 GAD projections of male life expectancy in the United Kingdom, 1998 to 2022, compared with 2002 Wanless projections 33 Figure 10 GAD projections of female life expectancy in the United Kingdom, 1998 to 2022, compared with 2002 Wanless projections 33 Figure 11 Percentage of adults who smoke, 1980 to 2010, compared with 2005 White Paper and 2010 Public Service Agreement (PSA) targets 35 Figure 12 Historic UK spending on the NHS and projected UK spending under fully engaged scenario, 1950/1 to 2022/3 (2002/3 prices) 84 Figure 13 Projected UK spending on the NHS under different scenarios, 1990/1 to 2022/3 (2002/3 prices) 86 Figure 14 Historic and projected UK and EU spending on health care, 1960 to 2030 86 Figure 15 Rates of NHS-specific inflation and the GDP deflator, 1993/4 to 2007/8 90 Figure 16 NHS-specific inflation, 1997/8 to 2007/8, compared with inflation assumptions of the 2002 Wanless review 91 Figure 17 Pay inflation in hospital and community health services (HCHS), 1997/8 to 2007/8, compared with pay assumptions of the 2002 Wanless review 91 Figure 18 Vacancy rates for NHS staff groups, 2002–2006 95 Figure 19 Trends in emergency and elective admissions per nurse (FTE), 1999/2000 to 2005/6 96 Figure 20 Impact of the new contract on consultant pay scales, 1997 to 2006 97 Figure 21 Vacancy rates for consultants, 2000 to 2006 99 Figure 22 Trends in emergency and elective admissions per consultant (FTE), 1999/2000 to 2005/6 100 Figure 23 Average net income and expenses for GPs, 2003/4 to 2004/5 102 v 01 Future Health Secured 4/9/07 11:42 Page vi Figure 24 Cumulative increase in the headcount and FTE number of hospital consultants, 1999 to 2006, compared with the 2004 NHS Plan target 107 Figure 25 Cumulative increase in the headcount and FTE number of GPs, 1999 to 2006, compared with the 2004 NHS Plan target 108 Figure 26 Cumulative increase in the headcount and FTE number of nurses, 1999 to 2006, compared with the 2004 NHS Plan target 108 Figure 27 Cumulative increase in the headcount and FTE number of allied health professionals (AHPS), 1999 to 2006, compared with the 2004 NHS Plan 109 Figure 28 Numbers of medical staff compared with numbers of non-medical staff in the NHS, 1996 to 2006 110 Figure 29 Numbers of managers and senior managers in the NHS, 1996 to 2006 111 Figure 30 Projected demand for FTE doctors in England (based on Wanless review growth rates), 2000 to 2020, compared with actual supply 112 Figure 31 Numbers of NHS hospital beds, 1987/8 to 2005/6 118 Figure 32 Increase in number of intermediate care beds, 1999/2000 to 2005/6 120 Figure 33 Change in number of general and acute beds and average length of stay, 1999/2000 to 2005/6 121 Figure 34 Numbers of hospital beds, 1999/2000 to 2005/6 121 Figure 35 Numbers of delayed transfers of care, 2001/2 to 2006/7 124 Figure 36 Projected and actual ICT spending in the NHS, 2002/3 to 2006/7 127 Figure 37 Local and central government ICT spending in the NHS, 2002/3 to 2006/7 128 Figure 38 Local and central government ICT capital expenditure in the NHS, 2003/4 to 2006/7 128 Figure 39 Categorisation of NHS patients treated in hospital 135 Figure 40 Trends in total elective admissions for inpatients and day cases, 1998 to 2005 136 Figure 41 Absolute change in number of elective admissions by health care resource group (HRG), 1998 to 2005 136 Figure 42 Trends in elective and non-elective admissions, 1998 to 2005 140 Figure 43 Trends in total elective admissions, by source of admission, 1998 to 2005 142 Figure 44 Composition of the net increase in elective admissions of 605,000, by source and type of admission, 1998 to 2005 143 Figure 45 Sources of admission for elective patients, 1998/9 143 Figure 46 Sources of admission for elective patients, 2005/6 144 Figure 47 Trends in inpatient admissions by source of admission 144 Figure 48 Trends in day case admissions by source of admission, 1998 to 2005 145 Figure 49 Top 10 increases in planned elective admissions by health care resource group (HRG), compared with change in other sources of elective admissions, 1998 to 2005 148 Figure 50 Hospital admissions among patients aged 65–74 and 75+ per 1,000 population, 2000/1 to 2005/6 149 Figure 51 Numbers of first and subsequent outpatient attendances, 1994 to 2005 151 Figure 52 Trends in referrals for first outpatient attendance, by source of referral, 1994 to 2005 151 Figure 53 Trends in first and subsequent outpatient attendances, 1994 to 2005 152 Figure 54 Trends in maternity-related admissions and hospital deliveries, 2002/3 to 2005/6 152 vi OUR FUTURE HEALTH SECURED? 01 Future Health Secured 4/9/07 11:42 Page vii Figure 55 Numbers of accident and emergency attendances 1987/8 to 2006/7 154 Figure 56 Trends in accident and emergency attendances, 1987/8 to 2006/7 154 Figure 57 Trends in finished consultant episodes and number of admissions where the primary diagnosis relates to mental health, 1998/9 to 2005/6 155 Figure 58 Numbers of outpatient attendances related to mental health, 2003/4 to 2005/6 157 Figure 59 Estimated total numbers of GP consultations, 1989 to 2005 158 Figure 60 Use of NHS Direct and NHS Direct Online, 1997/8 to 2005/6 161 Figure 61 Total numbers of emergency calls compared with calls resulting in an emergency response, 1995/6 to 2005/6 163 Figure 62 Numbers of ambulance journeys, by priority of journey, 1995/6 to 2005/6 164 Figure 63 Trends in numbers of consultants and registrars: public health compared with all other medical staff groups, 1997 to 2006 167 Figure 64 Numbers of NHS hospital admissions with a primary diagnosis that can be caused by smoking, 1995/6 to 2004/5 169 Figure 65 Proportion of deaths attributable to smoking, 2004 169 Figure 66 Percentage of men who smoke in selected countries, 2002 to 2005 170 Figure 67 Percentage of women who smoke in selected countries.