During 2011-12, real-term spending on NHS primary care services in England declined 1.2%, while hospital spending increased by the same percentage, according to new data.Despite government efforts to move care closer to patients, spending on hospital care has grown rapidly, at an average of 5.2% over the last five years, while spending on general practice services has seen a real-terms decline, according the report, from health policy think tank The Nuffield Trust.
Moreover, despite an overall increase in healthcare expenditures since 2003-4, spending on GP services has been static since 2005. Primary care services had accounted for 26% of overall Primary Care Spending (PCT) in 2003-4, but by 2011-12 this share had dropped to 24%.These findings show clearly that, for all the rhetoric, money is still moving into hospitals, not out of them, and this raises questions about whether the NHS has the right balance of services for the future, the report’s authors warn.
"Policymakers must ensure that appropriate support and management is in place to guarantee high-quality local services for patients," says Anita Charlesworth, chief economist at The Nuffield Trust and co-author of the study.
The study also sees very little improvement in labour productivity across the hospital sector in recent years. Following a slight improvement in 2010-11, figures for 2011-12 show a slight decline, suggesting that the NHS is struggling to translate headline savings into labour productivity improvements, it says.
It finds evidence of a north/south divide in labour productivity. Hospitals in the south of England, apart from London, have higher labour productivity than those in the north, while hospitals in the east and south west of the country are better compared to England as a whole.
Workforces with larger proportions of doctors and other medically-trained professionals are strongly associated with higher productivity, despite their higher labour costs. Competition appears to have a small but significant negative effect on productivity - trusts which come closer to monopoly perform slightly better, it finds.
Also, larger NHS and foundation trusts tend to have somewhat lower labour productivity, "suggesting the existence of diseconomies of scale," say the authors. They add that this finding "implies that managers and policymakers should carefully review the impact of potential trust mergers on staff productivity."
Among other findings are that the proportion of NHS trusts in deficit has risen steadily over the last four years. In 2012, 32 trusts out of 250 were in deficit, and nine have reported a deficit for three years or more.
Also, while financing costs of private finance initiative (PFI) contracts remain a small proportion of total spending, they have risen sharply since 2009, and especially in London, where they rose over 70% across just three financial years. Seven acute trusts now pay out more than 5% of their total revenue through PFI, says the study.
It also finds that spending on GP prescribing has changed little over the years, rising just 3.8% (£301 million) between 2003-4 and 2011-12. "In the past, the cost of prescriptions has tended to increase at a faster rate than overall healthcare spending - however, this trend has now reversed," it notes.
Commenting on the report, Stephen Whitehead, chief executive of the Association of the British Pharmaceutical Industry (ABPI), said that medicines have not been the significant driver of growth in NHS expenditure in recent years, while many others, such as energy costs and the costs of running the NHS estate, have been significant drivers.It is clear that the medicines bill is under control, said Mr Whitehead, and he called for all areas of health spending to be scrutinised so that informed decisions can be taken about where efficiencies can be realised.
"This is particularly important given that some savings may have a disproportionate and adverse impact on patient outcomes. However, if further cuts are made to the medicines budget, this is likely to lead to reduced patient access to treatments in the NHS and, ultimately, poorer outcomes for patients,” he warned.
- The report is the first in a series of annual publications and other activities from The Nuffield Trust that will examine the financial performance of the NHS in England over the coming years.