Is the NHS Too Expensive? What Cost vs Value Can Teach Us

By Jonathan Finch
In
Posted Wednesday January 18, 2023

Is the NHS Too Expensive? What Cost vs Value Can Teach Us

The cost of the NHS is often mentioned in the media and is a perennial talking point between those who work in and care about this great organisation. But in terms of its value for money, however, that can be harder to measure.

Money paid to General Practice n England

When we look at the cost versus value of general practice, data released by the NHSE in the NHS Payments to General Practice report (for the period 1st Apr 2021 to 31 Mar 2022) can help us. It gives information on NHS payments made to General Practices and Walk-in Centres in England and the actual monies paid to them for all activities and costs during the 2021/22 financial year.

£10.07 billion was paid by the NHS across 6,758 general practice service providers. That sounds like a lot, and it is. But when we consider that the average NHS payment per patient was £163 (£159 last year and £155 the year before), then it begins to sound like very good value. That’s the equivalent of buying a takeaway coffee each week in the year.

NHS spending overall

Looking more broadly, according to the Office for National Statistics, the overall share of gross domestic product (GDP) attributed to healthcare in the UK was 11.9% in 2021, which was similar to the share in 2020. That’s around £277bn, including both government and non-government spending. Covid has of course had an effect on this; total healthcare spending in 2021 was around 24% (£54 billion) greater than the amount spent in 2019, before the coronavirus pandemic.

That’s a large cost and a huge sum of money, for sure. But context is everything here. However big or small the number is, the real question is whether it is enough, or can ever be enough, as well as whether it represents good value for money. And a related question: who should pay?

Be in no doubt that the NHS needs more money, as well as all the other more long-term solutions. Whether we like to admit that and pay for it is another question, but we will all end up paying for it in one way or another. Whether this comes via some sort of new state insurance mechanism, or a new tax, the funds must come.

When we look at the figures for health spending overseas, we can see that although the funding sounds enormous, it’s actually substantially less than many other comparable nations. According to Health.org.uk figures, average day-to-day health spending in the UK between 2010 and 2019 was £3,005 per person – 18% below the EU14 average of £3,655. (EU14 countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Republic of Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden).

If we look at the average funding of capital (buildings, machinery, equipment and IT), we’re also behind. Every year since 2011 we’ve invested less than the EU average on capital. To match that spending, we’d have had to invest £33bn more between 2010 and 2019 (around 55% higher than actual investment in that period).

The relationship between cost and value will always spark heated debate, but as ever, context is crucial. We’ll always have to fund the NHS as probably our biggest national expenditure, and it will probably always need more than we can actually give it.

The value of it remains high, though, and it’s a reason for us to be very proud on a global stage of our healthcare system. The cost is high too, but not as high as many would have you think. And the cost of inadequate funding will always be far, far higher.

To understand more about how Primary Care is funded then why not check out our Thornfields workshop, Introduction to Practices Finance and Contracts?