This document discusses efficiency challenges in healthcare spending in the UK. It notes that while health spending growth has slowed recently, health still receives a larger portion of public funds compared to other services. The document proposes a framework for identifying savings opportunities by examining inputs, outputs, and outcomes. It recognizes the NHS has performed well compared to other sectors in recent years. Finally, it outlines plans to deliver £22 billion in savings through 2023/24, primarily through NHS efficiencies and secondary care productivity improvements.

1. Delivering the efficiency challenge
John Curnow
Economics Director
26 May 2016

2. 2
0
2
4
6
8
10
12
2003 2013
Totalexpenditureohhealth,%GDP
Germany
France
France
Germany
UK
UK
Italy
Italy

3. 3
Whilst in recent years the growth in health spending has been lower, it’s
still been a ‘winner’ in spending reviews compared to other public services
-80%
-60%
-40%
-20%
0%
20%
40%
Real Change between 10/11 and 19/20 Real Change between 15/16 to 19/20
* Estimated from DH and NHS TDEL data, NHS from 2014/15

4. 4
* Spending defined as Total Managed Expenditure, minus social security and debt payments
Non-Health
71%
Health
29%
2014/15
Non-Health
78%
Health
22%
1996/97
Non-Health
86%
Health
14%
1978/79
And health continues to take a greater proportion of discretionary public
spending

5. Our framework for thinking about savings opportunities
Inputs (staff,
drugs, …)
Outputs (FCEs,
…)
Outcomes
(QALYs, …)
Budget
Economy
Controlling input
costs
Efficiency
Productivity /
technical efficiency
Effectiveness
Allocative efficiency
/ managing demand
VALUE FOR MONEY

6. We should recognise that the NHS has
performed well compared to other sectors in last
ten years

7. How the £22bn of savings will be delivered
7
21.6 6.7
14.9 1.0
13.9 4.3
8.6
1.0
0
5
10
15
20
25
NHS Efficiencies Of which nationally
delivered
To be delivered
locally
Of which already
secured
To be secured Activity related Secondary care
NHS provider
productivity
improvement 2%
Other
commissioner
£bn
In 2016/17 plans