1. © Institute for Fiscal Studies and Nuffield Trust, 2013
May 2013
Public payment and private provision
The changing landscape of health care in the 2000s
Sandeepa Arora, Nuffield Trust and George Stoye,
Institute for Fiscal Studies
Understanding competition and choice in the NHS

2. © Institute for Fiscal Studies and Nuffield Trust, 2013
Trends in public and private health care spending

3. © Institute for Fiscal Studies and Nuffield Trust, 2013
Proportion of secondary care spending on private providers

4. © Institute for Fiscal Studies and Nuffield Trust, 2013
Regional variation in NHS spending on private providers

5. © Institute for Fiscal Studies and Nuffield Trust, 2013
Public and private spending on hip and knee replacements
• The spending patterns that we observe previously may be
consistent with some ‘crowding-out’ of private spending.
• The extent to which this occurs is difficult to assess directly
using aggregate spending data.
• This part of the report focuses on the case of elective hip and
knee replacements.
• Provided and funded by both private and public sector.

6. NHS-funded knee and hip replacements (2003/04 – 2011/12)
NHS-funded knee and hip replacements increased by 52% and 45%, respectively,
between 2003/4 and 2011/12.
© Institute for Fiscal Studies and Nuffield Trust, 2013

7. Change in NHS-funded hip & knee replacements by provider
type
Independent sector providers (ISPs) account for more than half the increase
in NHS-funded hip and knee replacements between 2003/4 and 2010/11
© Institute for Fiscal Studies and Nuffield Trust, 2013

8. © Institute for Fiscal Studies and Nuffield Trust, 2013
What explains the increase in NHS-funded activity?
• The increase in NHS operations may suggest that some
patients are now having procedures that they would otherwise
not have had or would have had much later.
• However, the rise in operations may also be explained by:
• Demographic change
• Some patients switching from privately funded to NHS funded-care.
• Our estimates suggest that population ageing accounts for a
fifth of the increase in hip replacements and a sixth of the rise
in knee replacements.

9. © Institute for Fiscal Studies and Nuffield Trust, 2013
Examining substitution between NHS- and privately funded
care
• To what extent are patients that would have paid privately a
decade ago now choosing NHS-funded care?
• For most procedures very limited information is available on
the privately funded activity.
• For hip and knee replacements, we can address this question
by comparing two data sources:
• National Joint Registry (NJR): hospital-level data on all hip and knee
replacements conducted in England and Wales.
• Hospital Episodes Statistics (HES): patient-level on NHS-funded hip
and knee replacements in England.

10. Three-year aggregates of hip and knee replacements recorded
in the National Joint Registry and Hospital Episode Statistics
Total hip and knee implant sales, as recorded by the NJR, changed little between 2003/4
and 2011/12. However, the number of NHS-funded hip and knee replacements, as
recorded in HES, increased by a third. © Institute for Fiscal Studies and Nuffield Trust, 2013

11. © Institute for Fiscal Studies and Nuffield Trust, 2013
Evidence of substitution from the privately funded to
NHS-funded sector
• Aggregate evidence is consistent with some substitution from
privately funded to NHS-funded knee and hip replacements.
• Evidence from individual providers tells a similar story:
• Decreasing volumes of NHS private patients and independent
private hospital patients.
• Falls in numbers of privately funded procedures for ISPs that treat
both private and NHS patients.

12. © Institute for Fiscal Studies and Nuffield Trust, 2013
Conclusions
• Spending patterns are mirrored by changes in the provision of
NHS-funded elective knee and hip replacements.
• Increased volumes over and above which can be explained by
demographic changes
• More than half of the increases are accounted for by ISPs.
• Overall volume of these procedures remained relatively stable
over the same period.
• Falling private volumes
• Suggestive of substitution from the private to publicly funded
sector.

13. © Institute for Fiscal Studies and Nuffield Trust, 2013
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© Institute for Fiscal Studies and Nuffield Trust, 2013
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