Wednesday, 15 April 2015

NHS - Fun with numbers

Conservatives pledge another £8 billion a year on the NHS.

Labour say that they would only spend another £2.5 billion a year on the NHS.

Lib Dems match the Tories' pledge of £8 billion a year more on the NHS.

Greens promise to employ an extra 400,000 people in the NHS, cost unspecified, £20 billion a year, maybe?

UKIP plans an extra £2.4 billion a year for the NHS (over five years = £12 billion headline figure).

What nobody can explain is that one-third of the NHS budget (over £100 billion a year) goes on doctors' and nurses' salaries and actual medicines, but nobody knows where the other two-third goes.

I am sure that there is plenty of other worthwhile stuff in there, like ambulances and ambulance drivers, cleaners and so on; and there is plenty of crap like translating anti-smoking leaflets into 128 different languages and all the PFI fraud and waste, but is there a breakdown of it?

The Taxpayers' Alliance have scratched the surface occasionally, well done them.
The comments thread here has descended into a flame war about completely different topics.

Fact 1: the NHS is just as good as most other healthcare systems in terms of value for money. We spend a bit less and get a bit less.

Fact 2: there is a huge amount of waste and fraud in the NHS.

Conclusion: there is a huge amount of waste and fraud in most healthcare systems. That's what we should be addressing.


paulc156 said...

MW. There is a breakdown in terms of particular conditions or specialties. eg;dental, mental health etc. Though 25% of all expenditure gets allocated to "Other Areas of Spend/Conditions". See table 3.

Lola said...

The Nationalised Health 'Service' like the Nationalised Education 'system' manages the impressive tick of enjoying eye-watering producer capture yet still exploit and exasperate its clinical (teaching) staff. If you spend any time at all in hospital (or know someone working as a teacher) you will find out quickly enough that 80% of the clinical staff (teaching staff)are absolutely totally frustrated by it all.

It's not money. It's structures.

paulc156 said...

I think in the long term the best hope of restricting healthcare costs lies in technological innovation. Obviously every time a marginally improved bit of equipment is designed [eg; proton therapy]treatment costs escalate, so what is going to be a game changer?
I would suggest studies by gerontologists into mechanisms responsible for ageing offer far more hope than all these expensive treatments. The prospect of a simple course of treatment, maybe as simple as a jab, or series of injections to slow down the ageing process itself also has the added bonus of improving health into the delayed old age. Eliminating many of the conditions associated with old age. eg;vascular conditions and cancers. Less need for open heart surgery and proton beams!

The other obvious candidate for reducing health care costs is tailoring treatment according to genetic profiles. It's inevitable and potentially revolutionary. This obviously is all best done under the aegis of the state so no need to worry about decades long patent protection and hence excruciatingly high prices for the lucky monopolist, erm... I mean pharmaceutical giant.

Lola said...

I'd personally rather the gummint didn't try and run this. Better IMHO to give people vouchers and help for the uninsureable (which includes me!!!) and let us sort it out ourselves.

paulc156 said...

Lola. Fine as it goes but in general that would lead to a more expensive system. We have lower private provision than almost any advanced economy with better outcomes per buck spent. ie; we're more efficient than our continental colleagues.

I'm not suggesting zero involvement with private rent seekers where they can offer services more efficiently but that won't be the case most of the time. As for my above comments regarding the state, I was referring to ground breaking/cutting edge research into the causes of old age and the tailoring of treatments to specific genetic profiles of individuals. This is neither work suited to big pharma nor usually of any interest to them [since they mostly prefer to extract rents by offering treatment to people with debilitating illnesses that can be ameliorated at great cost over very long periods of time without ever quite curing them, whilst still under patent protection].

Sean Vosper said...

Paul C - yes, technological innovation is the only real answer.
Not sure about your 1st point re senior health.
But your 2nd point is a good one. And diagnostics in general - often much cheaper to do blood tests than scans, investigations, etc. And definitely than in - patient stuff.
Genetics is a kind of pre-diagnostics that enables patients to take evasive action early, even including surgery,etc.

The Stigler said...

If I've not told you about it, here's the process I had to go through to book an appointment to get someone to look at my eyes.

1) I receive a letter from NHS Direct telling me to look on a website for some hospitals for treatment and then to call a number.

2) I look on the site. Notice that the little private hospital near me is on there.

3) I call the number. "I'd like to be treated at x hospital". "Oh, no, they don't do that there". "So, why did you send me a URL of hospitals and include some I couldn't go to" "oh, it's just a list of hospitals". Well... OK. "OK, where can I go". Gets details of an appointment in 2 months time. "Really? Nothing earlier?". "Well, we could we could try Gloucester or Oxford"

(at this point I'm thinking "what, you can't just click a button and get that data?")

"Oxford can see you in 2 weeks". "Great, can you book me in". "Well, no, I can't?" "Why?" "Because that's Oxford's system" sigh "so, what do we do?". "Well, you can phone oxford and check if it's still available. But first you'll need to unlock the appointment. Of course, if they don't have one, you'll be stuck. So, it's best to check, call me back, unlock it and then call them with the reference".

So: to book an appointment in a hospital that's supposed to be part of a NATIONAL system, it took 4 phone calls. That's not even considering that clearly a delay of 2 weeks vs a delay of 2 months means that we're not distributing resources or patients properly.

And having been into hospitals, they have none of the data collection systems that businesses have. A lot of large businesses spend a tiny amount of money on reporting because they do so much with automatically collected data. The Gerry Robinson programme showed a senior NHS manager calling around trying to find available beds and using a whiteboard. Most businesses would have this data in near real-time, available on a dashboard.

The public sector is rarely efficient. It's best job is paying for public goods and letting providers compete for the work. And that's how NHS dentistry and prescriptions work, and both work pretty well.

Lola said...

P156 etc
Thing is that 'the market' did generate a pretty good private health care system in the 19th century that covered about 75% of the population.
I do not see why this still would not work. Any nationalised system ends up suffering endemic producer capture and organising things for its own convenience rather than the patient. One of my staff needs to take her child to hospital for a check, and she wants it after her working hours. NHS won't do any such thing and she now has to lose time at work. I wanted to pursue post op. physiotherapy on the NHS but they would not offer at a time or place that suited me. With a voucher I could have got it done locally, easily.
All the evidence is that you really have to get the State out of actually running this - or pretty well anything. Yes, yes, I know the NHS comparative efficiency arguments, but I am extremely suspicious of those numbers having seen the Damn' thing operate from the inside and watched the deterioration in the 'service' culture over the years.

The Stigler said...


"I'm not suggesting zero involvement with private rent seekers where they can offer services more efficiently but that won't be the case most of the time."

I'm sure someone's concocted statistics to say that's so, but we tried having the state running all sorts of other things in the past, and they were awful. How many state farms in Cuba, China or the USSR produced lots of goods? How good were British Leyland cars? How good are the state at purchasing for the armed forces?

The state wasted £12bn on a computer system that never worked. That's money that has to be applied to every appointment, drug or operation. I can assure you that no-one in the private sector would come close to blowing such money and have nothing to show for it.

Lola said...


The thing that gets up my nose is the perversion of the historical facts by the collectivists. Without any doubt by about 1900 the UK had an generally excellent system of benefits based on private provision through friendly societies and the like. There were complaints about the system - mainly from doctors moaning about low pay and insurers unable to compete. IMHO it was successful lobbying by those self interest groups that brought on the various national assistance acts early in the 20th century which led to the decline of the excellent private provision. Yes, I accept that increasing medical success through costly treatments may have become an issue, but I bet the whole cost benefit thing would have been run a whole lot better than it is now under the current rationing system.

The Stigler said...


Other than provision to the very poorest people, you're quite right (they had to rely on charity). And around 1900, we didn't do much at all for the very poorest people - the rest of us were too poor.

Bayard said...

"but nobody knows where the other two-third goes."

I did discover once that the NHS were funding tree-planting (on private land, of course).

I'm convinced that the NHS doesn't need more funding, it needs less political meddling. and fewer bureaucrats wasting staff time trying to save money, whilst spending money on irrelevancies and disasters.

Bayard said...

"to book an appointment in a hospital that's supposed to be part of a NATIONAL system,"

Yes but a national system that is split up into geographically-based health trusts, a recipe for empire building, fiefdoms and balkanisation. Divide and rule by the pols, I suppose.

paulc156 said...

Lola I'm all for the good ole days and all that but when you refer to Victorian Britain in such glowing terms and champion charitable giving over mandated welfare provision I have to say if that makes me a collectivist then you can call me Uncle Joe if you like. Oh and as far as doctors were concerned they pretty much opposed the idea of an NHS right up to the bitter end.

As far as health provision is concerned there's no reason why a private system couldn't do better than the one we have, just few of us could afford it. Just as few Americans can afford theirs. We put significantly less into health provision than other advanced economies. We could just consider putting in amounts similar to the French and German health services and see where that gets us. As for the litany of examples of bad state led industries I could just lob back a list thrice as long of a multitude of examples where the state rescued failed enterprises and markets but it's not a fair playing field when you ascribe every massive market failure down to government meddling, eg; the recession we've just spent a record time coming out of. It's all fine and dandy this libertarian passion but you can't provide a single example of it ever being tried anywhere in the post industrial era. I think the Red Indians had something pretty close though...

paulc156 said...

TS. OK I'll see your £12bn and raise you 120bn Euros per annum.
The pharmaceutical industry has been name-checked in a new report on corruption in the EU which has put the costs to the economy at a staggering €120bn a year.

Lola said...

A few errors in their old mate.
The US system is costly because it is hugely protectionist and corporatist. There is very little actual competition. There are also huge PI costs driven by ambulance chasers. So it's a very bad comparison or example.

The recent financial crisis - in which I was tangentially involved - was almost entirely down to epic mis-regulation by useless state bureaucrats. This is provable. A good place to start is to read John Allison of the Cato institutes book.

People bandy 'market failure' around without really knowing what they mean or what they are saying. In general markets don't fail - they just haven't worked out to price it yet. In regards to cyclical financial crises over the last one hundred years pretty well all of them are attributable to government failure in one way or another.

Luckily we have a real world 74 year experiment in state run economy. It collapsed in 1991.

Overall you have to learn to trust people and the power of their enlightened self interest and humanity.

paulc156 said...

SV. My "first point about seniors" was in reference to the possibility of finding a partial cure for old age!
There isn't nearly enough research in this area but what there is, is very encouraging. It seems very likely that if we can significantly slow the ageing process itself, [and there is no reason to suppose we can't] rather than treat the symptoms of old age and it's inflammatory type diseases, [eg;many cancers, atherosclerosis, arthritis,Alzheimer's etc] then we don't simply extend life expectancy but vastly improve the quality of that life. Simultaneously, dramatically reducing the spiralling costs of treating the symptoms of said diseases. Bearing in mind we can't cure any of them.

Physiocrat said...

Around 40% of NHS costs are presumably tax.

paulc156 said...

Lola. As I said, you simply apportion all market failures to the state and all state failures to the state. Orwell would have had a field day with you!
You're a market evangelist."In general markets don't fail - they just haven't worked out to price it yet." Which puts you in Utopian land with the kind of company I know you'd rather not keep. As for people's 'enlightened self interest'. Yes I know the old adage about the butcher the baker the candlestick maker. It's a shame that so few know what else A. Smith went on to say.
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Enlightened self interest gets you only so far.

P.S. And regarding the financial crash I would recommend you read Yves Smith. 'Econned'. She has real experience at a senior level, of financial skulduggery on an industrial and global scale. Sorry but anyone who thinks Atlas Shrugged is the best defence of capitalism is not entirely sane.

Nessimmersion said...

Re paulc156 and the egregious comment on efficiency, presumably successful outcomes from cancer treatment don't count in the scoring of continental systems. See Anna Racoon for some anecdata on how the patient sees the comparative systems. The contintal systems also haven't required the NHS efficiencies of the Liverpool Care Pathway or Staffordshire nutrition regimes, the apologists for the UK system never seem to consider the effects on the current elderly/needy/ill, only what happened to the less fortunate in society before electrification.

Lola said...
This comment has been removed by the author.
Lola said...

P156. Oh dear. Markets are not things one evangelises. They are there. They occur a priori. The evangelism comes from the place you are coming from.

No, I did not say the state always fails - you said that I said that. There are clearly things the state is best positioned to do - armed forces, system of justice, a bit of co-ordination around road building, refuse collection avoid free riders and so forth.

But without any doubt whatsoever the State is very bad at doing many things that is has nationalised. Healthcare, education, money for example. Incentives matter and state monopolies provide all the wrong incentives.

In re the financial crisis reading, I agree about skullduggery. That is included in Allison's book. FWIW I have direct experience of FS and have met quite a number of senior people both in the commercial bits and the regulatory bits. In brief, the system is nationalised by regulation, and the regulatory bureaucrats are by and large not really up to it and combine arrogance and ignorance in equal measure. We cautioned our clients pre 2008 as to where things were going and why, and lo! so it came to pass. Not when I expected it just then, you never do. You cannot time markets. Especially when they finally work and get to provide an accurate judgement on failed interventions.

Look son, making this personal will not alter the facts or the logic.

paulc156 said...

N. It's no use just pointing out the bad bits in the NHS and suggesting your own survey would get a different result. Anecdotes? Nah. See Commonwealth Fund's 2014 report 'Mirror Mirror on the Wall'. It's a comparison of 11 health services. UK comes out top. "Efficiency: On indicators of efficiency, the U.S. ranks last among the 11 countries, with the U.K. and Sweden ranking first and second, respectively."

paulc156 said...

Lola, 'personal'???... the comment about Atlas Shrugged and questionable 'sanity' was directed at your Allison of Cato, not you. It was he who said reading it was 'the best defence of capitalism' so he gave a copy to his employees, apparently.

The Stigler said...


"The pharmaceutical industry has been name-checked in a new report on corruption in the EU which has put the costs to the economy at a staggering €120bn a year."

I'm not sure what this has to do with running efficient services, but you are aware what the major source of corruption is, are you? It's people spending other people's money, and the greatest example of that is the state. Having more things run by the state increases corruption.

Mark Wadsworth said...

Phys, I know that 40% of it is tax - but that is already included in the one-third of identifiable good spending.

PC, you are way off piste.

The NHS gets good value for money when it comes to buying medicine and if you bothered to read the post, that cost is included in the one-third of NHS spending that is on identifiable good spending.

I asked where the other two-thirds goes.

paulc156 said...

MW, really? It may be off piste or it may not. There's rarely a post on here that doesn't go the same way. Furthermore I only responded to points made by other posters so you might try asking them to abstain from widening the discussion if it's a problem. My responses were specific to their comments.

That...and I seem to be the only person who made any attempt to find any figures or data whatsoever in your quest for further information on NHS expenditures, even accompanied by a link. If you bothered to read my first post.

The Stigler said...


The Commonwealth Fund study is the one that gave more priority to inputs and organisation than to outputs. It's the one that said "The only serious black mark against the NHS was its poor record on keeping people alive".

The Stigler said...


The Commonwealth Fund study is the one that gave more priority to inputs and organisation than to outputs. It's the one that said "The only serious black mark against the NHS was its poor record on keeping people alive".

paulc156 said...

TS. Not sure if this is off piste but aren't you just ever so slightly cherry picking?
The CF study gave the NHS top place out of 11 countries on measures including providing effective care, safe care, co-ordinated care and patient-centred care. The fund also rated the NHS as the best for giving access to care and for efficient use of resources. And to get an efficiency measure [NHS 1st of 11] one has to divide outputs by inputs.
It also details that the NHS spends the second lowest amount on healthcare among the 11, just £2,008 per head, less than half the £5,017 in the US. Only New Zealand spent less.
You may have done the data mining with the help of the excellent John Kay on the FT. And he goes on to say, regarding efficiency [which is what I referred to in the first place]:

"The survey also reports measures of efficiency, or more often inefficiency – how great is the burden of medical administration, how much unnecessary use is made of emergency services, how reliably test results reach medical professionals.
The UK’s National Health Service is at or close to the top on almost all these indicators"

He suggests much of the reason why premature deaths from various conditions blight the UK and the US is likely for "lifestyle and environmental" reasons. eg;French most often retire early, eat more healthy diets. The sort of thing we'd need to do to have an impact on these mortality figures is 'nanny state' stuff, the like of which sends people on here crazy!

Kay also makes plain that; "the Commonwealth Fund assessment was based MAINLY ON PATIENT OPINIONS, and the aspects of a healthcare system that patients value may have little to do with clinical outcomes".

The Stigler said...

"Kay also makes plain that; "the Commonwealth Fund assessment was based MAINLY ON PATIENT OPINIONS, and the aspects of a healthcare system that patients value may have little to do with clinical outcomes"."

Right, so it's a meaningless study considering how many people in this country wrongly view the NHS as a modern wonder of the world.

paulc156 said...

Yeh imagine that. The people who use the service expressing a view. One you don't agree with. Perhaps a central committee would be better able to pass judgement, we could call it a soviet. :)

Nessimmersion said...

156, so you've just completed a circular argument. The people who have used the NHS & the conti alternative find the NHS to be 3rd rate. The staff think its brilliant cos its all about equality (take your child to former soviet bloc for successful treatment and we'll arrest you) the elderly who might express an opinion on the care have been taken out by Staffordshire nutrition & the LCP. So whos left for an impartial opinion, after all we already know british people are not entitled to the quality of care or life expectancy of the Scandis cos they're a bunch of fascists or something.

paulc156 said...

NEs. Try reading the post immediately prior to your one.
"the Commonwealth Fund assessment was based MAINLY ON PATIENT OPINIONS..."

So your contention that the people who have used NHS "& the conti alternative" is without any foundation or support whatsoever. There has been no such comparison or attempt to identify such a group to my knowledge. The Commonwealth Study does, as stated above [twice now] rely to a large extent on patient views [but hey what can you do about those if <<>> don't like them?] and staff views to a lesser extent. The rest is down to assessments based on data collected.

Much of the mortality discrepancy [your Scandis comment] also highlighted by TS in an above post, is down to lifestyle choices/environmental and being this is a libertarian oriented site I can't see how you'd be proposing too much about rectifying that on here. It would be construed as nannying, something the Scandis are far less reticent about.