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How is the financial crisis affecting the UK’s National Health Service

Posted Dec 22 2009 6:32am

In the 1990s, the UK’s National Health Service may have imitated most American’s idea of what is wrong with a single payer system.  However, when Tony Blair became Prime Minister in 1997 government spending on the NHS increased.  Over the past decade spending on the health service has risen by over 6% a year in real terms.  In addition, the NHS set ambitious performance targets and introduced reforms to foster more local independence.  In 2000, the government also declared a “war on waiting” and wait times in the subsequent decade did drop dramatically.  Other improvement include:

  • Hospitals have been able to purchase expensive new equipment like scanners. By 2007 the NHS had 8.2 MRI units per million people, below the average of 11 for the OECD, but above the figure in Canada.
  • The number of hospital consultants has gone increased 56% between 1998 and 2008.  The rise in nurse employment is 26% over this period.
  • Life expectancy continues to rise, with particularly rapid gains for men. Mortality rates from cardiovascular diseases, the leading cause of death in rich countries, have tumbled.
  • Extra cash, together with targets and performance management, have had a large impact on health care quality.

However, not all the reforms have had positive effects:

  • When Labor came to power, it abolished “the internal market in the health service introduced by the Conservatives in the 1990s, in which around half of GPs had become fund-holders with their own budgets for drugs and elective care, giving them an incentive to curb demand and a tool to bargain with powerful hospitals. With this lever gone, the government at first had to rely on instructions from the centre backed by performance ranking.”
  • “Since Mr Brown became prime minister in 2007…[t]he drive to ginger up the NHS by putting more hospital work out to the private sector has faltered.”
  • Even single payer systems can be disjointed. The Economist argues that electronic records need to be adopted so that GPs can better coordinate the care of their chronically ill patients when they enter into a hospital.
  • Productivity has declined 0.4% over the last decade.

With the government coffers more bare after the financial crisis, what does the UK plan to do with its National Health Service?  The Economist reports that–because of the financial crisis–the recent increases in NHS spending will likely stop, but the NHS will experience few cuts (unlike most other government services).

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