In the first of a two-part investigation, Peter Madigan asks whether six years of massive funding increases is helping the NHS finally get back on its feet
2005 came to an ignominious close for the NHS with the announcement that the health service was heading for a £620m deficit for 2005-06 with numerous NHS trusts and hospitals in the red.
This is not the kind of news taxpayers would have expected to hear in the sixth consecutive year of massive funding increases in the NHS budget.
Indeed, it seems somewhat incongruous that despite £76bn spent on health in 2005, local trusts still found themselves in the red.
Elsewhere, MRSA infections continue unabated with as many as 100,000 cases and 5,000 deaths a year according to the National Audit Office, while in December last year a report by NHS staff claimed babies are dying due to a shortage of midwives.
Despite these problems patients have been relatively sympathetic to the immensity of the task the service is facing.
The Wanless Review in 2002 concluded that the cumulative underspend on the NHS between 1972 and 1998 amounted to £220bn when compared with average EU health spending over the same period.
With that deficiency accepted, however, the fact remains that five years into the new regime the visible benefits of the massive investment are sparse. The Department of Health (DoH) has widely publicised the successes the NHS has enjoyed so far, but what has actually been accomplished?
One of Labour's most vociferous claims regarding the resuscitation of the NHS is the staffing increases the service has so far achieved.
According to the DoH, the number of staff in the NHS has increased at an average of 33,000 recruits a year since 1997. This has included more than 5,000 new consultants since 1997 and 28,000 new nurses by 2002. Looking at staffing increases in terms of a simple headcount can be misleading, however.
Severe shortages
If targets were set as whole time equivalents, a method of calculating staffing by actual hours worked, the effectiveness of staffing increases could be cut by as much as half.
There also remain severe shortages of specialists such as cardiologists and radiographers and progress has been slow in meeting targets for new GPs and family doctors.
Waiting lists, regarded by both the Government and patients as a key indicator of improving standards in the NHS, have seen some improvement.
In 2003 the number of people waiting for treatment fell below one million but subsequently rose.
The chief executive's annual report for 2002/03 found "very good progress" had been made on waiting lists with numbers waiting over nine months for treatment having fallen by 45% while those waiting over six months fell by 21%.
Doubt has been cast on these achievements by the Audit Commission, however, which found "evidence of deliberate misreporting of waiting list information at three trusts" and further evidence of "reporting errors" at 19 others in 2002. This came just a year after the commission found nine NHS trusts had "inappropriately adjusted their waiting lists for three years or more, affecting 6,000 patient records".
While misreporting allegations continue to surface, other evidence suggests that falling waiting lists are due not to faster treatment, but restrictions on putting patients on waiting lists in the first instance.
In December 2005 the think tank Reform concluded that decreases were "due not only to increased activity but to the fact that the number of patients admitted to waiting lists has fallen".
The think tank went on to assert that as much as a third of waiting list reductions were due to such practices.
If doubt surrounds the validity of these claims then clearly the vast sums of money being pumped into the service annually is not reaching patients on the front line. Where is the money going?
Despite health spending in England more than doubling, from £44.6bn in 2000 to £90bn in 2008, just a fifth of the new money spent annually is spent on new hospitals, more beds treating patients more quickly. The lion's share of annual growth funding is, in fact, earmarked for "cost pressures".
According to DoH data, the NHS in England received £5bn more in 2005 than it did in 2004. Of this sum, however, a staggering 73% was allocated for cost pressures such as increased pay for NHS staff, clinical negligence claims and pensions rebasing. This left a mere 20%, or £1bn, for additional health services.
Wage increase
As 59% of the entire annual NHS budget is set aside for staff and pay, it is easy to see why an annual spend of £76bn does not transfer directly into £76bn worth of visible improvements, and with a massive recruitment drive underway, we can only expect to see wage expenses increase.
While the speed of NHS reform is being slowed by cost pressures from within, progress threatens to be halted altogether by demographic shifts currently underway in the UK population. Indeed, the medical fallout from the UK's ageing population has the potential to push the health service to breaking point on its own.
With the over-65 population set to breach the 10 million mark by 2009 the cost to the NHS by age increases alone could be as much as £3.9bn by 2011. As well as the cost of surgeries such as hip replacements and cataracts and other ailments associated with old age, comes the cost of treating cancers, heart disease and stroke, which are all most common among the elderly. New and expensive cancer and heart disease drugs are far more expensive then current treatments.
While a course of chemotherapy costs around £4,000 on average, cocktails of new palliative drugs and monoclonal antibodies may cost as much as £50,000 a year by 2011 according to WPA. Similarly, the Taunton-based insurer estimates that statins will cost the NHS £4.5bn annually in the fight against heart disease by 2010. With the over-65 age group set to grow to 14 million by 2031, the financial pressures of caring for the elderly will be extraordinary.
Obesity is another major headache, already costing the NHS £6bn a year in treatment, prevention and care. The cost of treating cancers, heart disease and diabetes, which develop as a direct result of being morbidly overweight is currently £18bn a year and with obesity on the increase this figure can be expected to rise significantly in the future.
If these projections are accurate then the increased investment the NHS is enjoying today is effectively being neutralised by the demands cost pressures and external factors are putting on the service.
Far from improving the quality of care, the annual cash injections are simply serving to maintain the standard of service patients currently experience. With indications that funding increases will drop in inflation rate levels after 2008 the NHS could be faced with an incredible situation in which service standards actually drop despite the huge boost in investment.
Hidden benefits
So what has the massive cash injection the NHS has received in the last six years achieved? The answer is, discernibly little. Of course not all achievements can be gauged in facts and figures.
If a doctor spends an extra 10 minutes with each patient, although this is a great improvement, on paper it looks like a drop in productivity and will suggest standards are falling. Additionally, money has been spent to enable work to be carried out by GPs at clinics without the need for a hospital visit, another positive development. These initiatives, however, are not captured by productivity measures.
Money has also been spent on schemes designed to prevent ill health and ultimately lower costs in the long-term future, such as the DoH's Choosing Health scheme, which will take some years to have an effect.
Hanging over all these plans, however, is uncertainty over what will happen after April 2008. The Chancellor has postponed the Comprehensive Spending Review, in which spending plans for 2008-2011 are to be announced, until 2007.
So far the Government has remained tight-lipped on health spending. It seems probable funding increases will drop to a more sustainable 2% annually, but this is far from certain.
One thing seems certain: 2008 and the 60th birthday of the NHS will decide the ultimate future of State-funded healthcare in Britain.
- In the March edition of COVER, the investigation continues by exploring the future of the NHS beyond 2008, exposing a potential staffing crisis and a £7bn annual funding gap that may force the Government into partnership with the private sector.
