NHS: Cost-effectiveness

Monday 12th September 2011 Lords Chamber

Question

14:51

Asked By

[Baroness Thornton]

To ask Her Majesty’s Government whether the Department of Health will draw attention to the recent report in the Journal of the Royal Society of Medicine on the cost-effectiveness of the National Health Service.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, the department welcomes the report to which the noble Baroness refers, and recognises the significant gains in health achieved by the National Health Service since 1979. However, its evidence is limited and does not support broad generalisations on NHS cost-effectiveness. The NHS can still make major improvements to the health of the nation and must continue to respond to pressures from an ageing population, new technology and rising patient expectations.

[Baroness Thornton]

My Lords, I thank the Minister for that Answer. The Government seek to justify the hugely risky reforms of the NHS by saying that our NHS is not fit for purpose in a variety of ways, including not being cost-effective. We all know that improvements can be made—there is no doubt about that at all—but how does the Minister reconcile that with yet another authoritative report in the Royal Society of Medicine journal which says, among other things, that in terms of cost-effectiveness—that is, economic input versus clinical output—the UK NHS is one of the most cost-effective in the world, particularly in reducing mortality rates, and that among other systems, the US healthcare system is one of the least cost-effective?

[Earl Howe]

My Lords, I must point out one thing about this report: it does not make any claims for how cost-effective our health system was at any given point in time. What it does is measure the improvement in mortality over a period and then assess the cost-effectiveness of that improvement, which is a very different thing. Yes, the NHS has made great strides in improving mortality rates, but that is the only metric that the report deals with. It completely ignores other measures of quality. It is also completely silent about anything that happened after 2005, so recent years are not covered.

[Lord Clement-Jones]

Is not the really difficult and vital context in which we find ourselves at the moment the fact that we need significantly to improve productivity in the NHS in line with the so-called Nicholson challenge, which was endorsed by both this Government and the previous one? Can the Minister remind us of the record under the previous Government and tell us what he expects to be the outcome of the current health reforms?

[Earl Howe]

I am grateful to my noble friend. A Written Answer was published in Hansard recently that tracked the changes in productivity of the NHS between 1996 and 2008. He will know if he read it that there was a decrease in productivity over that period of around 3.1 per cent. The pressures on the NHS are increasing. In order for it to respond to the needs of the future, including an ageing population and the cost of new technologies, it needs to adapt to new ways of working that reduce cost pressures while delivering improved outcomes. The measures that are before Parliament seek to do just that.

[Baroness Farrington of Ribbleton]

My Lords, can the Minister give an example of any major reorganisation and restructuring that has not cost more money and put the brakes on improvements in the service that were being made, particularly when the Government bringing in to the system such major changes comprise two parties that said that there would be no major reorganisation of the National Health Service were they to be in government?

[Earl Howe]

I commend to the noble Baroness the impact assessment that we published on the Bill. It shows clearly that, over the next 10 years, the savings that we will bring about will dwarf the cost of making the changes that we propose.

[Lord Patel]

Does the Minister agree that improving the quality of healthcare will lead to higher costs?

[Earl Howe]

No, I do not. There are plenty of examples of quality costing less because the system gets it right first time. We see this time and again, for example in the Quit programme. The simplest example is that if we can treat patients correctly in hospital and keep them in for the shortest amount of time, we save a great deal of money.

[Lord McColl of Dulwich]

My Lords, on the subject of cost-effectiveness, does my noble friend agree that we are in the middle of the most serious epidemic to afflict this country for 100 years—namely the obesity epidemic? The cure is free: you just have to eat less. Why does the Department of Health insist that exercise is important in this equation?

[Earl Howe]

My Lords, the department takes its cue from NICE. I am sure that my noble friend will agree that exercise is never irrelevant to the question of obesity. I think that my noble friend's difficulty centres on how relevant it is in relation to reducing calorie intake. No doubt the debate on that will continue.

[Baroness Pitkeathley]

My Lords, does the noble Earl agree that no system of health, particularly with an ageing population, can be effective and efficient unless we also provide the best possible social care to link with it?

[Earl Howe]

I agree with the noble Baroness. One of the aims of our reforms is to integrate health and social care in a much more seamless way. There is another element to our reforms, which may have escaped noble Lords' notice. It is our wish to bear down on health inequalities in a much more systematic way than we have done hitherto. Both health and social care have a part to play in that.

[Lord Tugendhat]

My Lords, I declare an interest as chairman of the Imperial College Healthcare NHS Trust. Does my noble friend not agree that whenever an international organisation such as the OECD or the IMF has good words to say about the conduct of the British economy, the Chancellor of the Exchequer always welcomes them and uses them as an argument to support the Government’s economic policy? Would it not be helpful, when other organisations have good words to say about the NHS, for the Government to welcome them with equal fervour? Of course the NHS can improve and must modernise and move with the times; but when significant institutions such as the Commonwealth Fund in America, and the one that has just been quoted, have good words to say about the NHS, surely the Minister should be less carping.

[Earl Howe]

My Lords, in my opening words I said that we welcomed the report. I stressed that we fully acknowledge the improvements that have been made by the NHS over the past few years, which the report highlights. However, it is limited in its scope. The difficulty with all these reports is comparing like with like, particularly with different health systems. I am not decrying the work that went into the report, but I will say that perhaps some OECD reports take us closer to how well the UK's health system is performing in relation to those of other countries.

[Baroness Williams of Crosby]

My Lords, will the Government take a larger look at the scope and permanence of the NHS’s success in recent years? Does the Minister agree that a key factor is the share of GDP devoted to the NHS and the results that it produces? The NHS has consistently produced better results with a much lower share of GDP than some comparative health services, including that of the United States.

[Earl Howe]

My noble friend is right. There is also another measure that counts—not just the percentage share of GDP, but the absolute amount of money in the health budget that goes into our NHS. As she will know, the amounts of money have increased substantially over recent years. That produces a rather different ratio from the one in the report referred to in the Question.