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NHS Resources

I congratulate the hon. Member for Wyre Forest (Dr. Taylor) on securing the debate. Given his long professional background in the field, few hon. Members have a better understanding of the importance of the sensible use of resources when it comes to health care spending. Before responding to one or two of the specific points that the hon. Gentleman made, I thought it might be helpful to put the matter in context. Often when people talk about value for money and productivity in the NHS, they come to it from a sort of widget-factory-based approach to productivity, rather than from the idea of productivity that he and I share and think is important. For example, people could conclude from the latest productivity reports from the Office for National Statistics that the NHS did not spend money efficiently. However, of course, ONS defines productivity as the amount of measurable output for a given input. By that measure, when the Government started their major investment in the NHS, productivity fell. Between 2001 and 2005, it fell by about 2 per cent. a year and by 2006 it had levelled off. So, even according to that measure, the tide was turning as long as three years ago. However, my difficulty with the crude assessment of productivity applied to the NHS is that it not only lags behind investment, but is an inappropriate way of measuring the success, value for money, and efficiency of the organisation. I shall give a couple examples in relation to that. The advances in health care provision and increases in staff numbers mean that many patients can now be treated in their own home and community. That is clearly better for their recovery and patients invariably prefer it. However, that can appear as a fall in measured productivity. Similarly, the hon. Gentleman mentioned the length of GP consultations. The average length of GP consultations has increased from eight to 12 minutes. Indeed, many good GP practices offer consultations that last a lot longer than that. I think we would all agree that that period of time is better for the patient and the GP, and that it can lead to better outcomes for the patient. However, as a crudely measured productivity statistic, that period of time spent with a patient will come across as a fall in NHS productivity. A more helpful and objective way of measuring the productivity and value for money of the NHS is to look at what international studies say about the NHS compared with other health care systems. The prestigious Commonwealth Fund in Washington has recently rated the NHS as one of the highest performing health services for the past three years. It specifically praised the NHS for managing chronic illnesses and access to primary care, and it also highlighted the NHS as one of the most cost-effective health care systems anywhere in the world. With the recent election of Barack Obama, it is instructive and topical to make a simple comparison with the United States. The US spends twice as much on health care as we do, as a proportion of gross domestic product, but has worse health outcomes, and tens of millions of Americans are not covered by their private health insurance system. A number of other recent international comparator studies have shown that the NHS is better at containing costs because we have a single purchaser system and we do not have the wasteful and profit-seeking involvement of insurance companies, private doctors and the pharmaceutical industry calling the shots. I shall now say a bit about what the Government are doing to achieve better value for money from the amount we spend. As the hon. Gentleman has mentioned, we introduced the better care, better value indicators, which were developed by the NHS Institute for Innovation and Improvement. They provide benchmarking data that all local NHS organisations can use to improve their performance. The indicators include such things as the proportion of patients who are seen as out-patients rather than in-patients, agency costs, and the proportion of statin prescriptions that are low-cost, generic drugs, rather than the more expensive, branded ones. By comparing their own results with other similar PCTs and trusts, NHS organisations can identify areas where they may be less productive than others. That, in turn, will help to inform their decisions on how best to target their resources to increase productivity. In the second quarter of 2008-09, eight in 10 indicators showed that, nationally, PCTs were improving. Those improvements led to efficiency savings of around £170 million. In fact, the NHS Institute for Innovation and Improvement has just added three more prescribing indicators, which look at the use of generic medicines for lipid modification, proton pump inhibitors and drugs affecting the renin-angiotensin system. The hon. Gentleman will know much more about them than I do, but I am advised that analysis shows that those are all areas where there are the greatest gains to be made by switching to generics.