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Public payment and private provision: Understanding competition and choice in the NHS
1.
© Institute for
Fiscal Studies and Nuffield Trust, 2013 May 2013 Public payment and private provision the changing landscape of health care in the 2000s Sandeepa Arora and Anita Charlesworth, Nuffield Trust; Elaine Kelly and George Stoye, Institute for Fiscal Studies Understanding competition and choice in the NHS
2.
© Institute for
Fiscal Studies and Nuffield Trust, 2013 Public payment and private provision • Examine relationship between public and private sectors in both delivery and funding of health care in 2000s. • Two key messages from aggregate data: 1. Differences in the growth rates of spending: • Public health spending rose faster rate during 2000s than in previous 25 years; growth of private spending slowed, and fell after 2007. 2. Increasing share of NHS-funded treatment provided by non-NHS providers. • Look at a specific example of hip and knee replacements to explore these changes in more detail
3.
© Institute for
Fiscal Studies and Nuffield Trust, 2013 The changing growth rates of UK public and private healthcare spending 1960-2011 -2 -1 0 1 2 3 4 5 6 7 8 1960-1975 1976-1996 1997-2007 2008-2011 Averageannualrealgrowthinhealth spending(%) Public Private Notes: OECD Health Data 2012
4.
© Institute for
Fiscal Studies and Nuffield Trust, 2013 NHS spending with non-NHS providers • A series of reforms opened up some NHS-funded care to non- NHS providers. • Independent Sector Treatment Centres (ISTC) (2002, 2006) • Any Qualified Provider (2008) • Patient choice (2006, 2008) • Between 2006/07 and 2011/12: • Total public health spending increased by 15% in real terms to around £120bn. • Spending with non-NHS providers increased by 60% to £8.7bn.
5.
© Institute for
Fiscal Studies and Nuffield Trust, 2013 PCT secondary care spending with non-NHS providers Notes: PCT Accounts data 2006/7 and 2011/12. 0 0.5 1 1.5 2 2.5 2006/7 2011/12 2006/7 2011/12 2006/7 2011/12 2006/7 2011/12 General and Acute Community Health Mental illness Learning Difficulties PCTspendingonnon-NHSproviders (£bn,2011/12prices)
6.
© Institute for
Fiscal Studies and Nuffield Trust, 2013 Distribution of PCT spending between non-NHS providers Notes: PCT Accounts data 2006/7 and 2011/12. 0 0.5 1 1.5 2 2.5 2006/7 2011/12 2006/7 2011/12 2006/7 2011/12 2006/7 2011/12 General and Acute Community Health Mental illness Learning Difficulties PCTspendingonnon-NHSproviders (£bn,2011/12prices) Other (inc LA) Voluntary Independent Sector Provider (ISTC + other private)
7.
© Institute for
Fiscal Studies and Nuffield Trust, 2013 What have we learnt from aggregate data? • Growth rate of public health spending increased after 1997, as a result of deliberate policy choices. • Private spending growth slowed 1997-2007. Spending and private medical insurance (PMI) enrolment fell during the recession. • As NHS spending rose, so did the level and share of PCT expenditure channelled to non-NHS providers. • Non-NHS providers deliver a small fraction of NHS-funded secondary care, but share has risen by a third between 2006/07 and 2011/12, from 9% to 12%. • The largest growth was in spending on what the PCT accounts term “Independent Sector Providers”.
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 Hip and knee replacements: a case study • Some interesting indicative evidence from aggregate data. • Now look at specific case-study where: • NHS and Independent providers deliver both NHS and privately funded care. • Data are available for privately-funded activity: particularly important when assessing substitution between NHS and privately-funded care.
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 NHS-funded knee and hip replacements (2003/04 – 2011/12) 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 NumberofNHS-funded procedures Knee replacements (ISP) Knee replacements (NHS) Hip replacements (ISP) Hip replacements (NHS) 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 Notes: Authors’ calculations using HES data. • NHS-funded knee and hip replacements increased by 52% and 45%, respectively, between 2003/4 and 2011/12.
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 Change in NHS-funded hip and knee replacements -4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 Absolutechangesince2003/04 Hip replacements (NHS) Hip replacements (ISP) Knee replacements (NHS) Knee replacements (ISP Notes: Authors’ calculations using HES data. • ISPs account for more than half the increase in NHS-funded hip and knee replacements after 2003/04
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 What explains the increase in NHS-funded activity? Possible drivers of increased activity: 1. Demographic Change 2. New procedures 3. Substitution from privately-funded to NHS-funded procedures
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 What explains the increase in NHS-funded activity? Possible drivers of increased activity: 1. Demographic Change • Explains 1/5 of the increase for hip replacements • Explains 1/6 of the rise for knee replacements 2. New procedures 3. Substitution from privately-funded to NHS-funded procedures
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 What explains the increase in NHS-funded activity? Possible drivers of increased activity: 1. Demographic Change 2. New procedures • Future work will: • Examine how the characteristics of patients have changed over time, and across provider and funding types. • Assess the implications for patient outcomes. 3. Substitution from privately-funded to NHS-funded procedures
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 What explains the increase in NHS-funded activity? Possible drivers of increased activity: 1. Demographic Change 2. New procedures 3. Substitution from privately-funded to NHS-funded procedures • Compare: • Hospital level data on all hip and knee replacements (in England and Wales) in the National Joint Registry (NJR) • Patient level data on NHS-funded hip and knee replacements in England from Hospital Episode Statistics (HES)
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 Three-year aggregates of hip and knee replacements recorded in the NJR and HES Notes: NJR Annual Accounts and authors’ calculations using HES data 310,000 330,000 350,000 370,000 390,000 410,000 430,000 450,000 470,000 490,000 510,000 530,000 2004/05- 2006/07 2005/06- 2007/08 2006/07- 2008/09 2007/08- 2009/10 2008/09- 2010/11 2009/10- 2011/12 Numberofkneeandhipimplantssoldor proceduresreported NJR levies HES operations
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 Evidence of substitution from the privately-funded to NHS- funded sector • Analysis by provider shows falls in privately-funded procedures for: • NHS providers • Independent private hospitals • Private providers that treat both privately and NHS-funded patients. • For patients: implies substitution from privately-funded to NHS-funded care. • For private health care companies: indicates growth in NHS income has compensated for falls in private patient income. • Further growth in ISPs may be limited by both NHS demand and independent sector capacity
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 Conclusions 1. Large increases in public healthcare expenditure and activity after 1997, as a result of deliberate policy decisions. 2. A rapid rise in the share of secondary care delivered by non- NHS providers, but NHS providers still predominant. 3. Evidence of patients substituting from privately funded to NHS-funded care, particularly after 2007. • Health and Social Care Act opens up new areas of NHS care to non-NHS providers. Experience of previous reforms suggests: • The share of services delivered by non-NHS providers will increase, but • That share will remain small – NHS will continue to provide the vast majority of care.
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© Institute for
Fiscal Studies and Nuffield Trust, 2013 For more information about the Nuffield Trust, including details of our latest research and analysis, please visit www.nuffieldtrust.org.uk For more information about the Institute for Fiscal Studies, please visit www.ifs.org.uk © Institute for Fiscal Studies and Nuffield Trust, 2013 The Institute for Fiscal Studies is the UK's leading independent microeconomic research institute, aiming to promote effective economic and social policies. The Nuffield Trust is an authoritative and independent source of evidence-based research and policy analysis for improving health in the UK.
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