When the NHS was created in 1948, the Minister for Health, Aneurin Bevan, expected healthcare costs to fall as the new service made people healthier. It has not quite worked out that way. By almost any measure, the health of the public has improved over the last 70 years – life expectancy has risen from 68 to 81 – but it has not led to financial savings.
On the contrary, NHS spending has risen nearly tenfold since 1948 in real terms. As a percentage of GDP, it has risen from three per cent to more than nine per cent. Most of that increase has come in the last twenty years and it is set to rise further. Thanks to Theresa May’s ‘birthday present’ to the NHS, state spending on healthcare will be close to £2,500 per person by 2023, up from just £325 (in today’s prices) in 1948.
Far from reducing expenditure, a healthier – and therefore ageing – population costs more to look after. It may seem obvious that an ageing population means more dementia but, paradoxically, a healthier population also means more cancer and more people living longer with chronic diseases. It is estimated that ageing alone increases per capita healthcare costs by 0.5 to 1.5 per cent per year.
It is now taken for granted that health spending should rise not only in real terms but as a share of GDP. This is clearly not sustainable. If continued ad infinitum, it would eventually lead to the government’s entire budget – and, later, the entire wealth of the nation – being consumed by health and social care.
Contrary to popular belief, Britain spends more than average on healthcare and yet it produces below-average health outcomes. This may point to structural problems with the NHS that could be remedied by learning from other countries, but costs are rising above the rate of growth in those countries too.
Among the cost pressures are the fact that new drugs are expensive, healthcare is labour intensive, and demand is virtually unlimited. So what are the solutions? One answer is new technology and that will be the subject of a panel discussion at this year’s Spectator Health Summit between Chris Hopson (NHS Providers), Dr Indra Joshi (NHS England), Richard Kerr (Royal College of Surgeons) and Neil Mesher (Philips) entitled ‘Can technology and AI revolutionise the NHS?’ Technology has often been life-saving but cost-inducing in the field of healthcare. With the advancement of Artificial Intelligence (AI) and robotics, it could save both lives and money.
The rapidly developing field of AI is not the whole answer but it opens up tremendous possibilities for improving treatment while cutting labour costs. The NHS is already investing in such technology and last month promised to phase out pagers by 2022. This is hardly game-changing progress but it is a start. The question now is what gains can the NHS realistically expect from the digital revolution and how can AI and robotics be joined up to yield the greatest benefits?
I’ll be in the audience on Monday to find out.
The Spectator and Philips will be discussing this and more during The Spectator Health Summit on Monday 18th March at One Great George Street from 9am to 12.40pm. Speakers include the Health Secretary Matt Hancock and NHS England’s Chief Executive Simon Stevens.
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