The price of health

On 12 April 2020, just under 20,000 of the UK’s 166,000 hospital beds were occupied with coronavirus patients. The peak of the pandemic in Britain put inordinate pressure on the country’s healthcare system. Even with £6bn in emergency funding, hospitals and their staff buckled under the weight of a terrifying new illness. More than 100 doctors and nurses contracted the virus and died. 

But a rapid improvement in understanding of Covid-19 – the illness caused by the SARS-CoV-2 strain of coronavirus – meant by the end of June, Britain’s hospital fatality rate had fallen to less than 0.5 per cent, from 6 per cent just a few months earlier. Brand-new Nightingale hospitals popped up in a matter of weeks, providing extra beds. 150,000 patients have gone through Britain’s hospitals with Covid-19 so far this year and the majority have survived. Lives have undoubtedly been saved by the heroics of the nurses and doctors who work for the NHS. It’s no wonder that the nation’s pride in its healthcare service has rarely been stronger.

But pride could also be the undoing of the nation’s beloved NHS. Successive governments have failed to appropriately equip it for the nation’s changing demographics and lifestyles. And this failure has been highlighted by the abrupt arrival of an illness that disproportionately affects the very people who demand most of the health service’s attention: the elderly and the chronically ill. 

Indeed, a heavy price has been paid for the temporary reorganisation of the NHS to combat coronavirus. The reallocation of resources and lockdown restrictions have caused many treatable problems to worsen. Missed tests and treatments mean otherwise preventable cancer deaths could rise by a fifth. Others with serious but manageable conditions have been kept away from surgeries and hospitals, with sometimes tragic consequences. Mental health care – championed by the NHS’s chief executive in his last annual report – is being overlooked. And all the while a backlog of minor operations continues to build up.

The crisis has also dragged up thorny health questions: what is the purpose of life and how much should we pay to save one? 

Using the NHS

The notion that each human life has a financial value is, to many, barbaric. But valuing life is crucial in policy-making, nowhere more so than in determining healthcare spending and safety regulations. For example, in 1972, a US taskforce set up to help regulate the automobile industry put a life’s worth at $885,000. That figure prompted the US Department of Transportation to reject regulation to install bars at the rear of lorries to prevent passenger vehicles from sliding underneath them in a collision – they reasoned it would not be cost effective, as the price of installation would have exceeded the value of lives saved. The bars became a legal requirement in 1998 when the Department of Transportation’s value of a life reached $2.5m.

In the UK, the life value assigned by the National Institute for Health and Care Excellence (Nice) is slightly more nuanced. Nice values human life based on life years, rather than lives saved and – prior to coronavirus – approved treatments if the cost per life year saved was less than £20,000. That means that older people who have already enjoyed more of their life should be lower priority for treatment approvals than sick children who have most of their life still to come. The policy also acknowledges the important and often overlooked concept that life-saving is only ever temporary and healthcare interventions should be about prolonging life rather than saving it.

But Covid-19 seems to have thrown Nice’s decision-making out of the water. Estimates suggest that the government’s extra expenditure during the pandemic and the average age of patients who have needed the most treatment means the value of each British life per year has rocketed to £180,000 in 2020. That kind of expenditure would have been justified if the UK had faced roughly 20m life years lost. But it has not. Indeed, the mean age of death for the disease is 85 years – four years more than the average life expectancy of the UK. 

The expenditure seems all the more excessive when compared with treatment approvals for other illnesses, for which Nice has stuck to its threshold. For example, the organisation recently rejected funding for asthma medicine Dupixent – which has been proved to reduce asthma exacerbations for patients aged 12 years or older – on the grounds that it is too expensive.

There’s a certain irony in that decision-making. Chronic respiratory illness is a major risk factor for coronavirus and asthma exacerbations can lead to severe respiratory complications and hospitalisation. Should we not be helping keep as many asthma sufferers out of hospital by providing them with the medicine that will reduce the likelihood of an attack?

But perhaps the unbalanced expenditure should not come as a surprise. Healthcare spending in the UK has always been weighted towards caring for the elderly and the dying. Indeed, about a quarter of the entire NHS budget is spent on patients in the last year of their life, according to data from Kings College. And that pressure is only going to increase as the proportion of elderly people in the UK increases. By 2039, one in 12 Brits will be over the age of 80, according to projections from the Office for National Statistics. 

And the NHS is very good at keeping people alive for as long as possible. Life expectancy has climbed from 70 to 81 in the past 20 years. Just under three-quarters of Brits over the age of 65 are immunised against flu – the highest of any OECD country. Hospitalisation for hypertension – an illness that commonly affects elderly people – is just 17 in 100,000, compared with Germany at 320 per 100,000. 

Funding the NHS

But providing excellent healthcare, free at the point of use to a population of 67m is also a major financial burden. Even in a normal year, the NHS costs upwards of £150bn – that represents around a tenth of UK GDP and a fifth of all public sector expenditure.

And that, we are frequently told, is not enough to deliver the type of world-class healthcare one would expect of an advanced nation such as the UK. In fact, the UK’s healthcare expenditure per person ($3,943) falls at the bottom of the range of developed countries – more in line with New Zealand ($3,923) than the US ($10,207). 

But throwing more money at the NHS – if indeed that were possible – will not help it cope with the growing burden of an elderly, chronically ill population. Coronavirus has certainly helped demonstrate that a bottomless pit of spending can create more problems than it solves.

The way the NHS is funded means that to spend more, the government must decide to make cuts elsewhere or agree to higher taxation – neither of which are proposals that tend to go down very well with voters. Spending issues are therefore perhaps not in the volume of funding, but the source. 

In the UK, almost all of its public healthcare funding comes from taxation, unlike Japan, for example, which although funded to an even greater degree by public revenues in fact derives the bulk of these through mandatory social health insurance schemes. It is a similar story in many European economies, like Germany and France, where private and social schemes account for the bulk of funding, with individuals' contributions linked to earnings. Yet with the cost of healthcare provision on an ever upward trajectory, resolutely rising taxation is currently the only option the UK has for higher expenditure, especially as only 10 per cent of the population voluntarily pay for private healthcare, often through workplace schemes. 

Although a reassessment of the way healthcare is paid for in the UK could help it cope with its ever-evolving demands, fears of the creeping privatisation of the NHS mean a shift to a more insurance-based system, or even a mixed one, seems unlikely. As a paper by think-tank the Health Foundation concluded: “Health and social care funding reforms tend to be incremental rather than radical, are path-dependent, and are catalysed by changes in economic conditions rather than by rising demand for care.”

Yet more private participation in the broad provision of healthcare is already used to relieve pressure on an overstretched system. According to the health-focused think-tank the King’s Fund, the NHS is estimated to spend anywhere between 7 and 22 per cent of its budget on private provision, buying in services in areas such as community care, diagnostics and elective surgery and, in the higher estimates, primary care services including GPs (which are not directly employed by the NHS, instead running their practices as private businesses).   

Greater private involvement could also help improve the way the NHS spends its budget. Indeed, a change in the way the organisation commissions services, procures products and pays for medicines saved it £3bn in the 2019 financial year. That shift in spending is already creating opportunity for companies like Tristel (TSTL), primary care patient management system supplier Emis (EMIS), or imaging outsourcer Medica (MGP). Novel drug and device manufacturers could also receive additional NHS budget, if spending shifts to reflect recent innovation in medicine. 

For now, the bulk of the NHS’s spending is controlled by clinical commissioning groups (CCGs), which are responsible for local hospital trusts, GPs and other specialist care. In the 2019 financial year, CCGs spent just over £84bn to pay for everything required by a health provider: from physician salaries to MRI scans and antibiotics to stationery. The outsized expenditure by CCGs highlights the heavy cost of chronic illness – the NHS spends a huge amount of money on big volumes of relatively cheap, older medicines (the average prescription costs just £8.60 in the UK). Indeed, the NHS’s most costly drug is AbbVie’s (US:ABBV) Humira, which is used to treat multiple chronic conditions including rheumatoid arthritis, inflammatory bowel disease and psoriasis.

That leaves little room for expenditure on innovative medicines. In 2019, just £24bn of the £130bn budget was centrally commissioned and spent on novel or experimental treatments. These are the types of medicines developed by pharmaceutical pioneers in the past few decades that seek to help keep people out of hospitals. Targeted cancer therapies, for example, which remove the need for prolonged bouts of chemotherapy, can reduce the burden on hospitals while improving the outcome for patients. Digital initiatives such as automatic diabetes monitoring can help patients manage their symptoms without frequent GP visits. 

But change does seem to be afoot. CCGs have teamed up to negotiate better prices for medicines such as Humira. A deal signed in December 2018 with a range of manufacturers has already helped deliver £100m of savings and is expected to save a further £230m in the current financial year. Generic or biosimilar alternatives to older medicines are increasingly being used by the NHS, which saved £440m in 2019 and will free up more budget for innovative medicines that can help keep people out of hospital.

Removing the need for healthcare is surely the ultimate goal of an efficient healthcare system. When health ministers seek to increase the number of hospital beds per person, surely that is negative?  A good healthcare system requires as few hospital beds as possible. 

But in the UK, the least efficient area of spending is in central administration. Although this accounts for the smallest proportion of annual spending (£4.4bn in the 2019 financial year) it consistently runs well over budget. Expensive tech projects, overpaid executives and poorly managed operating systems are undoubtedly to blame.

Digitising the NHS 

“The NHS isn’t a thing,” says Dr Shaun O’Hanlon, chief medical officer at healthcare software company Emis, “it’s a loose organisation of thousands of systems.” That is why making the whole of the NHS digital in one whack doesn’t work.

Not that people haven’t tried. Recognising the potential efficiencies to be gained from electronic records, hospitals had started to implement patient administration systems as long ago as the 1970s, but the result was a patchwork of systems, and project after project that ended up overbudget and failing to deliver the promised benefits. One estimate suggests that as many as four-fifths of all NHS IT projects have ended in failure.

But no failure was bigger than the National Programme for IT in the NHS, New Labour’s flagship programme to build a universal IT system for the NHS that would deliver online patient records viewable anywhere across the NHS, alongside electronic booking, referral and prescription systems. At the time of its launch in 2002 the ambitious project was expected to cost £6.4bn. By the time it was scrapped, the “biggest IT failure ever seen” had cost almost double that, and delivered benefits of just £3bn. Ten years into the project, CSC, one of several large IT service providers selected to lead the project, had failed to deliver a fully functional patient record system to any of the 220 trusts in its region despite being paid £3bn. Another, Fujitsu, saw its contract terminated.

Given the scale of the failure, many studies have been made to determine what went wrong. And most conclude that the top-down, one-size-fits-all approach to the project – apparently conceived by then prime minister Tony Blair after a so-called ‘sofa meeting’ with Microsoft boss Bill Gates – was inappropriate given the way the NHS is organised. 

The government’s hasty decision did not give it an opportunity to find out either; the people using the system – practitioners and patients – and the NHS’s IT directors weren’t consulted in the government’s decision to invest in the NHS IT modernisation or, to any significant extent at least, the system’s design. As leading IT trade title Computer Weekly put it, “large, centralised IT schemes imposed on semi-autonomous NHS sites rarely work. They engender scepticism among doctors that becomes impossible to overcome”. 

Thankfully, it seems that many lessons have been learned from the National Programme and other digitising initiatives that went before. Today, the strategy for making the NHS more tech-savvy is far more considered. According to the NHS Long Term Plan, published in early 2019, local trusts, clinical commissioning groups and sustainability partnerships will be responsible for creating strategic, tech-enabled plans to improve care for their local populations – scrapping the monolithic approach that scuppered the National Programme. 

And unlike other carefully laid plans, coronavirus has not upended this one, instead reinforcing the efficiencies that can be gained through the effective deployment of technology. Indeed, government-mandated lockdown forced the closure of GPs' practices and encouraged people to stay at home, meaning primary care interactions all went online. GPs started making better use of tech systems, which allowed them to deal with many more patients than they would be able to face to face. The final 20 per cent of prescriptions that, pre-coronavirus, were still handled physically went digital because “no one wants to handle pieces of paper in a pandemic”, according to Mr O’Hanlon.

Primary care has long led the way towards a more tech-savvy NHS. Software like that provided by Emis and SystmOne helps GPs track and monitor patients’ health and build up a lifelong digital record of care. Roughly 20m Brits use Emis’s consumer-facing software Patient Access, which allows them to book appointments, pick up test results and order repeat prescriptions without having to deal with the horrors of a waiting room. 

It’s true that the covid-enforced shift to online has left gaps: screening, vaccinating and mental health assessments – the bread and butter of general practice – have taken a back seat while the virus has been circulating. Getting these back on track without unpicking the digital progress that has been made in the last few months will be essential. 

Meanwhile, the failings of 'big behemoth hospitals' have been shown more clearly than ever. Reports of ambulances piling up outside hospitals where beds were full and oxygen depleted, even though the brand-new Nightingale hospitals were barely used, highlights the woeful lack of communication between trusts.

Tech-enabled procurement has also been non-existent. According to Liz Dixon, chief financial officer at NHS supplier Tristel, coronavirus sparked an attitude of “every trust for themselves” – on the day lockdown was announced, one of the company’s many customers bought the entire stock of disinfectant wipes, leaving none for other hospitals. Online, centralised ordering systems would surely help ensure each trust has adequate supply, while helping the entire NHS negotiate better prices.

But, according to Mr O’Hanlon, the situation is improving. Information systems previously focused on billing – not a terribly engaging function for the clinicians whose job it is to provide care – but today an increasing number of software providers have clinical needs at the heart of their services. US group Cerner (US:CENR), whose software is used in big British hospitals, says it intends to support “clinical, financial and operational needs”. Oxford University Hospitals Trust says the software has helped it complete administrative tasks 56 per cent faster.

But while digital strategies will undoubtedly allow individual trusts and geographies to deal with the increasing demand from changing demographics, challenges remain in tying all these systems together – Hampshire-based hospitals might be wonderfully well connected, for example, but what if a patient has a heart attack in neighbouring Surrey? Will the hospital they attend be able to read their medical records?

Again, there has been improvement in the past few years. Cloud-based operating systems ‘speak a common language’, meaning data collected from trusts in different locations can be easily shared. The cloud has also helped overcome data storage issues. Hospitals churn out half a billion bits of data every year. Emis alone writes 650m prescriptions – that’s the type of data generation that no storage centre on the planet can hold.

Collection and storage of health data also lends itself to better analysis – another lesson that has been learned during the pandemic. Analysis of test data has allowed scientists to pinpoint the highest risk populations. A similar sort of analysis applied to other illnesses would hugely help with both financial and health outcomes by helping the NHS achieve the ultimate goal of medicine: prevention is better than a cure.

Avoiding the NHS

A key strategy of the government and health authorities throughout the pandemic has been to keep as many people out of hospital as possible. Lockdowns have been justified as a way to avoid a surge on the NHS’s limited capacity, particularly in its intensive care units. 

While the circumstances are far from normal, it is yet another indication of a health service working at its limits. And if keeping people out of hospital helps the NHS cope with Covid, it must follow that keeping them out of hospital more generally would relieve broader pressures on the system – especially as reform to healthcare funding is likely to remain a distant possibility.  

In fact, it seems that the same factors that increased patients’ susceptibility to the worst ravages of Covid-19 are the same that weigh most heavily on western healthcare systems, including the NHS – not least obesity and diabetes. Dr Richard Horton, editor of The Lancet, has suggested that Covid-19 is in fact two health crises merging into one – the ‘acute’ pandemic and an epidemic of chronic conditions that have increased its dangers, a synthesis he describes as a syndemic. In short, a healthier population may have made Covid a far less expensive problem.

Covid aside, chronic conditions are expensive to treat in their own right. According to a study by the Institute of Economic Affairs, the net cost to the NHS of obesity is £2.5bn a year, and that cost is projected to rise to an annual £10bn by 2050. The Lancet’s Global Disease Burden study has found that 88 per cent of the UK’s illnesses are chronic, and often caused by preventable risk factors that governments are failing to effectively tackle. “Governments must devise national strategies, not only to reduce the prevalence of the virus, but also to more assertively address the burden of chronic disease, and the risk factors for chronic disease,” said Dr Horton.

Preventing these illnesses through healthy lifestyle interventions is an area in which the private sector can have a hugely positive influence – especially as public budgets devoted to preventative public health programmes are a minuscule proportion of overall health spending in the UK at around £3bn a year. 

A greater focus on plant-based food and lower sugar ingredients from the likes of Unilever (ULVR) and Nestle (Ch:NESN) is beginning to help parts of the western world that struggle with diabetes and obesity. Gym groups too and fitness trackers help encourage more active lifestyles. A rise in alcohol-free brewing and nicotine alternatives are helping wean people off their vices. Even the big brewers and tobacco companies – no doubt sensing a change in demand – have started to increase investment in healthier alternatives. 

Meanwhile, healthcare monitoring continues to be more innovative. Heart rate sensors – which are increasingly incorporated into smart watches – can detect abnormal heart rhythms, which may signal poor blood pressure or heart disease risk. Sweat meters are being used by diabetics to monitor blood sugar levels, thus preventing patients from having to endure regular blood tests. Oximeters monitor the amount of oxygen in the blood and can help with early detection of respiratory illnesses such as chronic obstructive pulmonary disease (COPD).

Tech is also being used to treat conditions that previously saw patients pumped with pills. Virtual reality can be an effective treatment in pain management, mental health illnesses and neurological conditions. The global virtual and augmented reality in healthcare market is expected to reach $5.1bn by 2025.

And it is almost impossible to play down the role that genetics will have in healthcare in the coming decades. Therapies that target specific populations have helped with both the prevention and treatment of many cancers. The meteoric rise in Crispr gene editing – where snippets of modified DNA are used to fight illness – has stunned scientists. Theoretically, this technology could lead to the eradication of disease in future human generations. 

But aside from the murky ethics of gene editing, problems will always surround the way these novel health initiatives are funded. For the NHS, a shift in thinking is crucial to stop the UK getting left behind. Coronavirus has shown the world that global governments need to get a stronger grasp on public health – that includes in the care of the young and the healthy as well as the elderly and the dying.