Intended for healthcare professionals

Rapid response to:

Feature Data Briefing

Rises in healthcare spending: where will it end?

BMJ 2012; 345 doi: https://doi.org/10.1136/bmj.e7127 (Published 01 November 2012) Cite this as: BMJ 2012;345:e7127

Rapid Response:

Re: Rises in healthcare spending: where will it end?

Economists who look top-down at the trends in the percentage of GDP spent on health tend to be too pessimistic about the possibility of controlling those trends. I think John Appleby is in that group at least in what he wrote in his article.

Those who analyse the causes of health spending bottom-up should disagree with his pessimism. We can control healthcare costs if we really want to. And we should because it is better for patients if we do.

New technology supposedly drives up healthcare cost. But in most industries, new technology lowers costs and improves quality. Despite Baumol's idea of health being a classic case of "the cost disease" because of the labour-intensive nature of the work, there is still plenty of scope for doing that work more effectively and more efficiently if new technology is used well.

The NHS tends to under-use computers for coordination of staff and equipment and suffers both quality and efficiently failures as a result, both of which push up cost. Regulation of new drugs worldwide doesn't encourage price competition between me-too products and thus let market forces drive down the cost of medicines. That is two easy ways the cost of healthcare could be lowered with a suitable will to act.

But perhaps the biggest failure of modern healthcare systems is their failure to "know at what point the extra pound we decide to spend on healthcare produces less than a pound's worth of benefit". John, I think, assumes we are not near that point. But there is significant evidence that we are. This is unambiguous in the US where the analysis by the Dartmouth Atlas Project is clear. When the pattern of Medicare activity in small geographies is analysed, they find that high spend areas don't generate any extra health gain for their population and probably cause extra harm (to be precise, outcomes are marginally worse in areas of high spending). We have only just started this sort of analysis in the NHS (with RightCare's NHS Atlas of variation) but we can't yet be sure that we are not suffering a similar problem.

Even in the NHS there are plenty of treatments that are hard to justify on the evidence of their benefits. And we have barely started to collect the information required to tell us whether today's treatments work so tomorrow's doctors can stop wasting money on those that don't.

Both the public and many NHS staff seem to assume that more spending on health is always good. But spending more on healthcare isn't good if we spend it on things that don't benefit patients. When the NHS takes this to heart and only spends when it sees a health benefit, we will control cost growth.

Competing interests: I have worked for PA Consulting for more than a decade. Clients of this global management consulting firm, headquartered in the UK, have included the Department of Health, NHS providers and NHS commissioners.

14 November 2012
Stephen Black
management consultant
pa consulting
london sw1w 9sr