The King's Fund urges government to consider value-for-money before committing to health service investment

The government must be clear about the value of the benefits expected from spending on the health service before it commits to future investment.

That was the call today from a new King's Fund report, Spending on health care: how much is enough?, which considers how to set a limit on health care spending.

As the NHS struggles to get to grip with financial deficits projected in one in four hospitals by the end of 2005/6*, the report authors say that there is a lack of quantifiable evidence on the costs and benefits of implementing major policies such as reducing waiting times. They say that without knowing the true costs and benefits of current policies, it is difficult to say whether patients are receiving value for money.

The report highlights evidence which indicates that the rate of improvement in the benefits from health spending may be declining as more money flows in to the NHS. It also points to evidence showing pressures to spend more are rising as a result of government policies fuelling demand in the health service.

Spending on Healthcare: How much is enough? by The King's Fund chief economist John Appleby and senior fellow Anthony Harrison, comes ahead of the government's comprehensive review of public spending in 2007. The English NHS is now six years into a nine year period of increased annual spending which in the next few years will see the UK devote nearly one pound in ten in the whole economy to health care.

John Appleby said:

'As the UK moves into the big league of health care spenders - but with unabated pressures to spend more - it will become increasingly important to consider in a rational and transparent way how much more we want to spend.

To do this we will need to be clear what we want from health care - which may be less about improving life expectancy and more about quality of life and improved access to care. And we will need to assess whether the value placed on such benefits are worth the extra investment needed.'

He added: 'We are nearing the end of a period of planned high growth in health care investment and we soon face inevitable decisions about how to arrive at limits to funding. This does not necessarily mean no future growth in spending. But it does mean that a more sophisticated case needs to be made to justify devoting society's scarce resources to health care rather than other things.'

The report includes recommendations for strengthening the evidence of how the NHS uses its resources:

  • A programme of studies on the costs and benefits of new policy initiatives, including a quantitative analysis of the value the public places on health and other associated benefits - such as easier access to care.
  • Measuring the health impacts of health care services and interventions. For example, by introducing a before, during and after-care health status questionnaire for patients.
  • Extending the role of the NICE evaluative process to new areas of treatment and new policy areas.
  • The Department of Health using the above information to develop a 'cost/benefit' framework to monitor and evaluate its main spending programmes in the health service so as to better inform future decision making.

The King's Fund chief executive Niall Dickson said:

'Although we remain concerned about the vast number of reforms being imposed on the NHS, we do not doubt there have been benefits from investment in the health service in recent years. We are now concerned about how future investment in the service will be planned and the return society can expect from increased spending.

'With the comprehensive spending review looming, we now hope that the government will be very clear not only about the way the NHS budget is determined, but on the benefits that can be expected from specific policies and investment.'

The report authors conclude by saying that future NHS spending growth should be aligned to general long-term growth in the economy with flexibility for adjustment as the economy grows, but that a wider debate may be needed if demand for services and costs continue to rise.

Read the report: Spending on health care: how much is enough?

Notes to editors: 

*The King's Fund published (Thursday 2 February) a briefing on healthcare funding, detailing where money in the health service is being spent.

  1. For further information or interviews, please contact the King's Fund media and public relations office on 020 7307 2585, 020 7307 2632 or 020 7307 2581. An ISDN line is available for interviews on 020 7637 0185.
  2. Spending on Health Care: How much is enough? by John Appleby and Anthony Harrison is free to download from Thursday 9 February 2006.
  3. The King's Fund is undertaking a programme of work to examine NHS funding decisions with the aim of influencing the government's forthcoming Comprehensive Spending Review. The programme includes a major summit at Leeds Castle in Kent. This event will bring together experts to consider what information is needed to determine where investment will be most effective, better ways of managing resources to obtain maximum value for money and the impact of the lower rates of funding growth expected after 2008.
  4. The King's Fund is an independent charitable foundation working for better health, especially in London. We carry out research, policy analysis and development activities, working on our own, in partnerships, and through funding. We are a major resource to people working in health and social care, offering leadership development programmes; seminars and workshops; publications; information and library services; and conference and meeting facilities.