In recent years, NHS spending has been protected while other budgets such as welfare, local government and the police have been subject to significant cuts. Despite this, health services are facing unprecedented financial and operational pressures. In 2015/16, NHS providers ended the year with a record deficit of £2.45 billion, while performance against waiting times and other key indicators has deteriorated.
So why is the NHS struggling to maintain standards of care despite funding having increased? A key reason for this is that demand for services is rising. Here we explore demand for hospital services by looking at the data for different aspects of activity over the past 13 years.
Please note: All of the charts draw on publicly available data published by either the Department of Health, NHS England or NHS Digital (formerly Health and Social Care Information Centre). All specialties have been included, and no changes have been made to any of the data, with the exception of the financial data in Figure 7, which has been converted into 2015/16 prices using the whole economy GDP deflator. Data is available in a consistent and reliable format for funding and activity dating back to 2003/4, except for diagnostics, which had its first publication at the start of 2005/6.
What is emergency care?
A range of services are available for someone with an urgent health problem, including general practice, major accident and emergency (A&E) departments,1 walk-in centres, urgent care centres and minor injuries units. Most emergency care takes place at major A&E units attached to hospitals, so in this analysis we focus on activity at these departments, which serves as a good indicator of the overall demand for emergency care.
Both attendances2 at major A&E units and admissions into emergency care3 have increased over time (Figure 1).
Attendances at major A&E departments
Between 2003/4 and 2015/16, the number of attendances at major A&Es increased by 18 per cent, from 12.7 million to 15 million.
This represents an average annual increase of 1.4 per cent.
Attendances have increased more sharply in recent years – in fact, nearly a third of the overall increase in attendances at major A&Es took place in the past two years (with the average annual increase rising to 2.6 per cent in 2014/15 and 2015/16).
Emergency admissions to hospital from major A&E departments increased at a much faster rate than attendances
Admissions via major A&E departments rose by 65 per cent over the period, from 2.5 million in 2003/4 to 4.1 million in 2015/16.
This is equivalent to an average increase of 4.3 per cent per year.
The increase in emergency admissions occurs partly as a result of the rise in the number of attendances and also because the proportion of patients being admitted to hospital has increased (see Figure 2) – from 19 per cent in 2003/4 to 27 per cent in 2015/16. Much of this growth comes from a higher number of patients being admitted for shorter stays, which some have linked to the introduction of the four-hour waiting times standard for A&E departments (eg, National Audit Office 2013). The growth in admission rates increases pressure on other parts of the hospital and, together with delays in discharging patients, means that hospitals are struggling to meet A&E waiting time standards.
What is elective care?
Elective care is planned care. Most interactions with elective hospital services arise as a result of a patient being referred to outpatient services for tests and advice. After an initial appointment, the patient may be re-called for further outpatient appointments or may require admission to hospital as an inpatient for further treatment. Providing the patient does not need immediate admission, this is classed as an elective admission. This is the standard route for many common operations including cataract removal, hip and knee replacements.
The figure outlines some of the key points in the elective pathway – though by no means all of them. There are many other routes in and out of the pathway (eg, failure to attend appointments) that, for simplicity, are not shown here.
Figure 3 presents data for all referrals to outpatient services between Q1 2003/4 and Q1 2016/17.
Total referrals to outpatient services (combining referrals from GPs and from other sources, such as A&E departments or consultants in other specialties) increased from 3.6 million in Q1 2003/4 to 5.8 million in Q1 2016/17.
This represents an overall increase of 62 per cent – an average increase of 3 per cent per year.
Referrals from GPs specifically have increased from 2.4 million in Q1 2003/4 to 3.6 million in Q1 2016/17, an overall increase of 51 per cent.
While referrals from GPs remained broadly static between Q1 2003/4 and Q3 2008/9, the rate of increase rose to an average of 4 per cent per year from Q4 2008/9 onwards.
Referrals from other sources rose steadily over the whole period from 1.1 million in Q1 2003/4 to 2.1 million in Q1 2016/17.
This growth in referrals from other sources represents an overall increase of 85 per cent, and an average rate of increase of 4.8 per cent per year.
Following the initial referral, a patient is seen as an outpatient and may then have subsequent outpatient attendances. Figure 4 shows the change in first and subsequent outpatient attendances between Q1 2003/4 and Q1 2016/17.
Total outpatient attendances over this period increased from 11 million to 15.3 million.
This is an overall increase of 39.5 per cent, representing an average increase of 2.4 per cent a year.
While total outpatient attendances grew at around 0.7 per cent for several years, this increased to an average rate of 3.8 per cent per year from 2007/8 onwards.
First outpatient attendances increased from 3.3 million to 5 million.
This is an overall increase of 50.7 per cent, representing an average increase of 3 per cent a year.
Subsequent attendances (ie, follow-up attendances) rose from 7.7 million to 10.4 million.
This is an overall increase of 34.8 per cent, representing an average increase of 2.1 per cent a year.
Following an outpatient appointment, some patients may be admitted to hospital for elective care.
Figure 5 shows data for the number of elective admissions between Q1 2003/4 and Q1 2016/17.
The overall increase across the period was 82 per cent, from 810,000 admissions in Q1 2003/4 to 1.5 million in Q1 2016/17.
This represents an average annual increase of 4.3 per cent per year.
Diagnostics include a wide range of tests at many different points in a patient’s experience of care, and in many different settings (including outpatient and inpatient settings). Figure 6 charts activity over 10 years for 15 key diagnostic tests such as imaging, endoscopy and audiology assessments4.
Total activity increased by 109 per cent from 2.5 million in Q2 2006/7 to 5.3 million in Q2 2016/17.
This represents an average annual increase of 7.4 per cent per year.
Why has demand risen?
One reason for the growth in hospital activity is simply that the population has grown. Between 2003 and 2015 the population of England increased by 10 per cent, from 49.9 million in 2003 to 54.8 million in 2015. However, hospital activity in all the areas covered here has risen far faster than the increase in the general population.
Some of the change in demand could be attributed to demographic changes. For example, between 2003 and 2015, the number of people aged over 85 has increased by nearly 40 per cent (see Figure 7). This is not, however, enough to explain rising activity – all admissions, for example, are up by more than 50 per cent over the same time period. While ageing alone may not be sufficient to explain rising activity, the rise in the number of people living with multiple long-term conditions may be a significant factor.
Other factors that may also be driving up demand include patients’ rising expectations (for example, in relation to quality of care and speed of access), earlier referrals from GPs for suspected cases of cancer, and advances in technology that make it possible to treat more people.
Attempts to unravel the drivers of rising activity that go beyond increases in the population overall or the proportion of older people aged 85 or over have struggled to provide more than a general overview5. However, what is striking is that demand and activity have risen across all the services shown here, and the increase has been sustained over many years.
Why is this a problem now?
Figure 7 shows total hospital admissions between 2003/4 and 2015/16 against the real-terms spend on health and the population aged 85 and over. From 2016/17 onwards, we have added the indicative funding settlement alongside NHS England’s estimate of future increases in activity in acute care and ONS’s projections for the population aged 85 and over.
Between 2003/4 and 2015/16, the number of people aged 85 and over increased by nearly 40 per cent.
Across the whole period (2003/4 to 2015/16), the average annual increase in admissions was 3.6 per cent, while funding increased by an average of 3.1 per cent per year.
While for some of this period (2010/11 to 2012/13), the rate of increase in admissions slowed considerably (increasing by 1.1 per cent per year on average), since 2012/13, admissions have grown at a rate that more closely resembles the long-term trend, with an average increase of 3.1 per cent per year.
Until 2010/11, spending rose at an average rate of 4.8 per cent per year, generally faster than admissions. However, between 2010/11 and 2014/15, funding slowed significantly, averaging 1.2 per cent per year, and is set to average 1.1 per cent per year from 2015/16 until 2020/21, considerably lower than the average for the whole period.
Looking ahead, the mismatch between funding and activity leaves NHS hospitals needing to achieve a step change in productivity growth, find ways to moderate demand, or overspend against budget.
The NHS five year forward view (NHS England et al 2014) set out a plan for meeting the projected gap between funding and demand. NHS England has estimated that it could reduce growth in acute hospital activity to around 1.3 per cent a year as a result of actions taken by the NHS national bodies (National Audit Office 2016) including an increased focus on prevention and public health, use of commissioning tools such as RightCare, and implementation of the new care models programme.
The total number of admissions to hospital increased by 3 per cent in quarters 1 and 2 of 2016/17 compared to the first two quarters of 2015/16. Data from our latest quarterly monitoring report (Murray et al 2016) reinforces this, with activity up across all types covered in the report in quarter 2 2016/17 compared to the same period in 2015/16, including a 5 per cent increase in A&E attendances from all departments and a 4 per cent increase in admissions from A&E.
Failure to moderate the rise in demand for hospital care contributes to the growing financial and operational pressures in the NHS and highlights the challenges in delivering the Forward View.
Our analysis has shown that, over the 13 years of data we have reviewed, rising demand is resulting in increasing hospital activity – from A&E attendances and emergency admissions to referrals to outpatient services, diagnostic tests and elective admissions. There is also evidence that other parts of the health service are facing similar challenges, including general practice (Baird et al 2016) district nursing health services (Maybin et al 2016) and mental health (Gilburt 2015).
Since 2010, this increased activity has coincided with a prolonged funding squeeze. Between 2010/11 and 2014/15, funding slowed significantly, averaging 1.2 per cent per year, and is set to average 1.1 per cent from 2015/16 until 2020/21. The effects of this can be seen in deteriorating financial performance and growing waiting times across secondary care. There is compelling evidence of a health system buckling under the strain of trying to meet increasing demand within constrained resources.
In the short term, the squeeze on spending is set to tighten further over the coming years, with 1.1 per cent growth in 2017/18, no growth in real-terms funding in 2018/19 and only 0.4 per cent in 2019/20. Pressures on other budgets, such as social care and public health, will also increase the strain on NHS services (Nuffield Trust, The Health Foundation, The King’s Fund 2016).
Our findings underline the importance of the NHS and its partners focusing on finding ways of meeting and moderating rising demand for hospital care. We know from international examples – Nuka, Alaska (Collins 2015) and Canterbury, New Zealand (Timmins and Ham 2013) – that this is possible. The Canterbury experience demonstrates that it is feasible to provide better care for patients, reduce hospital demand, and flatten or reduce elements of the demand curve across health and social care by improved integration of health and care services.
The NHS can learn from these examples, building on innovations in care for older people in different parts of the UK (Oliver et al 2014) and work under way to integrate health and social care as part of the move to population health systems in the new care models in England (Alderwick et al 2015; Collins 2016). It is equally important to fulfil the commitment in the Forward View to radically upgrade prevention and to increase investment in services in the community to avoid hospital use where possible and provide more care in people’s homes or closer to home. These actions will help to transform the delivery of health and social care to better meet the needs of the population (Ham et al 2012).
Work on sustainability and transformation plans (STPs) offers an opportunity to take forward these aspirations but will require a substantial commitment of time and resources. This will be challenging to say the least, when the additional resources made available to the NHS are being used to reduce deficits and social care has become a threadbare safety net for some of the most needy and vulnerable service users. Funds that had been identified to pump-prime new care models are in very short supply, raising serious doubts about whether the health and care system can put in place the services and interventions needed to give confidence that more care can be delivered outside hospital.
In the short term, the best hope lies in reviewing and improving how services currently provided in the community can be delivered more effectively, as is beginning to happen in the new care models – primary and acute care system (PACS) and multispecialty community provider (MCP) vanguards. By aligning these services with those provided by general practices and social care in localities and neighbourhoods, there is a possibility of moderating rising demand for hospital care with existing staff and resources. Enabling hospital specialists and their teams to work across hospitals and the community, as is already happening in some areas (Robertson et al 2014), may also support the fundamental redesign of services needed in the future. Work under way in the Fund on what this might mean for the NHS and its partners will be reporting in 2017.
Having made this point, it is important to be realistic about the time needed to transform care in this way. Successive governments have published plans to revolutionise services in the community and all have fallen well short of their ambitions. An optimistic view would be that the unprecedented pressures facing the NHS and social care will be a more effective stimulus to change and improvement than the additional funds that have accompanied these previous efforts. A pessimistic view would be that the unrelenting focus on sustaining existing services will crowd out both the resources and leadership needed to do so.