Publicly funded hospital care: expenditure growth and its determinants

Posted on 19 January 2021

CHE's latest Research Paper 177 written by Nigel Rice and María José Aragón

CHE Research Paper 177 Cover

Understanding the drivers of growth in health care expenditure is crucial for forecasting future health care requirements and for the efficient use of resources. We consider total hospital admitted care expenditure in England between 2009/10 and 2016/17. Decomposition techniques are used to separate changes in expenditure into elements due to changes in the distribution of characteristics, of both individuals and the services they receive, and due to changes in the impact of characteristics on expenditures. Growth in aggregate expenditure was due to increases in total patient admissions together with a substantial shift towards episodes of non-elective care, particularly the use of long-stay care. Decomposition of patient level expenditure suggests efficiency gains in treatment across the full distribution of expenditures, but that these were outweighed by structural changes towards a greater proportion of patients presenting with high-dimensional comorbidities. This is particularly relevant at the top end of the expenditure distribution and accounts for a large proportion of the total expenditure growth.

This CHE Research Paper supersedes CHE RP 156 using more recent and relevant data.

Full Report: CHE Research Paper 177

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