Case study

Spending Healthcare Resources Wisely

With an annual NHS budget in England of around £127 billion (2017/18), it is vital that decisions are made so that health care spending generates the greatest impact on the health of the population.

The NHS heart logo painted onto a stone floor. Nicolas J Leclercq,
Nicolas J Leclercq,

The issue

Important decisions on the budgets for providing healthcare are made every year. These include: the size of the budget, how the budget is divided up between organisations and localities, and which interventions and treatments are funded from the fixed resources. 

The research

York economists have provided research evidence to inform these key decisions on NHS spending. Each year, researchers measure how productive the NHS has been in using the available inputs such as staff and hospital beds, to deliver outputs such as GP consultations and hospital stays. This calculation helps the government to set the size of the NHS budget.

Researchers also investigated how to share budgets out to NHS organisations on a fair basis in order for them to provide care for their local population, using novel methods and a wide range of data. This provides the formula used to distribute funds across England.
Lastly, York economists have devised ways of looking at the link between spending on different types of healthcare and the improvements in patients’ health gained as a result.  This produces methods to calculate which treatments, diagnostic tests and other interventions make the best use of NHS budgets. 

The outcome

The government has to decide how much funding should go to the NHS when there are many other priority areas such as education and transport that also need funds.  The York research on productivity has demonstrated that the NHS makes good use of the funding it gets and this provides the basis for more favourable settlements for future budgets. 

The formula used to plan how a large part of the budget for the NHS is divided between organisations responsible for healthcare aims to ensure it is done on a “fair shares” basis.  Areas where a higher proportion of local people are ill or where there are older or more disadvantaged citizens, will have greater needs for healthcare services than areas with healthier populations.  The York approach is used to target funds where they are most needed. 

Policymakers use York research to decide whether spending on some types of care, such as public health and social care is a good use of funds in terms of the impact it makes on the health of the population. They also use the research when deciding which treatments the NHS will fund. 

Featured researchers

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