A major new report from the International Longevity Centre – UK (ILC-UK), supported by insurance company EY, has found that whilst the UK is well placed to innovate to improve health outcomes and reduce costs, the UK is often not doing enough with the tools at its disposal.
With the NHS committed to achieving efficiency savings of £22 billion through productivity gains of 2-3% between 2015 – 2020, ‘Towards affordable healthcare: Why effective innovation is key’ explores how health care innovations currently employed at home and abroad could increase productivity and reduce costs.
The report showcases seven outstanding global and UK-based innovations with a strong evidence base of demonstrable success, and calculates the savings that could be achieved by implementing them across the UK. Home grown innovations include:

  • The UK’s Memory First Project, an integrated dementia service run by a consortium of GPs across Staffordshire. Savings if working methods applied nationally: up to £38 million between 2019 – 2030.

  • Manchester Royal Infirmary’s programme of providing the training and equipment to perform home dialysis. Savings if programmed applied nationally: up to £5.6 billion between 2014 – 2030.

The report concludes however that the UK is often not doing enough with the tools at its disposal to implement such innovations. Social care is underfunded and fragmented, which has consequences also for NHS costs, and funding mechanisms within the health system can often discourage innovation; there continues to be a slow uptake in the UK of new drugs and treatments, with adoption speed varying across the country.

The report presents three simple scenarios for future UK health care costs based on projections for demographic change, the rate of productivity growth in the economy, and the degree to which innovations are implemented, thus reducing residual costs, i.e. the impact of investment in technology, relative prices and different policies and institutional adaptations within the health service.

  1. Transformative change: The health service makes significant productivity gains and ensures that residual health care costs are zero over the projected period.

  2. Gradual convergence: In light of continuing cost pressures, it is perhaps hard to imagine public policymakers and individual NHS Trusts will not make adjustments over time to improve efficiency, but the transformation will take time and is unlikely to happen overnight. For this reason, productivity gradually improves over time so that residual health costs converge to zero by the end of the projected period (from 1.7% in 2019-20 to 0% by 2064-65).

  3. No policy change: There is no meaningful policy change, productivity in the health service continues to disappoint and residual health costs rise in line with the historic OECD average (1.7%)

Health spending as a proportion of GDP

  • In the transformative change scenario, health spending rises from around 6% of GDP in 2019-20 to 8% by 2064-65.

  • In the gradual convergence scenario, health spending rises from around 6% of GDP in 2019-20 to 11.4% by 2064-65.

  • In the no policy change scenario, health spending rises from around 6% of GDP in 2019-20 to 16.4% by 2064-65.

The primary balance – the difference between non interest receipts and expenditure

  • In the transformative change scenario, the primary balance falls from a surplus of around 2% of GDP to a deficit of 1.9%.

  • In the gradual convergence scenario, the primary balance falls from a surplus of around 2% of GDP to a deficit of 5.3%.

  • In the no policy change scenario, the primary balance falls from a surplus of around 2% of GDP to a deficit of 10.3%.

Towards affordable healthcare: Why effective innovation is key’ is available to download from the ILC-UK website www.ilcuk.org.uk.

Steve Iliffe, June 2017