Comment

13.06.17

Do we need to invest more in NHS administration?

Source: NHE May/Jun 17

Vivek Kotecha, research officer at the Centre for Health and the Public Interest (CHPI), argues that there needs to be greater investment in NHS administration.

All large organisations need a well-resourced administration to deliver a good service. In the British Army, the Royal Logistic Corps represents 16% of the entire army, making it the largest Corps. In the NHS managers make up 3% of the workforce (versus 11% of the national workforce), and adding in wider NHS infrastructure support staff brings the total up to 14% (excluding GP practices). The cost of managers is often brought up as an unacceptable waste of NHS money during election campaigning, and NHS England’s Five Year Forward View aims to make around £400m of savings from reducing and streamlining back-office costs by 2020. This raises the questions of whether the NHS is spending too much or perhaps too little on administration, and whether the money spent is being invested in the right areas. 

Firstly, it’s important to make clear what administration is. Its definition can vary and a common one includes managers; ‘central functions’ i.e. payroll, finance, IT, HR, procurement; and estates and property staff, but excludes support for clinical staff. 

So how does the NHS compare with health systems in other countries? OECD data estimates that the UK spends 1.2% of its current health expenditure on NHS administration versus an OECD average of 3%. The administration cost of voluntary health insurance schemes in the UK adds another 1.2% (bringing the overall total to 2.4%), despite covering only 11% of the population. Indeed, the OECD data suggests that social health insurance and compulsory insurance schemes incur higher administration expenditure compared to countries where the government sets coverage. It also suggests that single-payer systems (by government or social security) have lower costs than multi-payer systems, where payers are competing and consumers have more choice over coverage levels. Government coverage and a mostly single-payer system appear to be reasons why the NHS has a lower administration cost compared with other countries. 

The UK’s lower spend does not appear to hinder its ability to provide an internationally comparable service. Patient and physician survey findings from The Commonwealth Fund placed the UK top for co-ordinated care (i.e. information-sharing between primary care physicians, hospitals and specialists) and efficiency (such as avoiding duplicate diagnostic tests, unnecessary A&E admissions and time spent on paperwork). These strengths flow from the advantages of having a national health system which should, in principle, make data sharing easier than in a system with numerous, often competing companies. 

Far from perfect 

However, administration in the English NHS is far from perfect. A Health Select Committee inquiry found that since the 1991 purchaser-provider split administration costs had been rising, and by 2014 the running costs of the healthcare ‘market’ were estimated to have reached £4.5bn a year in a CHPI report by Calum Paton. 

The duplication and complexity of administration has increased, with over 240 NHS trusts and the creation of over 200 CCGs alongside NHS England involved in spending the NHS’s £100bn budget in England. A CHPI report on ‘the contracting NHS’ in 2015 found that there were now 25,000 staff across CCGs and local area teams employed in commissioning, administering and enforcing NHS contracts at an annual cost of £1.5bn a year. 

The unnecessary costs created by duplication in an artificially fragmented system have become an area of focus following Lord Carter’s review of variations in operational productivity in acute hospitals. His report estimated that savings of up to £375m could be made by sharing corporate and administrative back-office services (such as payroll) between different hospital and system integration. 

Savings such as these are welcome, but the Carter reforms focus on improving cost efficiency and do not look into ways to build a better overall administrative system. Staff in NHS administration face outdated IT systems, superfluous paper filing processes and high staff absenteeism from years of underinvestment in back-office functions. Meanwhile the attempt to store patient’s medical information in a single database, via the care.data initiative, was axed due to privacy concerns. 

Despite these setbacks and challenges, investment in these areas is vital, especially as the NHS undergoes another transformation into 44 geographically-based sustainability and transformation partnerships while the apparatus of CCGs and hospitals remain. 

A relatively small workforce of managers is responsible for the smooth running of a £100bn+ business (as large as many listed companies). It is important that a resilient and adaptable administrative service is invested in, across the myriad of NHS organisations, to ensure a well-run NHS for both patients and staff.

Comments

There are no comments. Why not be the first?

Add your comment

 

national health executive tv

more videos >

latest healthcare news

High Court rejects ‘hostile environment’ policy challenge from Windrush man who was refused cancer treatment

10/12/2018High Court rejects ‘hostile environment’ policy challenge from Windrush man who was refused cancer treatment

A member of the Windrush generation who was refused cancer treatment has lost a legal challenge against NHS regulations that make people who cann... more >
Nine out of 10 NHS trusts revealed to have asbestos in hospitals

10/12/2018Nine out of 10 NHS trusts revealed to have asbestos in hospitals

An investigation has found that nine out of 10 NHS trusts say they have hospitals containing asbestos. Of the 211 trusts who responded to FO... more >
‘Archaic’ and ‘absurd’ fax machines banned across the NHS

10/12/2018‘Archaic’ and ‘absurd’ fax machines banned across the NHS

The NHS has been banned from buying fax machines by the health secretary who has ordered a complete phase-out of the outdated machines by April 2... more >
681 149x260 NHE Subscribe button

the scalpel's daily blog

The good, the bad, and the potential of social media

05/12/2018The good, the bad, and the potential of social media

Vicki Nash, head of policy and campaigns at Mind, assesses the impact of social media on the nation’s wellbeing. Few days go by without a story in the press about the negative effect of social media on mental health. It seems obvious: people, especially children and young people, are often seen staring at their mobile phones rather than engaging with the world around them, while the news agenda is often dominated with stories of y... more >
read more blog posts from 'the scalpel' >

interviews

How can winter pressures be dealt with? Introduce a National Social Care Service, RCP president suggests

24/10/2018How can winter pressures be dealt with? Introduce a National Social Care Service, RCP president suggests

A dedicated national social care service could be a potential solution to surging demand burdening acute health providers over the winter months,... more >
RCP president on new Liverpool college building: ‘This will be a hub for clinicians in the north’

24/10/2018RCP president on new Liverpool college building: ‘This will be a hub for clinicians in the north’

The president of the Royal College of Physicians (RCP) has told NHE that the college’s new headquarters based in Liverpool will become a hu... more >
Duncan Selbie: A step on the journey to population health

24/01/2018Duncan Selbie: A step on the journey to population health

The NHS plays a part in the country’s wellness – but it’s far from being all that matters. Duncan Selbie, chief executive of Pu... more >
Cutting through the fake news

22/11/2017Cutting through the fake news

In an era of so-called ‘fake news’ growing alongside a renewed focus on reducing stigma around mental health, Paul Farmer, chief exec... more >

last word

Hard to be optimistic

Hard to be optimistic

Rachel Power, chief executive of the Patients Association, warns that we must be realistic about the very real effects of continued underfunding across the health service. It’s now bey... more > more last word articles >

editor's comment

25/09/2017A hotbed of innovation

This edition of NHE comes hot on the heels of this year’s NHS Expo which, once again, proved to be a huge success at Manchester Central. A number of announcements were made during the event, with the health secretary naming the second wave of NHS digital pioneers, or ‘fast followers’, which follow the initial global digital e... read more >

health service focus

National Health Executive fuels the Northern Powerhouse with official partnership

21/11/2018National Health Executive fuels the Northern Powerhouse with official partnership

Cognitive Publishing, the home of leading hea... more >
Rules of engagement

01/10/2018Rules of engagement

Using technology to increase patient engagement... more >