The definition of madness: why Chancellors keep splurging on NHS efficiency plans
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They say you have to spend money to make money. But on Wednesday, Jeremy Hunt followed a long line of Chancellors in expressing the apparent belief that you also have to spend money to save money, especially when it comes to the National Health Service.
Hunt devoted a large section of his Budget speech to the National Health Service, announcing that the Government would be investing £3.4bn on improving “productivity”. He touched on the use of artificial intelligence for quicker cancer diagnosis; cutting admin to free up capacity; and transforming access and services for patients.
The idea is that greater use of cutting-edge tech systems will free doctors and nurses from the drudgery of paperwork, allowing them to spend more time actually looking after patients. As an added bonus, the Chancellor estimated his plans will help save £35bn by 2030.
The trouble is, when I quote these numbers to a healthcare policy expert who hadn’t watched Hunt’s Budget speech but has scars on his back from wrestling with NHS bureaucracy for nearly two decades, his first reaction is to laugh bitterly.
Public service productivity has long been the holy grail for British governments. Gordon Brown talked of little else. With the UK’s tax burden at a record high, the national debt-to-GDP a whisker under 100pc and public services screaming out for more money, increased productivity should, in theory at least, ensure taxpayers get more bang for their hard-earned bucks.
Too often, however, it doesn’t work out like that; productivity gains are elusive. Public services – and especially the gaping maw of the NHS – have a bad habit of swallowing the Government’s “investments” whole while failing to cough up any of the promised efficiency savings down the line.
“Of course, it is possible to create efficiencies in the way the Chancellor has suggested; you only have to look at how new computer systems have revolutionised various industries,” says Andrew Haldenby, a co-founder of think tank Reform and advisory firm Aiming for Health Success. “But – when it comes to the public sector – this is an old and favourite song; we’ve heard it all before.”
A history of failure
The list of botched IT healthcare projects is very long and far from distinguished. Indeed, Hunt’s own plans while Health Secretary to drag the NHS kicking and screaming into the 21st century often ended in conspicuous failure.
As long ago as 1996, the National Audit Office launched an investigation into several failing IT projects. These included the Hospital Information Support System, which was launched without a full business case appraisal; and the Read Codes system, which was supposed to provide a unique 10-digit number for all patients but accidentally issued the same number to more than 7,500 newborn babies.
Most infamous of all was the failed national programme designed to create electronic patient records for use across the NHS in England, which had to be dismantled in 2012 at an estimated cost of £12 billion. After investigating the debacle as a member of the Public Accounts Committee, the Conservative MP Richard Bacon said: “This saga is one of the worst and most expensive contracting fiascos in the history of the public sector.”
Among the firms hired to digitise patient records was Fujitsu of recent Post Office scandal infamy. After its contract was cancelled, the Japanese company sued the government and was eventually awarded £700m in damages.
Undaunted, in 2013 the Government announced a plan to make the NHS a paperless organisation by 2018 in order to save billions, improve services and – stop me if you’ve heard this one before – freeing up doctors to spend more time with patients.
The Health Secretary at the time was one Jeremy Hunt. Giving evidence to a House of Lords Select Committee hearing on the long-term sustainability of the NHS in 2017, Hunt said: “I perhaps rather bravely said I wanted the NHS to be paperless by 2018 in my first few months as Health Secretary, and I am quite relieved that most people seem to have forgotten that I made that promise.”
Instead of an entirely paperless NHS, the Conservatives in 2018 settled for promising to ban fax machines (yes, fax machines) in the NHS by 2020. But data obtained by The Sun newspaper just last year revealed that more than 600 machines were at the time still owned by 26 English NHS trusts.
In 2019, the idea was to consign pagers to the dustbin of history. But, again, figures last year showed that 79,000 (one in 10 of the clunky communications devices still in existence globally) were still being used by the NHS. All this 14 years after the dawn of the smartphone age.
Perhaps unsurprisingly, productivity remains a huge issue. Consequently, even the Labour Party points out there’s plenty of NHS fat to trim. In January, it claimed that the £3.5 billion being spent on recruitment agencies could have been used to train more staff. A further £636 million was spent on management consultants.
Why things go wrong
Given the repeated attempts to get to grips with the NHS’s spiralling costs, why does it remain resolutely analogue and inefficient? And is the Government in danger of attempting the same thing over and over again and expecting different results?
Haldenby argues the NHS isn’t really set up to focus on increasing productivity. It cares about not slipping into the red and not running a deficit but it doesn’t really focus on or care about creating more value for money. One much-needed change would be to promote greater competition – the great driver of efficiency in the private sector – within the health service.
In fairness to Hunt, there are some faint signs things may be changing. According to the Treasury Red Book released to coincide with the Budget, the NHS has been running several pilot projects to test the ability of Artificial Intelligence in order to automate back office functions. By getting bots to write up clinical notes, discharge summaries and GP letters, for example, doctors were able to spend more with patients.
“Pilots in Chelsea and Westminster Hospital have found that this technology can reduce time spent on discharge summaries by more than 50pc,” the Treasury claimed. “If rolled out across the NHS, this could unlock an annual productivity benefit of £500m to £850 million.”
One Department for Health and Social Care advisor says that past promises of tech-driven efficiencies were so much hot air but AI might actually deliver change.
The NHS app is also driving greater efficiencies. It was responsible for 250 million engagements last year including sending 60 million messages to patients. This was a 40-fold increase on the year before. These app-based messages are effectively free and crucial to reducing the number of missed appointments. Under the old system, text messages were sent through SMS Gateway at a cost of £330m.
“It’s clear that there’s an opportunity now and you can use the latest technology to ease the administrative burden significantly,” says the DHSC advisor. “The unanswered question is whether the NHS hierarchy is sufficiently brave enough to embrace the technology.”
Julian Hunt, a health services leader at PwC, argues that while the NHS does quite well at innovation, useful breakthroughs are often not adopted across the entire health service. To do so will require “the right culture, leadership and behavioural change” across the mammoth organisation. Past experience does not augur well.
Different this time
Last year, the Government attracted a certain amount of controversy when it handed the US spy tech company Palantir a £330 million contract to build a new data platform.
Last year, the Government attracted a certain amount of controversy when it handed the US spy tech company Palantir a £330m contract to build a new data platform. Critics said the move raised privacy concerns about patient records, though Palantir’s chief executive Alex Karp has insisted: “We’re the only company of our size and scale that doesn’t buy your data, doesn’t sell your data, doesn’t transfer it to any other company … That data belongs to the government of the United Kingdom.”
However, Palantir, named after magical crystal balls in JRR Tolkein’s Lord of the Rings, claims the so-called Federated Data Platform would “improve patient care by bringing together the information needed to plan and deliver care, and reduce the administrative burden on staff”.
Speaking to The Telegraph last year, Karp said his company had already run a number of trial programmes to make sure operating theatres were used as efficiently as possible.
This was an issue singled out by Hunt in Wednesday’s Budget speech. The Chancellor said that too often operating theatres would sit idle if a patient failed to turn up at the appointed time or a single member of staff called in sick.
Part of the problem stems from the fact that the NHS uses multiple, unlinked databases. The Chancellor said Palantir’s Care Coordination Solution connects different hospital IT systems so staff have access to the information they need, in one secure platform, to manage all coordination needed to schedule patients into operating theatres.
John Wells, a theatre manager in the NHS says: “This has revolutionised how we book our theatres. With CCS, we have everything in one place, and everyone is kept informed on all changes, saving a lot of time, and avoiding confusion.”
The Federated Data Platform (FDP), which technologists say will act like a kind of highly secure Google Cloud for the NHS, is aiming to bring together healthcare data currently stored on separate systems to every trust in the country by the end of 2026-27 so staff can access the information they need in one safe and secure environment.
Among other benefits, according to the Treasury, the NHS estimates the FDP could enable a 10pc improvement in theatre utilisation, freeing up consultants to do an extra 200,000 operations procedures a year. If, that is, it is implemented successfully.
Private sector suspicion
Because if the FDP is indeed rolled out across the country, it will be a rarity. At any one time, the NHS is running hundreds of tech pilot schemes in a handful of Trusts. Yet however successful, willingness to scale these projects up and roll them out over the whole country never seems to materialise.
“The biggest barrier to greater efficiency is the NHS’s deep suspicion of the private sector,” says Haldenby. “The NHS was originally conceived as a public-private partnership and remains one today. But it’s still labouring under the mistaken belief that the profit motive is incompatible with the provision of universal healthcare.
“Why does that matter? Because all of the technological solutions that could help improve NHS efficiency are provided by the private sector.”
Might this whole debate be moot? There is, of course, the question of whether the Government will (or will be around to) deliver on its side of the bargain: the additional £3.4bn of capital funding for investments in technology and productivity-enhancing service improvements.
“All of this investment spending is to come after the election, from 2025/26 onwards,” says Paul Johnson, the director of the Institute for Fiscal Studies. “The Chancellor has promised this extra spending, but it will be for the next government to deliver (and fund) this in the next Spending Review.”
Current polls suggest, then, that it will be a Labour government committing Hunt’s extra cash to the health service. But when it comes to extra money and efficiency it too has had its fingers burned.
In 2002, Tony Blair declared a record spending boost on the NHS – but most went on staff. Two years later, GPs received a pay hike of almost one quarter while allowing them to provide far less care out-of-hours. Union negotiators could hardly believe their luck, later admitting they thought the offer was “a bit of a laugh”. No doubt there will be some who, having listened to the Budget and yet another Chancellor’s promise of fresh billions, will be chuckling again today.
“NHS history is littered with promises to spend more on capital and technology, budgets which have then been raided to pay for short-term pressures,” says Dr Jennifer Dixon, chief executive of the Health Foundation, “so it’s essential that this money is spent as intended.”
