What went wrong with healthcare? 🩺
And why the UK seems to be on strike every other day
The NHS, a source of British pride since its inception in 1948. After years of being regarded as one of the best healthcare systems in the world, and at the tail end of a global pandemic, the NHS is now facing some of the most severe challenges it has ever faced. Let’s take a look at some of the ways the UK’s pride and joy is being put under pressure.
Healthcare spending around the world
When taking government healthcare spending as a share of GDP, the UK is fairly average. Most OECD countries (developed countries) spent between 6-11% of their GDP in 2021, up from around 4-8% in 2000. The USA spends much more than the rest, way up at almost 16% of their GDP - but that’s a discussion for another time.
You could look at this chart and see that over the past 20 years, the share of GDP spent on healthcare almost doubled, which is great. However, it was by no means a stable year-on-year increase - between 2009 and 2019, healthcare spending in the UK remained stagnant. And because GDP keeps growing, this meant that the share of GDP actually shrank. The lack of funding was already beginning to show even pre-pandemic, as the UK began to fall behind its European peers.
The pandemic saw a much-needed funding increase which did play a part in making the numbers look better, but the biggest reason for the jump was actually the result of GDP dropping during the COVID recession - in fact at the time of writing, the UK is the only G7 country to have still not recovered to pre-pandemic GDP level. A smaller pie makes your piece look bigger, as they say.
You’d think that a global health crisis would make the UK government realise just how far behind the NHS has fallen, but in 2023 a scheduled 5% staff pay rise was not fully government-funded. 3% was included in the budget for the year, but the other 2% - around £1.8 billion - will have to come from the existing budget. This means that the NHS is facing a real-terms funding cut of between £4 billion to £9.4 billion, depending on which measure of inflation is used.
(And that’s not even mentioning how laughable a 5% pay rise is, when Q1 inflation topped 10%)
Not enough doctors
So we’ve talked about funding (or rather, the lack of it). What about staff? In 2020, the government promised £1.5 billion of extra funding to recruit 6,000 new doctors by 2024. In February 2023, there were 2,000 fewer fully-qualified GPs than in 2015. Even when including trainees, the total in 2023 is only 2,100 more than in 2015 - and almost 600 less than the peak of 37,000 in August 2022.
It’s not just doctors either - 10.8% of nursing posts remain vacant.
This creates a vicious cycle - not enough staff means existing staff are put under more pressure to take more shifts and take care of more patients, leading to higher rates of burnout and poor mental health, leading to higher staff turnover.
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Not enough hospital beds
The lack of staff is even further hindered by a lack of beds, and the number of hospital beds per 1000 in the UK remains at less than half of the EU average.
You might notice that almost every European country had more hospital beds in 2010 than in 2020 - one big reason for this is due to the fact that COVID patients had to be treated in separate wards from non-COVID patients. This meant more space was needed for isolation units and a general change in infection control measures, which is obviously great for preventing infections from spreading, but not great for space-saving.
In the early stages of the pandemic the government actually asked the NHS to free up critical-care capacity because of how overloaded A&Es were getting, and this was achieved by mainly reducing capacity elsewhere and postponing non-urgent planned procedures. Now that this emergency capacity is no longer needed however, the number of beds went back down and the NHS was left to deal with the backlog of postponing 1.5 million operations from 2020 alone.
A decrease in beds but no decrease in patients means occupancy rates have gone up - way past the 85% occupancy rate widely considered to be the safe limit. In 2019 before the pandemic, England had an average bed occupancy rate of 90.2%, and some areas had as high as 95% in the winter months. Even post-pandemic this number is still above 85%.
So now what? There’s no question that the NHS is under more pressure than ever, with less money and staff to deal with it, and an aging population that will only ever need more treatment over time. The UK Prime Minister even recently suggested that the private sector should be relied on more to help clear the backlog of postponed appointments.
The reality is that the UK may think it’s out of the pandemic panic, but the NHS is still dealing with the fallout - and the public is understandably worried. The waiting lists grow ever longer, but some progress is being made: the number of people waiting 18 months or more has fallen 35% month-on-month, and inflation looks to be easing which will take off some pressure from the budget. Strikes by doctors and nurses for better pay may not have resulted in anything just yet, but talks are in progress. We all know that governments work agonisingly slowly, but things are beginning to happen - progress is progress, no matter how slow.
So after all that - what do you think of the way the NHS is going? Do you see it getting better within the next year or so, or will it take much longer to restore it to its former glory?
See you on Wednesday with charts on the S&P 500!
Created by Miguel
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