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NHS investment “would pay for itself fourteen times over”

Researchers have found that an extra £1bn of healthcare funding could lead to a £14bn gain for the economy.

By Harry Clarke-Ezzidio

Extra funding in the early stages of NHS care has been linked for the first time to a return on investment potentially worth billions of pounds in economic growth.

For every £1 that is put into “upstream” NHS services in places with historically poor funding, including primary care settings such as GPs’ surgeries and wider community treatment, there is a return of up to £14 to an area’s Gross Value Added (GVA) output, according to research carried out by the NHS Confederation and the healthcare consultancy Carnall Farrar.

Two factors drive the extra GVA, the research, exclusively shared with Spotlight, suggests. Better primary health provision among a population would firstly lead to a reduction of sickness levels, resulting in better health outcomes and a more productive workforce. Additionally, new jobs created in local healthcare would generate additional tax revenues and contribute to the regional and national economies.

The researchers seek to challenge the well-worn narrative of funds given to the NHS being a “drain” on the public purse, instead presenting healthcare spending as a potential driver of economic growth. Their aim was to uncover which specific areas of healthcare yield the biggest results, following on from more general research the two organisations conducted last year that showed a high return on investment from increases in broader NHS funding.

The way the NHS calculates and distributes funding across key healthcare settings – including primary, community, mental health and acute care for places like hospitals – is “imperfect”, said Will Browne, a data scientist and analyst at Carnall Farrar. “In each individual locality, [the NHS] doesn’t fully look at the understanding of need; they just distribute it,” he told Spotlight, “so this research is about highlighting what the benefits of investing more in different places relative to their need would be.

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[See also: A&E doctor: I fear the job I love will one day break me]

“There are big opportunities for [the NHS] to invest in specific areas where current funding is not meeting the needs of the population. That’s having a knock on effect on what affected populations can then contribute to the economy.” 

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The research observed, over a five-year period from 2015 to 2019, that the areas of the country that spent the most on primary and community healthcare saw a far greater GVA return than those that spent less. Significant increases in economic activity were found in areas that invested heavily in primary and community care – up to £14 added in GVA for every £1 spent.

Added investment in acute care, such as hospitals and emergency departments, also led to significant returns, but not to the same extent: every additional £1 spent was associated with an extra £11 of GVA. (Researchers were unable to draw conclusions on potential increases due to mental health spending, due to a “lack of reliable data” on the area.) The reason that investing in early intervention appears more effective than acute care is that primary and community care “influences population health the most”, Ben Richardson, managing partner at Carnall Farrar, told Spotlight

“When you’re spending money in community care, if you think about the services that you’re getting… [you’re] helping older people to stay at home and be independent, and as a result, fit, working-age people won’t have to take time off work to look after their loved ones as carers,” he explained. Extra spending on primary care, Richardson added, is used on “case management and better treatment of long-term conditions”, and, research shows, is associated with “keeping people [at their] healthiest and most active in the workforce”.

Britain finds itself in a low productivity, high sickness and unequal public health spiral. Productivity this quarter was up only 0.1 per cent compared with the same period last year, and Britain lags behind Germany and the US by around 15 per cent according to this metric of output per hour worked. A large section of the working-age population is also classed as economically inactive – which is often linked to caring responsibilities or long-term illness. It was recently announced that the number of people who are out of work due to long-term sickness had reached a record high of nearly half a million. There are also glaring health disparities between various parts of the country: socio-economic factors mean that, for example, a girl born today in one of the most deprived 10 per cent of local areas of Britain is expected to live 20 fewer years in good health than a girl born in one of the least deprived.

If the areas that had the least amount of investment had an additional £1bn pumped into primary or community care, then the resulting economic growth would generate more than fourteen times the worth of the initial investment back into the wider NHS budget and Treasury receipts due to increased tax yields and financial activity, the researchers claim.

“That [extra] investment, purely from a tax receipt perspective, does pay for itself,” said Browne. “If those places that [were] underinvested in had the same as those areas which managed to meet and exceed needs, there would have been more money in the economy.

“It’s money that’s been left on the table, and if we don’t change things, it will continue to be left on the table.”

This article was originally published on 23 August, it is being repromoted today (20 September) to coincide with the doctors’ strike.

[See also: Keeping people healthy should be at the top of the political agenda]