The Real Economic Cost of Delayed Treatment Arising from Lack of Capacity in Hospitals in UK

1.   Introduction

Healthcare systems in most of the developed countries are experiencing the dual challenge of managing higher demand against funding limitations after the recent global economic crisis. National Health Service (NHS) England is no exception (Watkins, et al., 2017). Since healthcare is an essential aspect and direct influencer of public health, the costs of delayed in healthcare delivery is a cause of concern. The costs are not only monetary but also lead to loss of life or increased mortality among patients in UK. Therefore, it is essential to find out the economic costs of delayed treatment in the NHS and understand the lack of capacity within the hospitals under NHS so that significant steps can be taken to resolve the issue.

The economic cost is the value of opportunity lost due to the engagement of resources in an activity. It may be stemming from factors such as employee efficiency, follow up treatments, availability of beds or other infrastructure, staffing time, and ward time.

Objectives of Study:

The current research study has the following objectives:

  1. To find out the economic cost of delayed treatment in NHS
  2. To discuss the lack of capacity within the hospitals under NHS
  3. To suggest solutions to resolve the issue

Research Methodology:

The current study is an exploratory research study that will initially conduct a secondary study on existing research literature to understand the various concepts and past research efficacies. An exploratory research is one in which the researcher initially collects the information about a specific topic or research problem and eventually explores the subject to find a suitable research method. The questionnaire for primary research to be conducted within the hospital units within the NHS is prepared. A sample size of 50 respondents will be used to understand the economic cost of delayed treatment within the NHS, lack of capacity within NHS hospitals and suggest solutions to resolve the gap.

Research Limitations:

The current study is limited to UK location and hospitals within the regulation of the NHS. The results of the study therefore cannot be generalized for hospitals other than the NHS. Due to resource constraints of time and money, the study will include a limited sample size of 50 respondents. The medical structure and regulations as well as demographic profile of other countries are different than that of UK and therefore the results of this study cannot be applied for other countries.

2.   Literature Review

The following section covers an overview of research literature including the basic fundamentals of healthcare economics and factors leading to higher costs of delayed treatment in NHS.

2.1 Healthcare Economics

Kenneth Arrow published a paper “Uncertainty and the welfare economics of medical care” in the American Economic Review where he pointed out the differences between healthcare markets and markets for other goods. People consume healthcare as they need health. There is an uncertain link between the two. The physicians act as agents for patients. Markets cannot work in healthcare and therefore non-market institutions are essential for attaining positive outcomes without interventions. It is expected that UK will be spending nearly one fifth of its entire wealth on NHS by the year 2062 (Fenger, et al., 2016). NHS England is likely to experience a funding gap of £30 billion by the year 2021 (NHS England, 2016). There exists a scarcity in healthcare systems within UK and other developed countries as they have a fixed funding resource structure of time, HR and money to meet all demands. Markets for healthcare are governed by regulations based on factors of efficiency and equity (Olsen, 2017).

Since the resources are scarce, every choice over the use of these resources has benefits as well as opportunity costs involved. The objectives of any healthcare system are to maximise the benefits and minimize the opportunity costs for society (Olsen, 2017). Hence, the resources must be deployed in such a way that they ensure maximum efficiency. Therefore, the costs must be measured against the benefits at the margin. The analysis at the margin finds out opportunity costs and benefits attained from additional input of resources tend to rise at a decreasing rate with the law of diminishing marginal returns.

Opportunity Cost = forgone benefits of next best use of alternative resources

Efficiency in healthcare economics may be technical efficiency and allocative efficiency.

Marginal cost = cost of one more unit of output

Marginal benefit = benefit from one more unit of output

Economic evaluation may be conducted to find out the best option of resources. These include cost effectiveness analysis, cost utility analysis and cost benefit analysis.

2.2 Healthcare System within UK

The healthcare system within UK is undergoing a crisis with the central funding no longer in line with the demand (Montgomery, et al., 2017). The traditional solutions such as higher spending, efficiency savings and adjusting with market forces are no longer better solutions. There is a need for a new health delivery model that is jointly negotiated between public, policymakers and healthcare professionals. The model must focus on disease prevention, changing health behaviour and public policy related to food, transport and advertising. The true cost effectiveness of healthcare interventions must be balanced against cost of their implementation.

As per historical data, the real-term UK National Health Service (NHS) expenses have increased by 3.7% per year (Montgomery, et al., 2017). The costs of healthcare are rising faster with drug innovations, and with a rise in patient expectations, the number of non-communicable diseases, strength of elderly patients and people with chronic disabilities is also expected to be higher (Montgomery, et al., 2017).

Though healthcare reforms within UK and other countries have brought about positive impact, some existing inefficiencies and communication gaps within the health delivery system affect the chances of attaining the long-term goal of higher quality healthcare and better health outcomes. Some of the common barriers to healthcare services include higher prices of healthcare and lack of insurance coverage to cover these costs (Clarke, et al., 2017).

Various research studies conducted in the developed countries have found that uninsured usually have a poor access to healthcare services. Children in particular are found vulnerable (Kraft, et al., 2009). If poor access is caused due to a delay in seeking care and getting treatment, the children may not be able to recover and even survive. The delay in healthcare leads to worse health outcomes and higher costs. A study conducted by Kraft, et al. (2009) found that a delay of more than two days in admissions increases costs by nearly 1.9% of the total charges.

UK spending on healthcare needs to increase by 3.3% for the next 15 years to maintain the NHS provisions at the current levels and by 4% a year if the current level of services need to be enhanced (Charlesworth & Johnson, 2018). The social care funding needs to increase by 3.9% a year to cater to the ageing population and younger adults with disabilities. The public spending of UK on health in 2016-2017 was more than 7% of the national income (Charlesworth & Johnson, 2018). The various demand and cost pressures affecting UK healthcare spending projections are listed in Figure 1.

Figure 1 Demand and Cost Pressures affecting UK Healthcare Spending Projections (Charlesworth & Johnson, 2018)

The recent rise in the waiting time and other pressures on health services have led to falling patient satisfaction levels over the years (Figure 2).

Figure 2 Satisfaction with the NHS (Charlesworth & Johnson, 2018)

2.3 Causes of Delay in Healthcare Delivery

  1. Emergency Department Crowding

The emergency department (ED) crowding is a leading cause of higher waiting times, reduced patient satisfaction, and lower efficiency of the entire hospital (Jayaprakash, et al., 2009). An aging population, limited hospital resources, shortage of staff, and delayed ancillary services are major causes of delayed treatment (Figure 3). Also, public funding has a direct impact on the crowding factors through availability of beds, community care services, and staffing.

Figure 3 Factors Affecting Crowding (Jayaprakash, et al., 2009)

Bahadori, et al. (2017) have also explored various internal and external factors affecting crowding in outpatient clinics (Figure 4).

Figure 4 Factors Affecting Crowding in Outpatient Clinics (Bahadori, et al., 2017)

An emergency admission is one where a patient is admitted to a hospital urgently and unexpectedly. In the past 12 years, the number of emergency admissions in England have increased by as much as 42% from 4.25 million in 2006-2007 to 6.02 million in 2017-2018 (Steventon, et al., 2018). These have imposed a higher cost on NHS amounting to £17.0 billion in 2016-2017 with a growth of £5.5 billion compared to cost in 2006-2007 (Steventon, et al., 2018).

  • Role of NHS

The NHS is primarily a “disease detection and treatment” service with primary and secondary care poorly integrated and inappropriately structured to deal with social care crisis. As a result the acute care is sometimes burdened with preventable conditions, disproportionate expenses on end-stage disease treatment and lesser support for compassionate end of life care (Montgomery, et al., 2017). In the UK, the largest cost of element of end of life care related to hospital care is around £4500 per person on an average for the final 90 days of life (Montgomery, et al., 2017). More than one third of the patients get non-beneficial hospital treatments in the last 6 months of their life with non-beneficial chemotherapy being 33% and Intensive Care Unit (ICU) admission 10% (Montgomery, et al., 2017).

  • Ageing Population

More money is being spent on NHS in real terms. As per research estimates by National Institute of Economic and Social Research, UK now spends an average of f £2,160 per person, per year on healthcare (Dolton, 2017). The NHS is expected to have a shortfall of £20-30 billion in funding by the year 2020-2021 (Dolton, 2017). There has been a rise of 60% in hospital referrals and halving of available hospital beds in the past 25 years (Dolton, 2017). Many hospital departments routinely miss their 4 hour wait targets and there are a number of staff vacancies. The root cause is the ageing population in UK that needs extra spending and care (Figure 5).

Figure 5 Age Profile of Public Health Spending in UK (Dolton, 2017)

  • Hospital Bed Blocking

Hospital bed blocking takes place when hospital patients are ready to be discharged to a nursing home but no place is available and therefore patient stays back in hospital (Gaughan, et al., 2015). It is a symptom of inefficient resource allocation within hospital infrastructure. The concern on bed-blocking is high in many countries such as UK, Australia, Austria, the Netherlands, and Sweden. Therefore, the supply, availability and cost of beds in nursing homes has a direct impact on hospital beds occupancy.

  • Delayed discharge

Delayed discharge is defined as the period of continued hospital stay after a patient is considered medically fit to leave the hospital but is unable to do so due to non-medical reasons (Rojas‐García, et al., 2018). The costs to NHS associated with delayed discharge in England is approximately £100 m per year (Rojas‐García, et al., 2018). Delayed discharge is recognized as a system level problem and results due to lack of coordination between health and social care systems. Some of the adverse effects of delayed discharge include cancellation of operations due to blocked beds, delayed operations and rising costs of the subsequent delays. When operating time is postponed or delayed, the discharge time and treatment for the waiting patients is also delayed. The delays are closely related to the risk of infections that further increases cost of treatment. Discharge delays also affect other hospital services such as staff workload, physiotherapy, medical review, radiology, pharmacy, transport, social and therapy services (Rojas‐García, et al., 2018).


Bahadori, M., Teymourzadeh, E., Ravangard, R. & Raadabadi, M., 2017. Factors affecting the overcrowding in outpatient healthcare. J Educ Health Promot, 6(21).

Charlesworth, A. & Johnson, P., 2018. Securing the future: funding health and social care to the 2030s, London: NHS Confederation.

Clarke, J. L. et al., 2017. An Innovative Approach to Health Care Delivery for Patients with Chronic Conditions. Popul Health Manag., 20(1), pp. 23-30.

Dolton, P., 2017. Is NHS Funding in Crisis, London: National Institute of Economic and Social Research.

Fenger, M., Hudson, J. & Needham, C., 2016. Social Policy Review 28: Analysis and Debate in Social Policy, 2016. 1st ed. Great Britain: Policy Press.

Gaughan, J., Gravelle, H. & Siciliani, L., 2015. Testing the Bed-Blocking Hypothesis: Does Nursing and Care Home Supply Reduce Delayed Hospital Discharges?. Health Econ., pp. 32-44.

Jayaprakash, N. et al., 2009. Crowding and Delivery of Healthcare in Emergency Departments: The European Perspective. West J Emerg Med., 10(4), pp. 233-239.

Kraft, A. D. et al., 2009. The Health and Cost Impact of Care Delay and the Experimental Impact of Insurance on Delays: Evidence from a Developing Country. J Pediatr., 155(2), pp. 281-5e1.

Montgomery, H. E. et al., 2017. The future of UK healthcare: problems and potential solutions to a system in crisis. Annals of Oncology, 28(8), p. 1751–1755.

NHS England, 2016. NHS Five Year Forward View. Great Britain: NHS.

Olsen, J. A., 2017. Principles in Health Economics and Policy. 2nd ed. Oxford: Oxford University Press.

Rojas‐García, A. et al., 2018. Impact and experiences of delayed discharge: A mixed‐studies systematic review. Health Expect., 21(1), p. 41–56.

Steventon, A. et al., 2018. Briefing: Emergency hospital admissions in England: which may be avoidable and how?. The Health Foundation, pp. 1-21.

Watkins, J., Wulaningsih, W., Da Zhou, C. & Marshall, D. C., 2017. Effects of health and social care spending constraints on mortality in England: a time trend analysis. BMJ Open, pp. 1-9.

Categories: Health & Nutrition

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