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Cost savings and the economic case for investing in public health

Posted by: , Posted on: - Categories: Health economics

In leading PHE’s Health Economics team it’s my job to make the economic case for public health, whether that’s providing return on investment tools for local government and the NHS, or working with national government to discuss the wider impact of prevention.

It’s vital that we continue to make this case both with the NHS and with other government departments. As we note in our latest business plan, “evidence shows that prevention and early intervention represent good value for money. Well-chosen interventions implemented at scale help avoid poor health, reduce the growth in demand on public services and support economic growth.”

Through the regular conversations we have with the NHS, local government and national government, we are regularly reminded of two things:

  • Firstly, budgets must work harder and harder, year on year, inevitably leading to conversations about initiatives that provide the best value for money or even save public money.
  • Secondly, there’s still work to be done to demonstrate where health economics can be applied, including de-mystifying terms like ‘ROI’, ‘cost-effectiveness’ and ‘cost-saving’ for the widest possible audience, particularly as the nature and level of health funding will continue to be a key public debate.

Are public health interventions cost-saving?

In this blog I wanted to look at a question that’s often asked; are public health interventions ‘cost-saving’?  This is often taken to mean: “does the intervention deliver cashable financial savings to government budgets within the next two to five years?”

Last year I wrote a response to ‘Return on investment of public health interventions: a systematic review’, a paper which looked at this topic in depth.  This concluded:

Overall, PHE supports the conclusions of this review that public health expenditure is relatively cost-effective compared with health care expenditure and that cuts to public health budgets represent a false economy.

However, these statements need to be interpreted as relating to overall social costs and benefits, including the value of long-term health benefits as well as financial savings to government budgets.

We cannot conclude from the review that most public health interventions are ‘cost-saving’ in the narrow sense of delivering short-term cashable savings to government budgets. Some interventions may be cost-saving in this way, but we cannot imply that from existing evidence.

Most of the return-on-investment (ROI) and cost-benefit analysis (CBA) studies included in the review adopted relatively long and broad societal perspectives, and few if any provided sufficiently detailed breakdowns of short-term costs and benefits to determine whether cashable savings would materialise in the short-term.

Given the obvious interest in short-term cashable savings among local government and NHS decision makers, it might be a useful recommendation that future CBA and ROI studies provide narrower, short-term, budget-focused breakdowns of this kind as well as findings from a broader longer-term societal perspective.

However, it is equally important to recognise the ethical point that the aim of public policy is not solely to achieve maximum savings to public sector budgets, but also to improve people’s health and wellbeing and reduce health inequalities.

The focus of most ROI and CBA studies is primarily to quantify the health benefits as part of an overall assessment of value for money.  This latest review of evidence by Masters and colleagues is a helpful addition to the literature”.

It’s important to continue this debate about ‘cost savings’ and be clear that some interventions can lead to short-term savings, but most analysis into the return on investment of public health looks at overall social costs and benefits (and indeed, the wide range of ROI tools and resources PHE provides adopt a similar perspective).  Tools like our Health Economics Evidence Resource can also help, setting out explicitly what type of economic evidence exists in relation to different areas of the public health grant.

We must also continue to be robust about the fact that short-term cost savings are a high bar to set for public health interventions – you wouldn’t for instance argue that the NHS should routinely justify investment decisions by showing where cash will be saved or released.

I look forward to keeping this conversation going in further blogs over the coming months, discussing how we can keep demonstrating that prevention is a wise investment – but at the same time not over-stating the case.

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  1. Comment by Cameron Russell posted on

    Thanks for a really interesting article, your comment on cashable savings versus the long term is one that I can certainly relate to.

  2. Comment by Paul Hooper posted on

    One of the issues I frequently encounter is ROI for whom? There is tension in the system where modest spend by one agency (e.g. Local Authorities) provides savings to another (e.g. NHS). Pure health economics says 'Do it' but the need to protect already hit budgets says 'Why should we?'

  3. Comment by Jeanne Bianchi posted on

    Great post and thanks for sharing. Im starting to use ths strategy. Every little helps right!

  4. Comment by Rosie Saffell posted on

    In regard to savings? How do departments divvy it up? Further, health is a long-term condition in itself. Interventions only save money if habits and behaviours are 'sustained' by the individual or group beyond the actual intervention. Without a way of measuring this, are the potential 'savings' in the short term a fiscal illusion?

  5. Comment by Dr Michael C Watson posted on

  6. Comment by Yoga Bowers posted on

    Today’s timely and comprehensive interventions article warrant reflection for consideration of prevention for disruptive innovation in a global context. In my comment on Duncan Selbie's Friday message on 29 March, I touched on “how prevention could emerge as the disruptive innovation sector in the field of children's mental health.” Reflecting on the continuous debate about the size of our ODA budget perhaps PHE could along with the Foreign and Commonwealth Office apply aid budget to Prevention in support of the government’s Aid Strategy in developing countries.

    Is there a case for considering if the UK, through investment in prevention, could become a global leader in improving the health of the global population as well as improving UK’s local productivity! Organisations with the gravitas of World Health and the World Bank, since the Washington, D.C. April 2016 IMF Spring Meetings, have already embraced Prevention as an essential global step in the context of the 2030 SDG’s!

  7. Comment by Yoga Bowers posted on

    Re above comment “apply aid budget to Prevention in support of the government’s Aid Strategy in developing countries.” On 12 April Penny Mordaunt in her Mission for Global Britain DFID speech highlights how “In future years, if it is cost effective for us to deliver aid using taxpayer funded assets, we should do. That’s common sense, and the fact it might also help another government department’s budget shouldn’t count against it. We will take this approach - a win for the developing world and a win for the UK - with every single government department. It is an approach that does not dilute the good we do, it doubles it.”