Health secretary Andrew Lansley’s claim that there is no international evidence the NHS has low management costs has been thrown into doubt by a McKinsey analysis.
When HSJ put it to Mr Lansley at the NHS Confederation conference that the NHS had low management costs, he replied: “I just don’t think there is international data on the number of managers in health services across the world.”
The NHS has been told to reduce management costs by 45 per cent by 2014, while administration will be cut by a third.
But it already has relatively very low management costs, according to McKinsey, which analysed its own figures and those from sources including the Organisation for Economic Cooperation and Development and publicly available Central Intelligence Agency research.
The figures show management costs accounted for just 1.5 per cent of the NHS’s total costs in 2009, placing the UK 18th in a list of 23 global health systems. By contrast, Mexico’s management costs were 11.8 per cent, the US’s 7 per cent and France’s 6.8 per cent.
A second analysis, using the broader definition of management costs used by the Department of Health, places the NHS 15th out of the 23. The management spending funds 150 managers per 250,000 patients, compared with 1,140 managers in France and 64 in Italy.
NHS Confederation chief executive Mike Farrar said: “McKinsey is a pretty reliable source… this demonstrates that compared with other countries we’re low on management expenditure.”
Countries with private insurance based systems have higher transaction costs, he said.