Implementing NICE Decisions in Wales: Opportunity Costs

Just out is a new Research Paper from OHE that examines how local NHS organisations in Wales adjust spending to accommodate ‘shocks’ such as new NICE mandates for covering specific technologies. By law, technologies recommended by NICE are to be funded within three months of publication of NICE’s technology appraisal (TA) decision.

Just out is a new Research Paper from OHE that examines how local NHS organisations in Wales adjust spending to accommodate ‘shocks’ such as new NICE mandates for covering specific technologies.

By law, technologies recommended by NICE are to be funded within three months of publication of NICE’s technology appraisal (TA) decision. Explicit in NICE’s approach to health technology assessment (HTA) is the assumption that new, cost-increasing technology will displace spending on existing, less cost-effective health care. To date, however, no research has explored whether this happens in practice, which is important in understanding the actual effects of NICE’s use of HTA. In this Research Paper, the authors seek to document experience in NHS Wales and review how budget holders set priorities for spending.

Semi-structured interviews were completed with finance directors and/or medical directors from all seven Local Health Boards (LHBs) in NHS Wales. These interviews covered processes for setting priorities and approaches to dealing with sudden financial demands, or ‘shocks’, such as new NICE TAs, for the period October 2010 – March 2013.

The study found that the financial impact of NICE TAs is generally anticipated and planned for in advance and that the majority of LHBs have contingency funds available to cope with these and other ‘shocks’. Efficiency savings, i.e. reductions in costs with no expected reductions in quality, were a major source of funds for dealing with cost pressures of all kinds. Additionally, the Welsh Government has acted as the funder of last resort on occasion. Service displacements, moreover, could not be linked to particular NICE TAs.

The authors conclude that: ‘Services may be displaced as part of a response to the cumulative impact of all types of cost pressures, including cost-increasing health technologies newly recommended by NICE, but such displacements were not direct responses to the publication of individual NICE TAs.’ Cost pressures from new NICE TAs were likely to be accommodated at least in part by greater efficiency and increased expenditure.

Download Schaffer, S.K., Sussex, J., Hughes, D. and Devlin, N., 2014. Opportunity costs of implementing NICE decisions in NHS Wales. Research Paper 14/02. London: Office of Health Economics.

For additional information, please contact Sarah Karlsberg Schaffer at OHE.