The Challenges of Underfunding in Healthcare and Digital Technology’s Role in Mitigating It

Publicly funded healthcare systems are prevalent throughout Europe and remain a source of national pride for many citizens. In the UK, where the NHS is considered the cornerstone of the post-war welfare system, 77% of British citizens report that the NHS makes them “proud to be British” (Hospital Times). Elsewhere, healthcare systems in Scandinavian nations such as Norway and Sweden are often portrayed as some of the best in the world.

At the same time, many people are concerned by a perceived lack of investment in these healthcare systems and falling standards. In the same survey quoted above, 85% of respondents believe NHS workers are “overstretched” (Hospital Times). Swedish patients and the country’s own Health and Social Care Inspectorate (IVO) watchdog also express concerns over wait times and hospital conditions (AA).

In this article, we examine the challenges of underfunding in healthcare, focusing on the UK and Scandinavian systems. Beginning by looking at funding patterns over the last few decades, we will break down the principal challenges associated with underfunding before exploring the questions surrounding fiscal sustainability in healthcare. Finally, we explore the role digital solutions have to play in mitigating underfunding, improving patient safety and generating cost savings.

Examining the concept of underfunding in healthcare

Analysing underfunding is not as straightforward as it may seem. The UK is an excellent example. Though NHS spending is at an all-time high, it endured a period of relatively small annual growth between 2010 and the emergence of the COVID pandemic in 2020.

The IFS calculates that the NHS budget needs to increase by approximately 4% yearly to cover growing health costs. In the eight years leading up to the pandemic, the annual increase averaged 2%. Over the next two years, the budget is set to increase by 1.2% annually (Lowdown).

While spending is increasing, it is not doing so at the rate required to match growing costs, leading to underfunding. This dramatically impacts service provision and healthcare systems’ ability to deliver for their service users.

Exploring the core challenges associated with underfunding

Underfunding results in several issues that affect performance across an entire healthcare system. Though there will be slight regional variations in how these challenges manifest in different countries, they typically apply to most underfunded healthcare systems. 

Staff shortages
Staffing shortages are one of the most visible signs of underfunding. While many factors can lead to staffing shortages, underfunding training and education grants and staff compensation are significant contributors.

In June 2022, there were 132,139 healthcare vacancies in England alone (NHS). Staff shortages place more pressure on existing employees and increase staff turnover, resulting in more staff vacancies and a concerning loss of experience in the workforce.

Before the pandemic, official Swedish health data showed staff shortages in 80% of the healthcare sector (The Lancet). Similarly, the pre-COVID Norwegian healthcare system lacked 7,000 nurses and now faces a situation where seven in ten nurses have considered leaving the profession in the last 12 months (Nordic Labour Journal)

In late 2022, a shortage of midwives resulted in Oslo University Hospital closing the maternity ward on weekends (ao). Midwives and union representatives argued this was due to a lack of maternity funding and poor investment in support staff in particular. While the ward itself has the facilities required to increase the number of births at the hospital, there simply was not the staff to accommodate this move.

Compromised safety
Underfunding also has a significant impact on performance and safety within healthcare environments. A lack of investment leads to an under-pressure workforce that is often unable to meet the expected standards of care. Maternity underfunding in the UK is an excellent example.

In March 2022, the Royal College of Midwives called out the UK Government’s record on maternity funding, which they argue “leaves some NHS trusts and boards basing midwifery staffing levels on what they can afford, not women and baby’s needs” (RCM). It argues that growing demands on maternity services are exacerbated by years of underfunding to “create a perfect storm of factors affecting maternity safety and quality” (RCM). 

Treatment delays
In recent years, treatment waiting times have grown in many European healthcare systems. While this can be partly attributed to the effects of the COVID pandemic, funding also plays a critical role. In England, approximately 6.73 million people – around one in eight of the population – are waiting for elective treatment (NHS). Well-publicised issues with A&E wait times also result in ambulance services struggling to cope.

Though widely admired, Scandinavian health systems are also facing pressure. Heidi Stensmyren, President of the Swedish Medical Association, argues that “Swedish people are tired of problems of lack of capacity and resources, of waiting for ages for treatment, of getting sent from one doctor to another” (The Lancet). Alarm bells are also ringing in Norway and Denmark, where nursing shortages are a key concern.

Poor infrastructure management and maintenance
A lack of investment in healthcare facilities is also a prevalent issue. In the UK, the NHS’ backlog maintenance bill recently hit £9.2 billion (NHS). This figure represents the amount required to bring facilities back up to standard and does not include improvements or fresh investment.

This has a direct impact on the quality of care provided. Nine in ten NHS leaders said efforts to reduce the current waiting list are hampered by a long-term lack of investment in healthcare buildings and facilities (NHS Confederation).

While other nations are investing more in property, they face other unique and localised challenges. For instance, Sweden has long struggled with ensuring access to adequate healthcare facilities in rural areas, where population density is low. Though residents of these areas are likely to enjoy better access than similar regions in other nations, the question of equitable access and investment in rural facilities looms large.

Rationing of services
The question of what services are (and, by extension, are not) covered by publicly-funded universal healthcare systems is part and parcel of service delivery. However, underfunding tends to increase service rationing in two ways. First, healthcare organisations limit the treatments they are willing to pay for. Second, they alter eligibility criteria to reduce the number of people who can access certain treatments.

In 2018, nine of 33 Clinical Commissioning Groups (CCG) cut NHS-funded IVF treatments (Guardian), and NHS England axed four surgical procedures and altered eligibility criteria for 13 others (Pulse). The second of these decisions was intended to free up £200 million in funding. However, GPs argue that cutting such procedures is not cost-effective in the long term and will lead to increased costs further down the line.

Common international concerns

While healthcare challenges do vary regionally and often have a unique national flavour, several common issues compound and result from underfunding. First and foremost, the UK, Sweden, Norway and Denmark all have rapidly ageing populations. Europe as a whole is the largest ageing population in the world (AA). This is primarily due to improved healthcare outcomes, though fertility rates also play a role.

In the UK, the over-65 population is expected to increase from roughly 13% of the total population in 1966 to around 27% by 2066 (BBC). The growth in older citizens has coincided with an increase in the number of people living with long-term health conditions such as dementia, diabetes and heart disease. As such, the average 65-year-old costs the NHS 2.5 times more than a 30-year-old and a 90-year-old seven times more (BBC).

Underfunding is also thought to contribute to an increasing focus on firefighting rather than long-term planning and strategic planning that emphasises preventative healthcare measures over treatment. Over years and decades, this adds to the cost of healthcare provision while also causing systems to fall behind in medical, best practice, and technological innovations.

Almost all countries with a publicly funded healthcare system have to face the challenge of political instability. In many nations, the welfare state has become a deeply divisive issue, with both advocates and critics using healthcare systems as examples to argue their respective points. Healthcare also becomes a political tool and embroiled in fierce debates over topical issues such as immigration.

Finally, a lack of political continuity makes long-term funding arrangements and strategic planning difficult. Legislation and funding that one government passes can be undone by the next government the following term, resulting in a healthcare system defined by unpredictability and in a constant state of flux.

The real challenge is fiscal sustainability

Though underfunding leads to many worrying operational and strategic issues, one overarching challenge encompasses them all – achieving fiscal sustainability. How do we adequately fund public healthcare systems?

It is an issue all European healthcare systems are grappling with. To some extent, macroeconomic and political trends determine the extent to which countries can and are willing to spend. The European Observatory on Health Systems and Policies has written extensively on this issue.

“In an era of economic globalisation, the Nordic countries that rely on exports for a substantial share of their overall economy cannot continue to raise taxes and social security levies… for fear they will price their exports out of international markets.” It goes on to argue that sustainable funding incorporates the idea of social acceptability. By this, it means “the levels of expenditure and sources of funding that a broad majority of the population can be expected to continue to support” (The Observatory).

For the Observatory, this raises questions about how changing public opinion may influence funding and service provision in the future. “It remains to be seen… as lifestyle-related conditions such as obesity and diabetes generate an increasing percentage of costs, whether current funding arrangements will continue to be socially acceptable in the future” (The Observatory).

At its core, this is a question concerning equality, universal access, what we expect our healthcare systems to do, and how much people are willing to pay. The Observatory notes that “the publicly financed Nordic systems have traditionally operated under the term “universal coverage” without being particularly specific about what exactly is (not) covered.” If a sustainable approach to funding is not found, will what is not covered simply continue to expand? If investment is increased, where would be a publicly and politically palatable source of funding?

Sustainability, innovation and reforms

Though underfunding is a complex and multi-faceted issue, one thing is clear. There is not an infinite amount of money to throw at healthcare. It is also evident that more money is not the only solution. Instead, long-term funding solutions must be coupled with investment in efficiency-driving technology and organisational reforms. While increased funding is one part of the solution, getting more value from that funding is the other.

At Omda, we believe innovative healthcare technology has a significant role to play in creating sustainable healthcare systems that deliver value for service users in an affordable manner.

There is little doubt that digital technologies improve patient safety and healthcare outcomes. Writing in the SMJ, Alotaibi and Federico argued that “there is substantial evidence that implementing an electronic medical record reduces medical errors and improves patient’s safety.” A metaanalysis of studies in the European Journal of Health showed that organisations that implemented electronic health records reduced medication errors by 54%, benefited from 30% higher guideline adherence, and experienced 36% fewer adverse drug reactions.

Omda Cytodose is an excellent example of how digital technologies can enhance patient safety and simplify clinical workflows. A leading medical management system for oncology treatments in the Nordics, it was implemented in Uppsala University Hospital after a tragic compounding error saw a child being administered a fatal dosage. Prior to the introduction of Omda Cytodose, the entire chemo treatment process was paper-based and error-prone. Difficult handwriting lead to misinterpretation, instructions were added to documents and faxed between departments, and all documents were kept in complex filing cabinets.

Today, Omda Cytodose acts as a centralised database for patient information and connects every aspect of the treatment process, allowing clinicians, nurses and pharmacists to collaborate seamlessly. By streamlining workflows, the platform saves healthcare workers a remarkable amount of time that was previously spent clarifying information, manually inputting data and searching for, sending and filing documents.

Connected solutions and resource optimisation    

Digital maternity records are another example of developments that improve the quality of patient care and facilitate better cross-discipline collaboration. Omda iPana Maternity is one such solution. The cloud-based platform provides women with more ways to actively participate in their pregnancy care provision, helping to inform and reassure them.

By facilitating home monitoring, the solution has the added benefit of providing maternity professionals with additional healthcare data. The solution integrates with the in-hospital maternity solution to create a fully connected digital system that encompasses the entire maternity journey and secures that all healthcare professionals benefit from real-time insight into the pregnant woman’s care and condition.

Finally, Omda Optima Predict drives operational efficiencies by facilitating data-based resource management. A powerful simulation tool that enables ambulance services to model different resource allocation strategies, it also helps them justify investment in additional resources when required. In an environment where financial resources are limited and we need to extract greater value from all assets, optimisation tools like Omda Optima Predict are gamechangers.

Digital healthcare solutions are the future

Healthcare systems around the world face significant financial and operational challenges. Where underfunding is a concern, we must find innovative solutions that improve patient safety, generate savings and help optimise existing resources. These digital solutions are available and accessible today.

However, one of the principal consequences of underfunding is the adoption of a “firefighting” mindset, where we are so concerned with an endless churn of immediate and urgent problems that we can never tackle issues at the source. If we are to take steps to mitigating chronic underfunding in healthcare, there must be a move away from short-termism towards long-term digital investment. Making healthcare systems more efficient and cost-effective means adopting intelligent digital solutions. And that requires strategic planning and a willingness to commit to comprehensive digital transformation.

Helen Døcker
Chief Marketing and Communications Officer

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Helen Døcker
Chief Marketing & Communications Officer
She is based in the company’s headquarters in Oslo, Norway.

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