How does NHS work?

The NHS stands for the National Health Service, which provides health care for all UK citizens based on their need for medical care rather than their ability to pay for it.

How it works, is complicated. Here Goes. As the NHS is funded by your taxes, let us start with the government.

So. How does NHS work?

1. Government

Healthcare is the responsibility of a government department called the Department of Health and Social Care (DHSC)
This has had a variety of names in the past including: the Ministry of Health, Department of Health, Department of Health and Social Security (DHSS). But it is still often referred to as ‘DH’
It has buildings based in London, and Leeds. It is led by the Secretary of State for Health and Social Care, supported by 4 other MPs; 2 are Ministers of Health, and 2 are Under-secretaries
In the UK, healthcare is devolved. So the DHSC is really only in charge in England. There are three ‘other NHSs’, ie in Scotland, Wales and Northern Ireland
DH gives most of its budget to NHS England (which was formed in 2013) which is responsible for the day-to-day running of the NHS in England
Where does the £ come from? 81% is from general taxation, 18% National Insurance (recently increased) and 1% prescriptions and other charges (not in the three nations, where prescriptions are free)
How does that compare to other things our taxes are used for? After welfare and pensions, the NHS is the second largest thing you pay for accounting for 10% of your hard earnt taxes. This proportion of public funding is in line with other developed countries
This compares to the 4% you spend on justice, police and prisons, and 2% on defence.

But. How does the NHS work? OK OK. Next ..

2. NHS Number

All UK citizens have a 10-digit number, like 485 777 3456. This is given to you at birth and its quite important to know it
It gives you access to apparently free healthcare throughout your life
Of course it is not really free. As we say, you pay for it through your taxes.

But. How does the NHS work, and how much does it cost?

3. Cost

The DH had a budget of over £150bn per year pre COVID-19 pandemic. Through COVID-19 it rose to a staggering £190bn (in 21/22). Yes all that PPE was not free! It is now back down to £180bn-ish and rising
Of this £180bn, over £155bn goes to NHS England. They give the lion’s share of that (i.e. about £110bn) to 42 entities called Integrated Care Boards or ICBs
With a population of 67m in the UK, that works out to be about £2700 per person per year – we think quite good value!
Of the NHS England money that does not go to ICBs, the biggest share is the 20% ish of what’s left that goes to Specialised Commissioning. This pays for treatment of rare and expensive diseases like dialysis and cardiac surgery
Of the money left after NHS England’s budget, £5bn-ish used to go to two linked (‘arms length’) organisations, Health Education England (HEE) and UK Health Security Agency (UK-HSA). The former is being incorporated into NHSE at present
The rest goes to other arms lengths bodies (more of those later), research, the Armed Services and NHS Health and Justice (H&J, which provides healthcare in prisons etc), and to itself
Interestingly the armed services and prisons are like ‘independent mini NHSs’ within the NHS

But. How does the NHS work? Next ..

4. NHS Constitution and plans

Since Jan 2009, there has been a NHS Constitution in England. This is a document that sets out the objectives of the NHS, the rights of patients, staff, and management boards – and the guiding principles which govern the service. It was last updated in Jan 2021
As NHS England is, in part, separate from the DHSC, it has been able to produce two long term plans that cross government terms
In 2014, the 5 Year Forward View was published. This was followed, in 2019, by the current one, which is called the 10 year Long Term Plan
This is a brief earlier history of the NHS

5. Arms lengths bodies (ie organisations linked to NHS)

To make it more complicated, there were (and are) many other organisations linked to the NHS, so called arms lengths bodies. They are sources of power within the system, partly due to the dispersal of power away from ministers to NHS England. Here are the principle ones
The UK’s public health organisation is called the UK Health Security Agency, UK-HSA. This morphed out of Public Health England (PHE) in 2021. PHE was blamed in part for the UK’s poor performance against COVID-19. The three nations have their own public health organisations
The Care Quality Commission, or CQC, is the NHS’s inspection system in England. It has the power to fine or close down NHS services
Health Education England, or HEE, is responsible for all aspects of teaching in the NHS in England
NHS Digital leads on IT in the NHS. NHSX has been recently incorporated into it. NHS Digital leads on introducing subregional electronic patient records (EPRs), which will be largely based around the 42 new ICS subregions. The NHS App is becoming increasingly important and nearly 30m of the UKs citizens have it on their smartphones
Both HEE and NHS Digital have now being incorporated into NHS England
The NHS Business Services Authority (NHSBSA) deals, in England, with buying and selling equipment and services like prescription charges
The National Institute of Health and Social Care, or NICE, is responsible for recommending drugs and treatments, and writing guidelines. These are mainly used in England
Doctors have a regulator called the General Medical Council (GMC), a union called the British Medical Association (BMA) and professional bodies like the Royal Colleges. All have considerable influence

6. Regional substructures

Most of these organisations have a regional substructure. Unfortunately they are different in number and not the same geographically
For example there are 7 NHS England regions, HEE has 13 regions (called LETBs or ‘deaneries’), UK-HSA has 8 regions, and NHS H&J has 4 regions. None are linked up and have little connection to the 14 Ambulance Trusts (10 in England)
These facts explain why the NHS feels to both staff and the public like a huge machine of 7-8 massive silos that don’t talk to each other. They don’t!
Also, many doctors do not feel that any of these organisations are really in charge – they are! And they exert considerable power through the BMA (their main union, especially GPs) and Royal Colleges (hospital consultants and registrars)
Some of the colleges are very ancient. For example the Royal College of Physicians (London) was founded in 1518

7. Councils

The NHS cannot be discussed without discussing the role of councils in social care as that has a huge effect on hospitals in particular. Why is that so?
Firstly the name DHSC is a mismoner. It is not responsible for the majority of social care, and that is a huge problem
If it was, about 25% of patients in hospitals who are stuck there – labelled ‘medically fit for discharge’ and ‘waiting for social’ – would probably not be there. This would free up huge resources to deal with our 7 milion patients waiting for operations
Who are these people? They are our frail elderly. They are your grandparents – waiting for care arrangements to be in place, to allow their safe discharge from hospital. They need to go to a nursing home, or for carers to be arranged in the home. It is the councils role to provide that, not the NHS
But, councils, as we all know, are strapped for cash. Also, crucially, unlike the NHS, their funding is not linked to population growth and they have to stay in budget every year. The NHS’s budget is related to population growth and does not legally have to stay in balance. So most hospitals and ICSs are therefore effectively bankrupt every year and that is tolerated
There is also something called a Health and Well Being Board which is a formal committee of the council; where it meets with local healthcare bodies including the NHS and public health
But these boards have very limited formal powers. They are constituted as a partnership forum rather than an executive decision-making body. Hence they are unable to really integrate health and social care

8. Integration

This brings us on to Integration, which is the ‘buzzword’ for the NHS at present. Lets look at why
Legislation does not currently allow the providers of healthcare (like NHS hospitals and GPs) and their purchasers (like ICBs) to make joint decisions
In fact, the opposite is true. It encourages competition between hospitals and antagonism between hospitals and ICBs
ICBs (that became fully operational in 2022) should lead to a more integrated system comprising:
- 7 regions, of 42 subregional integrated care boards (ICBs), each serving abou t1-2 million people, i.e. about the size of a county
- As well as incorporating general and mental health hospitals, each ICB have formed groups of about 10 GP practices into something called a Primary Care Network or PCN
- Therefore each PCN serves about 50,000 patients. So, if an ICB serves 1m people it will have 20 PCNs
- It is hoped the GPs in the PCNs will focus the ICB on the needs of the patients in the community, and away from hospital-based empire building
Even though ICBs should also improve the links between the NHS and over 300 councils, there is no provision for them taking over social care. So true integration of health and social care is sometime off.

9. So what next?

It is likely that the formation of subregional ICBs will start the process of integration of primary, secondary and social care
But they are unlikely to have major effects, as there is no provision for them to take over full financial control of the constituent organisations
For example, they will be unable to close down a small hospital, with say 200 staff, and transfer the money into social care (for example building and running nursing homes) – even if that is what they think is necessary to help healthcare flow in the area
Also the organisations within an ICB, will keep their control structures, led by strong boards
So there will be considerable tension between the hospital boards and that of the ICB
We will probably have to wait another 5 years or so, before ‘ICB2’ and then ‘ICB3’ form, and they take control of the NHS and social care budget, to truly enable them to integrate services. This will require further acts of Parliament

10. Bigger picture

Lets look at the bigger picture
After that whistle-stop tour of the NHS, one could ask .. what has actually changed since 1948, and 1911 for that matter?
We still have GPs. Ok you may see them virtually. They will be linked into PCNs but we doubt you will notice that
Hospitals did and do exist. You may be referred there and see a consultant, and placed on an ever worsening waiting list
IT will definitely be better, i.e. communication between your GP and hospitals will be better. But will we really, one day, have a single humdinger of a national NHS computer system?
Then you or any NHS staff member can access your information; with appointments made by you with, who you want to see (when it suits you); and you can order your tablets which are delivered to your house. And all this needs to be freely accessible through your NHS app. That’s the dream. We hope that it happens
Whatever happens, the NHS never stays still. It will continue to change, adapt, improve and innovate
Other big questions remain:
- Will ICBs ‘work’ – i.e. integrate primary, secondary care, mental health and social care? Or is their footprint so large, staff won’t stand behind them,
- Do ICBs have adequate financial levers?
- When will social care be addressed finally? It needs to be to make the NHS work properly
- How will continuity be addressed in this new digital age?
- How will you really get to know your local GP?
- What is your role going to be, as a patient, carer or NHS worker?

Whatever it is, please do it with enthusiasm, caring, leadership .. and some humour.

Summary

We have described how does the NHS work. We hope you understand it better.

Other resource

It is interesting to compare the NHS to the USA’s healthcare system in this US video. Its mainly very positive.

https://www.youtube.com/watch?v=blapgFKXv0I

Last Reviewed on 7 May 2024