Modelling the Dynamics of a Public Health Care System: Evidence from Time-Series Data

The English National Health Service was established in 1948, and has therefore yielded some long time series data on health system performance. Waiting times for inpatient care have been a persistent cause of policy concern since the creation of the NHS. This paper develops a theoretical model of the dynamic interaction between key indicators of health system performance. It then investigates empirically the relationship between hospital activity, waiting times and population characteristics using aggregate time-series data for the NHS over the period 1952— 2005. Structural Vector Auto-Regression suggests that in the long run: a) higher activity is associated with lower waiting times (elasticity = -0.9%); b) a higher proportion of old population is associated with higher waiting times (elasticity = 1.6%). In the short run, higher lagged waiting time leads to higher activity (elasticity = 0.2%). We also find that shocks in waiting times are countered by higher activity, so the effect is only temporary, while shocks in activity have a permanent effect. We conclude that policies to reduce waiting times should focus on initiatives that increase hospital activity.