NHS performance in 2020

The National Health Service (NHS) budget outturn recorded a negative balance of 292 M€ in 2020. The difference from the balance foreseen in the initial budget for 2020 results from a favourable deviation of 62.8 M€ in revenue (+0.6%) and an unfavorable deviation of 355.2 M€ (288.6 M€ in current expenditure and 66.6 M€ in capital expenditure) in expenditure. 

Despite revenue growth, essentially justified by the increase in State Budget (SB) transfers, which accounted for 96.5% of total NHS revenue in 2020, the pace of expenditure growth poses financial sustainability challenges that need to be weighed in the framework of fiscal policy and the efficient management of financial resources allocated to the NHS.

NHS expenditure as a percentage of Gross Domestic Product (GDP) peaked at 5.66% of GDP in 2020, reflecting the impact of the COVID-19 pandemic, which caused a sharp contraction of the Portuguese economy (-5.4% of nominal GDP) and a stronger growth in NHS spending (+6.8%).

Current NHS expenditure amounted to 11,191 M€ (+5.9% than in 2019) and capital expenditure accounted for 2.3% of total expenditure. About 99% of current expenditure is concentrated under wage expenditures (41.8%), external supplies and services (36.9%) and inventory purchases (20.0%). 

The immediate financial effect of NHS deficits, which represent a persistent economic imbalance, is the increase in debt to external suppliers, which at the end of 2020 amounted 1,516 M€. More than 3/4 of the entities (42) have an average payment period of more than 60 days, contrary to the legal provisions in this context on late payment by public health care providers.

In 2020 there was a general reduction in the care activity carried out in the NHS, reversing the growth path that occurred until 2019 and creating a context of greater future pressure on this public service.

Family doctors performed about 14 million face-to-face consultations in the NHS, 8.3 million fewer than in 2019 (-37.1%), nursing consultations accounted for 16.5 million, a decrease of 2.8 million compared to 2019 (-14.4%) and consultations of other health technicians reached 540,000, a reduction of 124,000 compared to the previous year (-18.8%). In reverse, the activity of non-face-to-face medical consultation grew exponentially, with an additional 9.3 million consultations performed in 2020, which represented more than twice the annual average of the last 6 years.

Overall, around 11.2 million consultations were conducted in NHS hospitals, a reduction of 1.2 million compared to 2019 (-10.2%), with a more pronounced decrease in the first consultations (-16.1%) than in subsequent consultations (-7.8%).
The NHS evolution in the after pandemic faces risks and uncertainties that may entail a conditionalityin its future performance and sustainability. These risks operate both in the care and budgetary areas. As for these latest risks – budgetary risks – it should be noted a reduced diversification of the NHS revenue sources, which is heavily dependent on the State Budget (96.5% of current revenue in 2020), with capital revenues assuming little expression (about 50 M€ in recent years).  On the expenditure side, the risks focus on pressure on personnel expenses, external supplies and services, and purchases of medical consumption material and medicines. This pressure has been felt intensely in recent years, mainly due to the aging of the population and technological innovation, and it will tend to be aggravated by the effects of the pandemic and the recovery of the care activity. The minimization of these risks requires that the recovery of this care activity should be accompanied by the reorganization of management and care delivery models, in order to promote efficiency gains, performance enhancement, sharing of risks and and benefits, and the strengthening of monitoring and evaluation mechanisms in the NHS.

Date of last update: 27/05/2021