Independent Review Explores the Cost of Racism to the NHS

Racism affects not only people’s health and well-being but their economic lives too. The broad costs of racism also include an unnecessary financial burden on the NHS and a cost to the economy according to a new paper released today by the NHS Race and Health Observatory.

The Cost of Racism briefing considers the benefits of taking an economic approach to assess the costs of racial discrimination to the NHS, individuals and to the economy. It explores a broad array of ethnic inequalities in healthcare which lead to excessive and avoidable costs and reduce efficiency in the economy.

The new review proposes taking an economic approach to estimating the cost of racism, similar to ‘Cost of Illness’ and ‘Burden of Disease’ studies, to quantify the monetary value to individuals, the NHS, and society – of the impact of racism in health and healthcare. ​This could include measuring direct costs of treatment or the lack of treatment; indirect costs of reduced productivity in the economy; and costs to individuals and employers because of work-related mental health issues and absences due to discrimination.

Drawing insights from a rapid review of existing UK and international research, the review highlights several key reports which have sought to quantify inequalities in healthcare. These include the Black Report (1980), and a 2016 paper from the University of York’s Centre for Health Economics. Other studies are also cited, providing snapshots that illustrate significant economic losses, often amounting to billions of pounds due to disparities in healthcare. ​

The review highlights the current picture of institutional discrimination and racial health inequities across the NHS in England. These include poorer maternal and mental health outcomes, late diagnoses of cancer and other diseases, unequal access to healthcare including medical trials and personalised medicine, and wider disparities in the quality of healthcare treatment experienced by ethnic minority patients.  However, there is a lack of analyses of the broad monetary value of the persistent racial and ethnic inequalities in society and its impact on people’s health.

The Labour government has made growth the centrepiece of its policy platform for this parliament, telling the nation that economic growth is route to prosperity, better public services, and ultimately a healthier and happier nation. Achieving this vision, however, will mean confronting a significant barrier to growth – the effect of racism on the health and wellbeing of the population.

The costs of racism also extend to the experience of NHS staff. A quarter of the NHS workforce are from Black, Asian, and other ethnic backgrounds, who are more likely to experience bullying, harassment and discrimination than White staff, and are less likely to be appointed, promoted or have routes for equal earning attainment. Apart from the millions of pounds spent annually on litigation with employment tribunals and settlements, discrimination has a negative impact on NHS productivity

Professor Habib Naqvi, Chief Executive, NHS Race and Health Observatory, said:

“We know the human cost of the impact racial discrimination in society and in healthcare is having on all patients, communities and the workforce. What we don’t know are the less obvious economic costs to society and the NHS of such discrimination. Exploring the exact scale of the broader economic costs of racial discrimination on the NHS, and on taxpayers, is a crucial next step in our understanding of the burden of racism.

“Our role is not to simply outline the scale of the challenge, but to also provide long-term solutions to those challenges.”

This study signals the start of a wider body of research for the independent health organisation. The Observatory will announce a new research commission next month to explore the financial and economic impact of racism on healthcare services and outcomes.

Professor John Appleby, an Observatory Board Member and former Chief Economist, advised on the Observatory’s Cost of Racism study, he said:

“We currently have a very limited understanding of the broad economic costs of racism as it relates to health and healthcare. More research will not only reveal the value of health losses to individuals, but the monetary losses to the NHS and the economy more generally.”

Also highlighted:

• A 2010 report, from the Institute of Health Equity estimated that health inequalities have led to productivity losses of £31-33 billion per year.
• A 2023 JAMA report on excess deaths in the United States, highlighting historic discrimination against minority groups and human cost of racial health inequities.
• An Australian study in 2016 which concluded that racial discrimination resulted in significant economic losses, costing its economy $37.9 billion annually, or roughly 3.02% of its GDP.
• The Salisbury Centre for Mental Health report released almost 20 years ago found the average annual cost per Black service user was £6,539, compared to £4,132 for White service users. This disparity was primarily due to Black patients accessing services later and in more acute states leading to expensive interventions.

The emotional impact of racial discrimination has a devastating impact on patients and staff with negligence claims, internal grievances, independent investigations, increased staff sickness and absence – all negatively impacting on workforce retention and recruitment.

As part of the Cost of Racism study, four personal patient-centred stories illustrate the lived experiences of racial discrimination and its devastating effects. The new study concludes with mapping an outline for what a new cost of illness study could mean for the healthcare sector.