In the last Parliament, the UK government introduced major changes to the NHS, and in this session it has plans for universities with its much discussed higher education Green Paper.

Health and education are two fields where the UK leads the world. Nonetheless, there are compelling reasons for change, and the Green Paper cites the need to match workforce skills better to the knowledge economy and to see that students get better value-for-money for the very high levels of debt they accrue while ensuring that more of our society benefits from our degrees.

But what can the health sector tell us about what lies ahead in education??

The media focus on the NHS¡¯ difficulties misses some elegant and world-leading developments in UK health. Perhaps the biggest ¨C pre-dating the latest reorganisation by more than a decade ¨C is the move towards measuring outcomes rather than activity. It is not perfect, and there is still a lot of payment for activity in the NHS, but there is one stunning example of payment by outcome.

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In 1999, Nice (the National Institute for Health and Care Excellence) was set up to assess drugs and clinical interventions, and has now put everyone¡¯s health needs on the same footing when deciding how to spend our resources in health. It has been controversial at times because, for instance, extending your grandmother¡¯s life by three months is a more emotive decision than enabling two middle-aged ramblers to walk without pain. But these are the types of issues that Nice must consider when assessing where money should be spent.

The system is effective in England and around the world, and has changed how we think about provision.

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Nice harnessed our academic legacy in health economics and works by assigning each of us a utility: 1 for perfect health and 0 for the worst imaginable health (usually death). Drugs, surgery and technology that raise our utility can be funded, and there is a scale of payments that recognises the amount of improvement and how long it lasts. Critically, it means that we pay for the benefit, not for the amount of effort it took.

Education is not there yet, although the idea of learning gain in the Green Paper has obvious parallels with improvements in health utility that last for years. I am not an educational economist, but I am told that they exist in the groves of academe, and I am sure that they could contribute significantly to the challenge at hand.

So let us imagine that the current proposals were supported by a ¡°National Institute for Learning and Teaching Excellence¡±, or NILTE, that could put every educational programme on the same economic footing. Nice has taken a while to evolve, and it would be unreasonable to expect NILTE to emerge with a mature method overnight ¨C but if it did exist, how could it support education?

After the initial negative reaction followed by acceptance and compliance that Nice experienced, a NILTE-backed teaching excellence framework would be expected to enable providers to assess their courses and to articulate the full value of their educational offer to students. The pharmaceutical sector is extremely sophisticated in being able make the case for certain expensive drugs because they deliver better care and reduce expense elsewhere in the system. By analogy, two-year degrees, for instance, might be able to attract a higher annual loan while delivering a degree that costs less overall.

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This thinking could be taken further within universities, so that they move from simply articulating the value of their courses to designing courses that maximise value-for-money for students.?

At present, much discussion is about what universities have to do to charge higher tuition fees. In some cases, it might be appropriate to explore mechanisms to lower the cost base in order to charge less. NILTE could provide the toolset to do so.

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Perhaps the most immediate benefit, however, would be that a NILTE-backed framework would allow us to undertake an analysis of risk to the sector. While the Green Paper addresses risks faced by students and employers, we note, again with a nod to the experience in health, that this type of intervention can create upheaval.?

Moreover, with complicated systems that touch millions of people¡¯s lives, one cannot guess quite what will happen. We do not know, for instance, whether we have sufficiently disentangled research and teaching costs in a sector that has traditionally done both, to know that radical change on one front will not affect the other significantly.

An economic approach to learning gain, while likely to be as controversial as it was in health, offers three prospects critical to the success of the Green Paper:

First, we can gain a better understanding of what value-for-money means in learning. Second, we can start to learn how to design courses for high levels of value-for-money in education, by raising the learning gain and/or by reducing the cost of that learning gain. And finally, the creation of a ¡°Nice¡± for education would provide a better basis for analysing risk to a sector in which we still lead the world.

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Terry Young is professor of healthcare systems at Brunel University London.