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News archive - November 2012

Hospital payments should incentivise new models of care says report

Hospital payments should incentivise new models of care says report

THE WAY the NHS currently pays hospitals for the work they do - including Payment by Results - should change to incentivise new models of care, says a new report from the King’s Fund.

The report suggests that current payment systems may be obstructing changes in services required to meet current and future health care needs. It underlines the need to evaluate new and innovative payment methods that will move away from a system primarily driven by a desire to boost activity rather than outcomes and facilitate more integrated care. The King’s Fund proposes that the NHS adopts an approach that enables local experimentation in payment systems within a clear national framework, with a requirement for evaluation.

Payment by Results for hospital services was developed nearly a decade ago in order in part to drive a reduction in waiting times by encouraging more activity in hospitals, but the challenges facing the NHS have altered says John Appleby, chief economist at the King’s Fund and the lead author of the report. “Tinkering with PbR will not support the service changes increasingly recognised as necessary, and may even be obstructing them. One size does not fit all when it comes to payment systems, and radical changes in the blend of payment methods used in the NHS are essential in order to improve NHS performance and the quality of patient care.”

PbR is broadly suited to elective care (where services are relatively easy to define for costing and pricing purposes) and provides an incentive to improve technical efficiency within acute providers. However, it is not well designed to promote or support larger scale shifts in care from hospital to other settings, nor is it suited to promoting continuity and co-ordination of care. PbR provides almost no incentives for health promotion and disease prevention, and it does little to support improvements in the efficient allocation of funds or innovation.

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