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Think tank calls for overhaul in NHS payment methods


2 November 2012

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Current NHS payment mechanisms may “obstruct” the changes in services required to meet the growing care needs of the population.

A report by think tank The Kings Fund Payment by Results: How can payment systems help to deliver better care? has called for a change in the way NHS hospitals are paid for the work they do.

Current NHS payment mechanisms may “obstruct” the changes in services required to meet the growing care needs of the population.

A report by think tank The Kings Fund Payment by Results: How can payment systems help to deliver better care? has called for a change in the way NHS hospitals are paid for the work they do.

The research found there is an “urgent need” to experiment with and evaluate new and innovative payment methods that will move away from a system it claims is “primarily driven by a desire to boost activity rather than outcomes and facilitate more integrated care”.

The think tank proposes that the NHS adopt 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,” said John Appleby, chief economist at The King’s Fund and lead of the report.

“But the challenges facing the NHS have altered. Tinkering with Payment by Results 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.”

While the report claims the Payment by Results mechanism is “broadly suited” to elective care and provides incentive to improve technical efficiency within acute providers, it provides almost no incentives for health promotion and disease prevention and is not well suited to promoting continuity and co-ordination of care.

Speaking at the Tory party conference last month (October 2012), Health Minister Dr Dan Poulter confirmed NHS payment mechanisms will be “reviewed and improved” to drive through the reorganisation in the health service.

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