New Payment System Has Led to Real Changes in Hospital Care in England

A new payment system for hospitals in England has led to real changes in the delivery of care, concludes a study published on bmj.com.

In April 2002, the Department of Health in England outlined plans to introduce a new system of financing hospitals called “payment by results.” This fixed tariff payment system directly linked the income hospitals receive with the number and case mix of patients treated and was motivated by policy objectives to increase efficiency, volume of activity, and quality of care in English NHS hospitals.

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Similar systems have been adopted in other countries, but the impact of payment by results in England has yet to be thoroughly evaluated.

So a team of researchers, led by Shelley Farrar at the University of Aberdeen, compared measures of volume, cost and quality of care in hospitals across England (at various stages of implementing payment by results) with providers in Scotland (not implementing payment by results) during 2004/05 and 2005/06.

Differences between the phasing in of payment by results by foundation trusts, non-foundation trusts, and Scotland allowed the researchers to estimate the effects of the introduction of the policy.

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The results show that unit costs fell more quickly where payment by results was implemented. Evidence of an association between the introduction of payment by results and growth in acute hospital activity (volume of patients treated) was also found.

There was little evidence of any change in the quality of care associated with the introduction of payment by results. However, further analysis on the longer-term impact of payment by results found that the quality of care in foundation trusts increased in association with the introduction of the tariff.

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No results support the proposition that quality of care has suffered as a result of payment by results. This suggests that cost reductions have been attained through increases in efficiency rather than through reductions in quality, say the authors.

“Taken together the analysis suggests that payment by results is capable of achieving, and has in the short time since its adoption actually achieved, real changes in delivery of health care in hospitals in England,” they conclude.

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In an accompanying editorial, Professor Gerard Anderson from Johns Hopkins University says that the effects of payment by results cannot necessarily be predicted by theory and past experience.

He discusses the similarities and differences between the UK and American experiences with payment by results, and believes that evaluations like this are needed because patients, doctors and hospitals do not always respond in ways that programme designers anticipate. Many countries have instituted a programme similar to payment by results over the past 25 years; however, experiences in one country do not always predict those in another, he writes.

Source-BMJ
SRM