New "Payment By Results" System Results In Changes In Hospital Care (England)

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Main Category: Medical Practice Management
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Article Date: 01 Sep 2009 - 0:00 PDT

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

The Department of Health in England outlined policies in April 2002 to launch a new system of financing hospitals called "payment by results." In this fixed tariff payment system, the income hospitals receive is directly linked with the number and case mix of patients treated. It was motivated by policy objectives to increase efficiency, volume of activity, and quality of care in English NHS hospitals.

Comparable systems have been introduced in other countries. But until now, the impact of payment by results in England has not been carefully evaluated.

In order to find out more, 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. They considered the various stages of implementing payment by results with providers in Scotland who were not implementing payment by results, during 2004-05 and 2005-06.

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

Findings indicated that unit costs dropped more promptly where payment by results was implemented. The researchers also found evidence of an association between the introduction of payment by results and growth in acute hospital activity which is the volume of patients treated.

There was little indication of any alteration in the quality of care linked with the introduction of payment by results. But, additional analysis on the longer-term impact of payment by results suggested that the quality of care in foundation trusts improved in connection with the introduction of the tariff.

There is no evidence signifying 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 write in conclusion.

In a complementary editorial, Professor Gerard Anderson from Johns Hopkins University remarks that the effects of payment by results cannot essentially be predicted by theory and past experience.

He reviews the similarities and differences between the UK and American experiences with payment by results. He believes that such evaluations are required because patients, doctors and hospitals do not always react in the manners that program designers predict. "Many countries have instituted a program similar to payment by results over the past 25 years; however, experiences in one country do not always predict those in another", he writes.

"Has payment by results affected the way that English hospitals provide care? Difference-in-differences analysis"
Shelley Farrar, research fellow, Deokhee Yi, research fellow, Matt Sutton, professor in health economics, Martin Chalkley, professor, Jon Sussex, deputy director, Anthony Scott, professorial research fellow
BMJ 2009; 339:b3047

"The effects of payment by results"
Gerard Anderson, professor
BMJ 2009; 339:b3081
bmj.com

Written by Stephanie Brunner (B.A.)
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