International experience highlights need for payment reform in the NHS

Blog post

Published: 31/01/2012

I got an encouraging letter from the Secretary of State responding to our and The King’s Fund’s analysis on how integrated care could be developed in England. Our publication and other bits are a synthesis of what we know, with some concrete suggestions on how to move ahead.

There is now a tailwind, and the Department of Health, NHS Commissioning Board (now NHS England) and Monitor are currently mulling over how best to respond. More on this in the spring.

Meantime, for those weary of Kaiser and Torbay as examples, The Commonwealth Fund this month published four case studies of health organisations trying to develop integrated care as ‘accountable care organisations’ (ACOs): HealthCare Partners; Monarch HealthCare; Norton Healthcare; and Tucson Medical Center.

They are worth a look and are striking in that all are trying to do similar things: case management; care coordination; disease management; predictive risk modelling; use of hospitalists; developing the electronic health record across providers; close analysis of utilisation cost and quality at patient level; clinical leadership; developing easy access electronic portals for patients; bearing more financial risk appropriately; and pay for performance based on quality and shared savings models.

All not wildly new, but very instructive on the extent to which infrastructure is being developed as well as the methodical and serious way it is being implemented. No data yet on impact, but the four are taking part in the Dartmouth-Brookings ACO Pilot programme so will be exhaustively analysed.

In the above, modifying financial incentives feature and early results from Massachusetts’s Alternative Quality Contract look promising.

Clearly in England we are no slouches in developing these, given the extent of the Quality and Outcomes Framework (QOF) for GPs and speed of implementing diagnosis-related group (DRG) payment for hospitals. But given the task now at hand they look fragmented, misaligned and, frankly, out of date.

With this in mind we held a mini ‘Euro Summit’ last week in Brussels with KPMG, bringing together experts from 11 countries to discuss what next for payment reform.

The main headlines: blend payments according to what you want to achieve; all payment is in fact ‘pay for performance’; move towards year of care or full capitation for chronic disease with incentives for quality; different payments needed for more transactional care than the more ‘relational’ forms; commissioners can’t do it all – leave space for local providers to design detailed incentives.

The obvious, sobering conclusion was that changing payment currencies is not going to solve any issue fast (e.g. need for rapid upping of value). A full briefing will be ready soon and watch out for exclusive video interviews next week.

If you missed it, a review we have published of evidence on what helps to improve hospital efficiency could be helpful. The big ticket item – staff – and related productivity, is clearly the first place to focus on now.

But surely this is not just about cutting back on nurses, which is what the trade press is full of, alongside of course stories of yet more hospitals where patients cannot catch the attention of busy staff even for a drink of water.

We’ll continue to publish reports over the coming weeks from our research programme on how the NHS can increase efficiency and deliver more for less: The quest for efficiency in the English NHS.

And if you haven’t seen it already, join us at our major debate with The Royal College of Surgeons of England on Thursday, 23 February on whether – given the decade of austerity ahead – the NHS should further restrict the services it provides.

We have an all star cast featuring: Dr Clare Gerada, Professor Julian Le Grand, Professor Anthony Mundy, Polly Toynbee, with Branwen Jeffreys from the BBC in the chair. It will be very lively.

Suggested citation

Dixon J (2012) ‘International experience highlights need for payment reform in the NHS’. Nuffield Trust comment, 31 January 2012.