Personal health budgets: potential and challenges

Blog post

Published: 28/08/2013

Starting in April 2014 the 56,000 people eligible for NHS continuing health care will be offered a personal health budget. Positive results from an independent evaluation of a three-year pilot programme provided sufficient evidence to take the approach forward.

However, while the pilot programme has generated a lot of knowledge about how best to implement personal health budgets, important questions about how they can be sustained in the wider NHS are raised by next year’s roll out. These will need careful consideration as the roll out proceeds and are discussed in new research published by the Nuffield Trust.

Personal health budgets are a new tool to increase individual choice and control within the NHS as part of the mandate to increase the role of patients as partners in the management of long-term conditions.

Perhaps the most significant challenge is to decommission existing services in order to free up resources to offer personal health budgets, while not destabilising existing providers

A personal health budget is an allocation of NHS resources that individuals can use to meet their health and well-being goals in new and innovative ways that do not rely on commissioned services. It does not cover an individual’s entire NHS care. Certain services, such as GP services, A&E, and inpatient care, are excluded.

The evaluation found that personal health budgets improve individual quality of life and psychological well-being for a range of long-term conditions compared to care as usual.

Budget holders used fewer inpatient, A&E, and GP services than those receiving commissioned services and the benefits were greater for budgets of £1000 or more a year, and where budgets were implemented with a strong degree of freedom and flexibility for the budget holder.

The pilot demonstrated that frequently raised concerns about fraud were largely unfounded and that individuals were not exposed to undue risk or poor quality care in making their own choices.

Personal health budgets present clinical commissioning groups with opportunities to improve individual engagement with services. However, they also present a range of challenges.

Perhaps the most significant challenge is to decommission existing services in order to free up resources to offer personal health budgets, while not destabilising existing providers.

Under the pilot, double running costs for up to 75 personal health budget holders per area could be managed for a short period. But personal health budgets will have to move forward on a cost neutral basis if they are to play an ongoing role in the NHS.

This raises a further challenge around the long term sustainability of personal health budgets. While they have been shown to reduce spending elsewhere in the NHS, the Dutch experience with personal health budgets highlights the risks of a growth in demand.

In the Netherlands, there was a ten-fold increase in demand for personal health budgets between 2002 and 2010, leading to a change in the programme’s rules to better manage the costs.

As the roll out of personal health budgets proceeds in the NHS, it will be critical to monitor their take up and to closely track spending to ensure that the potential they offer to personalise care does not cause additional expense for an already cash-strapped NHS.

Vidhya Alakeson is Deputy Chief Executive at the Resolution Foundation. Please note that the views expressed in guest blogs on the Nuffield Trust website are the authors’ own.

Suggested citation

Alakeson V (2013) ‘Personal health budgets: potential and challenges’. Nuffield Trust comment, 28 August 2013.