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Journal cover: Journal of Health Organization and Management

Journal of Health Organization and Management

ISSN: 1477-7266
Previously published as: Journal of Management in Medicine

Online from: 2003

Subject Area: Health Care Management/Healthcare

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Implementing payment by results in the English NHS: Changing incentives and the role of information


Document Information:
Title:Implementing payment by results in the English NHS: Changing incentives and the role of information
Author(s):Russell Mannion, (Centre for Health and Public Services Management, University of York, York, UK), Giorgia Marini, (Centre for Health Economics, University of York, York, UK), Andrew Street, (Centre for Health Economics, University of York, York, UK)
Citation:Russell Mannion, Giorgia Marini, Andrew Street, (2008) "Implementing payment by results in the English NHS: Changing incentives and the role of information", Journal of Health Organization and Management, Vol. 22 Iss: 1, pp.79 - 88
Keywords:England, National Health Service, Performance related pay
Article type:Case study
DOI:10.1108/14777260810862425 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Acknowledgements:Thanks and acknowledgments for support and advice go to Alaric Cundy, Mike Curtis, Susan Devlin, Alastair Hill, Maria Goddard, Jackie Linton, Alan Maynard, Chris Ratcliffe and Eileen Robertson and all those who agreed to be interviewed. The project was funded by the Department of Health in England as part of a programme of policy research at the Centre for Health Economics, University of York. The views expressed are those of the authors.
Abstract:

Purpose – This paper draws on economic theory and empirical evidence in order to explore the role of incentives and information in the successful implementation of the new hospital funding system in the NHS.

Design/methodology/approach – The research is based on case studies in two strategic health authorities comprising in-depth interviews with key stakeholders and analysis of background statistics and documentation.

Findings – The structure of tariffs under payment-by-results (PbR) provides high-powered incentives for providers to increase activity because they are rewarded for hospital activity, and payments for increases in activity are made at full average cost. However, there is a danger that hospitals will increase activity beyond affordable levels and possibly induce demand inappropriately.

Practical implications – In future, as PbR is extended, it will be important to monitor its intended and unintended effects. Such evaluation should consider the extent to which commissioners are able to live within their budgets and whether hospitals are engaging in opportunistic behaviour and gaming the new funding system.

Originality/value – This study has shed light on the incentive structure of PbR for NHS organisations and has provided insights for the development of information strategies for providers and commissioners in the NHS market. It also highlights a number of policy issues that need to be addressed as PbR is rolled out nationally as well as several important gaps in knowledge that are in need of more sustained investigation.



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