The payment by results scheme is now well embedded across the National Health Service, but its full potential in terms of boosting productivity is yet to be reached, spending watchdog the Audit Commission has found.

Under the payment by results policy – introduced by the government in 2004 as a key component of healthcare reform – hospitals are paid nationally-set prices for the number of patients and types of conditions they treat, the idea being that this could boost productivity without damaging the quality of care.

But according to the Commission’s report, while there is evidence to show that PBR has helped the majority of hospitals to understand the cost of treating patients and improve financial management, the scheme “has not yet increased NHS efficiency significantly”.

“Now that the NHS has implemented PBR, it should start to deliver the significant increases in productivity and efficiency across the NHS that the policy was designed to achieve,” said Chairman of the Audit Commission Michael O’Higgins. Furthermore, he stressed that the initiative “needs to develop so that it does what it says on the tin”.

In order to encourage a more efficient way of working, he suggests setting prices for procedures at lowest levels possible as opposed to the average cost, to encourage those hospitals with higher expenses to drive them down.

Furthermore, he says the NHS should reward hospitals achieving the highest standards of quality as an additional incentive to improve efficiency, as the system does not currently recognise different levels of service quality.

Quality not activity
Commenting on the report, Dr Jonathan Fielden, chairman of the British Medical Association’s Consultants Committee, agreed that the mechanism for funding patient care “must be more strongly linked to quality not just activity”.

“Although PBR has resulted in a more business-like approach and some improvements in data, it is yet to have a significant effect on efficiency. It has so far too often been used solely as a blunt financing tool,” he said.

According to Fielden, clinicians must have a greater role to facilitate better decision-making and planning of patient services, and he concludes: “The future development of PBR should focus on cohesion and collaboration rather than fragmentation, together with improving the reliability and accuracy of data that will empower clinicians to enhance and develop patient care.”