Incentives
A reimbursement system for English hospitals called Payment by Results introduced strong financial incentives to the health system in 2003. The new system of national tariffs, which bases the cost for each hospital admission on its average cost across the NHS, is designed to create transparency and efficiency in the hospital sector. Similar payment schemes are used in other countries but the system in England covers a higher proportion of hospital income (around 90 per cent in England). Together with patient choice of provider, Payment by Results ensures that money follows patients and is intended to reward hospitals for high levels of activity and quality.
It is proposed that the system will be extended to other areas of health care including mental health and community health services. Reforms have been accompanied by other measures, such as new contracts for doctors and other health care staff, aimed at making the workforce more productive.
More information
Our briefing on Payment by Results
Publication: Assessing the New NHS Consultant Contract
Providers
The government is encouraging a greater diversity of organisations to supply health care services, by creating NHS foundation trusts and introducing new providers, including those from the private sector and social enterprise organisations. While there has been growth in the number of independent surgical treatment centres, there remain few alternative providers of primary medical care – this is likely to be an area for future reform. A major programme of service reconfiguration has begun too – driven by quality, access and financial issues at a national and local level.
More information
Our resources on primary care
Our briefing on the reconfiguration of hospital services in England
Commissioning
The 152 PCTs in England are responsible for 80 per cent of NHS spending, equivalent to around £58 billion. From June 2007 PCTs have been able to contract with the private sector to provide commissioning support under a national framework contract.
Under ‘practice-based commissioning’, PCTs give GP practices notional budgets with which to commission care for their patients. They can keep a percentage of any surplus they accrue, providing incentives for efficiency. Commissioners need to be able to assess need, stratify the risk of populations, manage risk, procure services and monitor contracts. It is hoped that high-quality commissioning will support policy objectives including reducing health inequalities, preventing ill health and managing chronic conditions more effectively, such as reducing costly avoidable admissions.
More information
Our briefing on practice-based commissioning
Our resources on commissioning
Regulation
Underpinning all these elements of reform is the need for effective regulation to ensure the quality and safety of both individuals and institutions. New regulatory challenges are emerging as the variety of organisations delivering care to NHS patients increases with the involvement of the commercial and voluntary sectors, social enterprises and foundation hospitals. There remains a need to monitor the performance of providers and commissioners and to develop a framework for market regulation.
More information
Our resources on regulation
Current and upcoming work
The King’s Fund is working on a number of projects that relate to health system reform as a whole. These include:
Windmill 2007 – Simulating health futures
In partnership with Loop2, Monitor and Nuffield Hospitals, we held a large-scale simulation event to explore how NHS reforms will work together when fully implemented and what needs to happen now to avoid unwanted consequences.
More on Windmill 2007
Read Windmill 2007 report
Wanless Health Care Spending Review – five years on
With Sir Derek Wanless, we are analysing whether the assumptions made in his original review of future spending requirements for health care have held over time and what the impact might be on future funding needs.
More on the Wanless Health Care Spending Review
Other work
The King’s Fund produces a range of papers on specific aspects of health system reform. These include:
How Should we Deal with Hospital Failure?
Practice-based Commissioning
Social Enterprise and Community-based Care
