Has payment by results affected the way that English hospitals provide care? Difference-in-differences analysis
BMJ 2009; 339 doi: https://doi.org/10.1136/bmj.b3047 (Published 27 August 2009) Cite this as: BMJ 2009;339:b3047All rapid responses
Rapid responses are electronic comments to the editor. They enable our users to debate issues raised in articles published on bmj.com. A rapid response is first posted online. If you need the URL (web address) of an individual response, simply click on the response headline and copy the URL from the browser window. A proportion of responses will, after editing, be published online and in the print journal as letters, which are indexed in PubMed. Rapid responses are not indexed in PubMed and they are not journal articles. The BMJ reserves the right to remove responses which are being wilfully misrepresented as published articles or when it is brought to our attention that a response spreads misinformation.
From March 2022, the word limit for rapid responses will be 600 words not including references and author details. We will no longer post responses that exceed this limit.
The word limit for letters selected from posted responses remains 300 words.
Farrer and colleagues have demonstrated that adoption of Payment by
Results has changed the recorded inpatient activity of hospitals. However,
what is not clear is whether this represents a genuine change in activity,
or simply a change in the way activity is recorded. To take an example,
upper gastrointestinal endoscopy is a common procedure performed on
patients who are not otherwise staying in hospital.
Historically, some
hospitals recorded these procedures as day case admissions, others as
outpatient procedures. It did not matter, the patient got the test, and
the hospital got paid under the block contract. Under Payment by Results,
however, the hospital gets more income for a day case admission with
procedure than for an out patient procedure. The astute business manager
will have ensured that activity is recorded for administrative purposes in
whichever legitimate manner will maximise income.
The side effects of such a change in recording include boosting many
perceived positive indicators of "good" or "efficient" care. The number
(and proportion) of day case admissions goes up. If other admissions are
unchanged, the total number of admissions also goes up, and the added day
cases reduce the average length of stay. Since very few patients admitted
for day case endoscopy die, in-hospital mortality rates also fall.
Such changes in recording for endoscopy and similar procedures could
account for a significant proportion of the "benefit" of Payment by
Results described by Farrer and colleagues, without any change whatever in
the actual activity, cost, or quality of patient care.
Competing interests:
None declared
Competing interests: No competing interests
At its conception PbR was intended to enable commissioners and
providers to focus on quality rather than price. The idea was that
providers compete on quality rather than costs. Farrar et al showed that
quality (as measured) did not change.
Either the health care market cannot be used to improve quality, or PbR is
the wrong tool to improve quality or the assessment of quality was in
Farrar et al’s study inadequate. In line with the two previous comments I
suspect that all three explanations apply.
Farrar et al showed a small improvement in productivity. This may be
more than offset by the additional administrative costs that occur with
PbR both at commissioning and provider level.
Farrar at al could not show that the introduction of PbR has not let
to a change in case mix. Indeed the increased number of day case
procedures undertaken could reflect that overall "healthier patients"
received treatment.
In my own area of health care (sexual health) PbR rewards the provision of
minimal services for the worried well while it “penalises” targeting those
who have most to gain from using the services - and are the most expensive
patients.
Finally Farrar et may not have compared PbR with no PbR but early
adaptors of an innovation with late adopters. Organisational cultures are
likely to differ between those groups and it might explain the observed
differences better than the introduction of PbR.
Competing interests:
None declared
Competing interests: No competing interests
Payment by results (PbR) is a fixed tariff payment system based on
case mix that reimburses hospitals for the type and number of patients
treated – a better term would be ‘payment by activity’. Farrar and
colleagues have shown payment by results to reduce unit costs without
detrimental impact on the quality of care provided.(1) The impact on the
volume of care provided was less clearly demonstrated, but an increase in
activity was suggested.
The primary intention of PbR (to incentivise higher outputs and lower
costs per patient) is commendable – but the current system is flawed.
Take the example of a patient who has, until now, regularly travelled long
distances to attend the nephrology clinic for management of longstanding
but stable chronic kidney disease. Rather than arrange a further clinic
appointment, the nephrologist may prefer to discharge the patient to the
primary care setting, or to manage the patient through a ‘virtual clinic’
model (where patients are followed by phone consultation in combination
with blood tests undertaken locally). Both options will require the
patient to travel less – reducing the environmental impact of the
healthcare.
However, PbR clearly discourages the nephrologist from discharging
the patient to primary care. Furthermore, although the current PbR model
includes some provision for virtual care, current guidance on this area is
extremely limited.(2) Implementation is further hampered by the absence of
guidance on tracking virtual activities. In the example above, PbR
unfortunately therefore favours promotion of increased provider activity
through the provision of another unnecessary low-cost, low-added-value
outpatient visit.
The scale of carbon reduction needed to mitigate the effects of
climate change cannot be achieved without the health sector playing its
part. Furthermore, after a period of relative plenty, the NHS is likely to
face budget cuts (or at least reduced expansion of funding) in the light
of a growing awareness of how the financial crisis will impact upon it.
The NHS must therefore embrace initiatives to stream-line service
provision. The current purchaser/provider split between primary and
secondary care does not always encourage this. New funding models within
PbR are required to support more sustainable care.
Andrew Connor, green nephrology fellow, the Campaign for Greener
Healthcare, Oxford OX2 7LG. andrew.connor@kintoa.org
Frances Mortimer, medical director, the Campaign for Greener
Healthcare, Oxford OX2 7LG.
Charles Tomson, consultant nephrologist, Southmead Hospital, Bristol
BS10 5NB.
References
1. Farrar S, Yi D, Sutton M, Chalkley M, Sussex J, Scott A. Has
payment by results affected the way that English hospitals provide care?
Difference-in-differences analysis. BMJ 2009;339:b3047.
2. Payment by Results Guidance for 2009-10. Department of Health.
Available at
http://www.dh.gov.uk/dr_consum_dh/groups/dh_digitalassets/documents/digi...
(last accessed 6th Sept, 2009)
Competing interests:
None declared
Competing interests: No competing interests
Has payment by results affected the way the English hospitals provide
care?
To the editor,
It was difficult to measure quality of hospital care in 1982;1 twenty-
seven years later; we are still none the wiser. Farah et al highlight our
shortfalls in understanding, measuring and interpreting health care
quality.2 Effects of payment by results on length of stay and volume have
been successfully demonstrated, whilst the effect on quality of care in
hospitals remains a mystery.
Since the introduction of payment by results, emphasis has been
placed on cost and timeliness with little data investigating the impact on
quality.3 Although Farah described no measurable detriment or difference
to quality of care, this ‘common result’ is a reflection of inadequate
investigation into the many facets of health care quality. Conventional
indicators of quality care (e.g. mortality) are minor representatives for
exploring impact on quality.
Along with the outcome measures of timeliness and cost of care, we
need thorough investigation into the effect of payment by results on
primary dimensions of quality. Dimensions deserving attention are
effectiveness of processes (treatment plans, preventative medicine,
teaching and research), safety (adverse events, safety improvement rates)
and patient centredness (patient experience of care, equitable care,
satisfaction and accessibility).4,5,6
Although seemingly difficult, assessing the quality of health care
has been described for quite some time.8,9 It would be of great benefit to
develop uniform national parameters (adjusted for risk, population,
patient group, location, ownership) to benchmark levels of health care
quality.5,6,7 In doing so, giving rise to more valid and comprehensive
assessment on the impact of health care quality.9
Until we have defined quality of care parameters the effects of
introduced policies will continue to be largely unknown in the realm of
health care quality. There is much room for further investigation to
realise the full impact of payment by results. We should now focus on
quality.
Competing interests: None
Erin Cottrill Medical scientist
Royal Children’s Hospital, Melbourne, Victoria, Australia
erin.cottrill@rch.org.au
References
1) Anderson G. The effect of payment by results. Editorial. BMJ
2009;339:b3081
2) Farrah S, Yi D, Sutton M, Chalkey M, Sussex J, Scott. Has payment by
results affected the way the English hospitals provide care? Difference-in
-differences analysis. A. BMJ 2009;339:b3047
3) Christianson J, Leatherman S, Sutherland K. Financial incentives,
healthcare providers and quality improvements. A Review. 2009 Available
from:
http://www.who.int/pmnch/topics/economics/financialincentives/en/index.html
4) Institute of Medicine. Crossing the Quality Chasm: a new health system
for the 21st Century 2001. National academy press. Available from:
http://www.nap.edu/books/0309072808/html/
5) Centor R M, Taylor B B. Health care reform: Do hospitalists improve
quality? Editorial. Arch Intern Med 2009;169(15)
6) Lopez L, Hicks L S, Cohen A P, McKean S, Weissman J S. Health care
reform: Hospitalists and the quality of care in hospitals. Arch Intern Med
2009; 169(15): pg 1389-1394.
7) Wharam J F et al. High quality care and ethical pay-for-performance: A
society of general internal medicine policy analysis. J Gen Intern Med
2009;24(7):854-9
8) Donabedian A. The quality of care. How can it be assessed? JAMA 1988;
260(12):1743-1748.
9) Pronovost PJ, Nolan T, Zeger S, Miller M, Rubin H. How can clinicians
measure safety and quality in acute care? Lancet 2004;363:1061-67
Competing interests:
None declared
Competing interests: No competing interests
PbR - Questions still remain.
Farrah, S. et al. find evidence of payment by results improving
efficiency, i.e. a reduction in length of stay and increase in the
proportion of day cases, and an increase in the volume of activity (1).
However, no discernable effect is noted upon the quality of patient care
(with reference to the proxy measures used).
Interestingly, the majority of the outcomes point to difference-in-
differences when Scotland is used as the control group. While reassuring
to note that payment by results has improved provider behaviour in England
relative to their counterparts in Scotland, it remains questionable
whether the policy has had a discernable impact across English providers.
Indeed, Farrah, S. et al. find evidence that 2004/05 non-foundation trusts
actually reduced their length of stay at a faster rate than foundation
trusts. This corroborates conclusions drawn by the Audit Commission that
the fixed tariff system had a questionable impact on efficiency (2).
In light of these findings it seems logical to argue for further
investigation into the impacts of the payment by results policy with
particular attention placed on the objectives set out by the Department of
Health (3).
References:
1. Farrah S, Yi D, Sutton M, Chalkey M, Sussex J, Scott. Has payment by
results affected the way the English hospitals provide care? Difference-in
-differences analysis. BMJ 2009;339:b3047
2. Audit Commission. The right result? Payment by results 2003-07.
London: Audit Commission, 2008.
3. Department of Health, Reforming NHS financial flows: introducing
payment by results. London: Department of Health, 2004.
Competing interests:
None declared
Competing interests: No competing interests