1. Patient-Focused Funding & Payment by Results The UK Experience CEO Forum, Kananaskis, Alberta February 16, 2009 Robert J. Bell – Chief Executive Royal Brompton & Harefield NHS Trust London, UK r.bell@rbht.nhs.uk

2. 2 The NHS (2008) DEPARTMENT OF HEALTH STRATEGIC HEALTH AUTHORITIES PRIMARY CARE TRUSTS  Manage and provide Medical and Surgical care in Teaching and District General Hospitals, Specialist Hospitals and DTCs  Contract with PCTs for services to patients on a local/regional basis ACUTE CARE TRUSTS THE LOCAL HEALTH ECONOMY  Contract for (commission) hospital care, locally  Manage and integrate primary care for medical, dental, pharmaceutical and optical services

3. 3 The NHS (2008)  10 STRATEGIC HEALTH AUTHORITIES (SHAs)  For a population of 51 million  152 PRIMARY CARE TRUSTS (PCTs)  Average population of 330,000  230 NHS TRUSTS  Acute, Mental Health, Ambulance

4. 4 The NHS (2008) MAJOR REFORMS : THE PAST DECADE …… Key Functions Examples of discrete reforms Standard-setting and monitoringNational Institute for Health and Clinical Excellence (NICE) National Service Frameworks (NSF) Core and development standards (set by the Department of Health) Clinical Audit Target-settingPublic Service Agreements, NHS contract Clinical governanceLegislation Regulation Institutional Individual Healthcare Commission (HCC) Monitor Audit Commission National Clinical Assessment Authority General Medical Council (GMC) Appraisal and Revalidation Patient/Public engagementPatient choice of providers Expert Patient Programme Patient and Public Involvement (PPI), LinKS Patient Advice and Liaison Services (PALS) Payment and Incentives Payment by Results (PbR) GP Contract Consultants’ contract Agenda for Change Public ReportingDr Foster League Tables Star ratings (now superseded by the annual health check) CommissioningNICE Commissioning guides, Practice Based Commissioning

5. 5 Payment by Results THE NEW WAY OF DOING BUSINESS PbR BLOCK FUNDING

6. 6 Payment by Results (PbR) KEY ELEMENTS (Payment by Activity) HRGs Activity Health resource groups National Tariff Payment to provider by PCT

7. 7 Payment by Results (PbR)  TO FACILITATE DECENTRALISED WAITING TIME REDUCTION (TARGETS)  TO REWARD EFFICIENCY AND QUALITY  TO SUPPORT PATIENT CHOICE (MONEY FOLLOWS THE PATIENT)  TO PROVIDE A TRANSPARENT AND FAIR WAY TO PAY PROVIDERS  TO REDUCE TRANSACTION COSTS AND NEGOTIATION DISPUTES WHY WAS IT INTRODUCED?

8. 8 The NHS (2008) PCT’s and Commissioning PCT’s PRACTICE BASED Commissioning GP’s 18 WEEK PATHWAYS Integrated Care PATIENT CHOICE “Choose & Book” PLURALITY PbR (Payment by Results) National Tariff Patient Level Costing Foundation Trusts ISTC’s NHS Trusts Etc.

9. 9 Payment by Results (PbR) THE KEY ELEMENTS FINISHED CONSULTANT EPISODES (FCEs) HRG’s counted by FCEs HEALTH RESOURCE GROUPS (HRGs) Developed in Australia Implemented in the UK (1992) Standard Grouping Clinically similar patients Consume similar level of Healthcare Used to set a National Tariff (Price/HRG) NATIONAL TARIFF Based on average reference costs Separate Tariff (Elective vs Emergency) Tariff paid according to actual work Trusts compensated through national contracts/local SLA BASELINE ACTIVITY SPELLS Agreed level of work between PCT and Trust Adjustments subject to SLA and risk sharing Providers paid for a “spell” that may include several FCE’s SPECIALIST TOP UPS Complex rules/algoritism Specific uplifts for certain combination codes

10. 10 Payment by Results (PbR) Has it really worked? Did the UK get the Balance right for the NHS and the Taxpayers?

11. 11 Payment by Results (PbR) The Combination of PbR and National Targets has markedly decreased Wait Time for Admission to hospital

12. 12 Payment by Results (PbR) Lower Hospitalisation has been experienced

13. 13 Payment by Results (PbR) And: Short stay activity has increased

14. 14 Payment by Results (PbR) Increasing efficiency Rewarding and increasing quality “THE JURY IS STILL OUT”

15. 15 Payment by Results (PbR)

16. 16 Payment by Results (PbR) However,

17. 17 Payment by Results (PbR) Data Quality has substantially improved ….

18. 18 Payment by Results (PbR) So what does the future look like? PbR is here to stay PbR is here to stay current HRG version 3.5 to be replaced by version 4.0 current HRG version 3.5 to be replaced by version 4.0 PbR has been extended to Mental Health PbR has been extended to Mental Health HRG unbundling to support PCTs in shifting local commissioning to community settings and GP’s HRG unbundling to support PCTs in shifting local commissioning to community settings and GP’s Pay for Performance may be next (linking Quality and Outcomes) Pay for Performance may be next (linking Quality and Outcomes) PbR may be applied to community and home based services PbR may be applied to community and home based services