Commissioning - Health Committee Contents


Letter to Howard Stoate MP from the NHS Confederation (COM 101A)

  I was interested to read the transcript from the Health Select Committee's recent evidence session on commissioning held on 4 January where you said, "The NHS Confederation is actually pretty impressed by PbR, they have some very positive things to say about it, particularly for example their view about the independent sector providers and bringing them into the market."

  Whilst we do feel that payment by results has an important role to play, we would not go quite so far as to say we are "pretty impressed" with it overall and I wanted to make sure we had been sufficiently clear to the Committee about our view of the significant benefits and real concerns with this policy.

  We believe that the general principle that providers should be paid for the results they achieve is right. For elective surgery fee-for-service arrangements, like the current tariff, are in use in many countries and a nationally set price has the advantage of removing the transaction costs of negotiation. These mechanisms can also encourage efficiency and innovation where there are effective controls in place to avoid provider-led changes in clinical thresholds for treatment.

  Tariff systems can work in emergency care and for long term conditions but unless they are used carefully they have the risk of providing incentives that are not really aligned with what patients or the wider health system needs. In particular, it has the potential to create incentives for providers to generate, rather than help manage, demand for secondary care. There are alternative approaches to payment for results mechanisms that do not rely on a fee-for-service payment which reward efficiency and coordination across whole pathways which would be preferable to the current arrangements.

  As our written evidence to the Committee has also suggested, we are keen for PbR to be rolled out to other service areas—not least mental health and ambulance services—but in these cases it will be important that the payment system supports the objectives of policy in this area: a system designed for elective surgery can not just be translated into these areas.

  We would be happy to discuss in further detail our views on PbR if that would be helpful, and we look forward to seeing the Committee's eventual conclusions on PbR and wider commissioning issues.

8 February 2010







 
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