Payment by volume (not results)

Abstract

Payment by results, a system for paying healthcare trusts, is intended as a fair and consistent basis for hospital funding. It relies on a national tariff structured around a case-mix measure known as healthcare resource groups. It is often argued that if payment by results works as planned, the National Health Service will become more efficient and productive. However, the use of a case-mix measure, the healthcare resource group, which derives from the diagnostic related (or diagnosis-related) group, has attendant problems. These include the risk that the payment structure will be inaccurate, unfair and liable to cause the financial destabilisation of trusts. There is also the risk that healthcare institutions will falsify patient classifications (‘up-coding’) to ensure higher remuneration. It has been argued that payment by results may be particularly unsuited to psychiatry. The ability of healthcare resource groups to accurately predict resource use in psychiatry is doubtful. In conclusion, mental health trusts will need to adapt to payment by results but there will inevitably be losers.