Payment by Results (PbR): How Can Finance Systems Improve the Quality of Health

Payment by Results (PbR): How Can Finance Systems Improve the Quality of Health

Payment by Results (PbR) continues to be one of the most important and fastest growing strategies in the National Health Service (NHS), especially in secondary health care. Last year, NHS England announced the introduction of this system for elective work.

But at a time of profound changes and past policies driven by the Social Care Act, an important opportunity arises to rethink how these payment systems should adapt to a new reality.

The health payment systems used by the NHS have been designed to ensure that the resources needed for a comprehensive health system are available across the country.

Some payment systems in the NHS (for example, the payment of GPs) are designed based on incentives that stimulate some activities to the detriment of others.

One of the most significant forms of this type of payment, payment by results (PbR) in secondary health care, has been used for almost two decades and accounts for a third of the total British NHS budget.

The pay-per-activity system was implemented in the NHS progressively (following the implementation of effective measures in 2003 and 2004), after the decision to reduce waiting times for hospital care, encouraging providers to increase their activity and attract more patients.

The philosophy of the system is that the providers have a minimum volume of cases awaiting treatment, and if they fail to comply with the minimum agreed upon, the providers are the economically disadvantaged.

The higher the level of patient attraction and activity, the greater the reward, with more resources. The potential perverse effects of this market logic have always been strategically curbed by the impossibility of competition based on prices, without forgetting the quality of hospital care.

Although this system has been regularly reviewed, updated and modified based on new needs and new studies on the system, its applicability and improvement continues to be one of the concerns of the system’s actors. This has intensified with the introduction of important changes in this, with the reforms that the Health and Social Care Act of 2012 has brought.

In addition, the current NHS payment system was born in different circumstances than today. At the time, the resources were in full growth, and the main objective was to reduce the average stays.

Therefore, the adequacy of the current system is questioned due to an environment (and a future) in which the emphasis will be placed on integration between levels of care, cost containment and the very change in the health needs of the population.

In a report, The King’s Fund, the UK’s not-for-profit foundation for improving health and care, assumes that the current pay-for-results system is ill-suited to many current and future needs of healthcare.

Thus, it presents a vision and a comprehensive study of the context and design of the payment systems that the NHS uses, specifically the PbR. The applicability in the current situation and how it should be adjusted to better respond to the future needs of the health system are analyzed.

Starting from the political context of these payment systems, the report provides a brief description of the different solutions or types of payment for health services, and how they are designed and applied in the field (capitative financing, payment for service, bundled payment, etc.).

Subsequently, the current payment systems for secondary health services in the UK NHS, their design and how they operate, are studied in detail, with special attention to the payment for results (PbR) system.

The findings of this study reflect the need for planners to take a broader view of how payment systems relate to each other, and how these systems can be integrated with policies across different NHS policy areas, to achieve improvement in the performance and quality of care provided to patients.

It is important to be clear that a payment system, by itself, is not the end of the system, and will not solve the care needs of the population. However, it is an important tool to promote the objectives of defined health policies.

International experiences regarding payment systems are also an aspect of knowledge and reflection. It highlights the fact that, recently, there are several attempts to achieve a balance between pressures and competitive forces in health systems. Considering these bases of analysis and experience, the main challenges that the NHS faces in the medium term can be defined, and how it should adopt a system of payment for results.

Specifically, some lines of strategic orientation are pointed out for the future, which must be present in the definition of the payment strategy to be defined by the NHS commissions:

  1. Clear identification of the objectives (and respective limitations) that the results-based payment system should aim for.
  2. Definition of what the role of payment by results should be and what its cost-effectiveness should be.
  3. Recognize the heterogeneity of health services, and ensure that the structure of the system is adapted to the specificities of the different types of services.
  4. Define the scope of action or decision of local actors and the rules that should allow flexibility at this level.
  5. Ensure and make explicit the trade-offs between the objectives to be achieved and how these should be addressed.
  6. Ensure the existence of robust and useful information on activity and costs.
  7. Define and manage expectations regarding the pace of development and the evaluation of the system and its different interventions.

The current results-based payment system must not only follow these premises, but also adapt to a system that is constantly changing and to new needs or structures for the provision of health services. To obtain an appropriate answer and tool, thus meeting the objectives of improving the quality, accessibility and availability of NHS health services.

About Odutolu Timothy

Passionate about technology and communication, Timothy Odutolu has more than 5 years of experience writing for various niches in these fields. He's more comfortable writing about the key trends in the business-to-business software-as-a-service (B2B SaaS) niche. He is also a generalist with interests in journalism, DIY and outdoor, and other writing services. He's reachable via Twitter, LinkedIn, and email through or

Check Also

Working Cashless in the Healthcare Industry

With CASHLESS OPERATION, you can work faster and more securely. But what might that look like for you in the healthcare industry?

Leave a Reply

%d bloggers like this: