Payment by results system has outlived its usefulness, King’s Fund report says

Payment by results, the system used in England to pay for around 60% of the average hospital’s activity, no longer meets the challenges facing the NHS, a new report from the King’s Fund finds.

The system encourages hospitals to do more. This was appropriate when the need was to cut waiting lists for elective operations but not when the need is to foster integrated care, limit emergency admissions, and keep patients out of hospital altogether.

Payment by results was introduced in 2003-4 with the aim of linking hospitals’ payments more closely to the work they did. Each hospital service was given a fixed price or tariff, set at the average for the system as a whole. Focused initially on a small number …