New pricing analysis highlights opportunities to improve patient care

Published on: 23rd February 2012

An independent report published today by Monitor sets out the opportunities for improving patient care by developing the way providers of NHS services are paid.

The main objective of a pricing system should be to drive the best possible care for patients and achieve the best use of valuable resources. This report – the most comprehensive analysis of pricing in the NHS that has ever been done – is the first stage in establishing the evidence for Monitor to use to develop new ways of using pricing to deliver benefits for patients.

The Government has proposed that Monitor takes on joint responsibility for pricing, working closely with the NHS Commissioning Board. Monitor commissioned PwC to undertake an independent evaluation of where the pricing system is working well, and where it is not, before developing its own approach.

Monitor has welcomed the analysis as the beginning of its work to develop pricing, while recognising that changes should be made gradually and that results will take time to emerge.  This careful and evidence based approach demonstrates how Monitor will develop all aspects of its proposed new role as Health sector regulator.

There is some evidence that the existing system has brought about improvements in the quality and efficiency of care, as well as greater choice for patients. But, PwC did find that the information underpinning the reimbursement system does need significant improvement.

One of the key issues emerging from the report is the importance of good quality information on costs.  Improving the quality of cost information will help Monitor to use pricing to deliver its objectives, such as driving improvements in quality, removing barriers to integrated care, and creating a level playing field for providers.

In their report, PWC found that over 40% of prices set under the current Payment by Results (PbR) framework change by 10% or more each year.

These changes undermine confidence in the tariff as often they are not understood and this can lead to poor compliance with the system.
Commenting on the need for good quality information, Monitor’s Chair, Dr David Bennett, said:

"Our decisions on pricing will have one ultimate goal: to help improve the care provided to those who need it. This report highlights a number of areas for potential improvement, not least the need for good quality information which accurately identifies the true costs of providing care.

"We are already thinking about how the findings of this report can be developed into changes that could make a difference for patients. As we move to the next phase of work we are seeking the views of everybody with an interest in this report to make sure our decisions are based on all the available evidence and are made with full transparency."


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