Reforming the NHS payment system won’t increase integrated care on its own, but it is vitally important for building a system geared around maintaining people’s health, wellbeing and independence, says Michael Scott

More and more people are living with long term conditions, often with complex needs, and they need care which enables and supports them to live as well as possible for as long as possible.

To meet these needs, it is well known that the NHS needs to shift resources into community based care, and work in increasingly integrated ways.

However, the NHS currently pays for care in ways that tend to reward ever increasing episodes of care, which worked well when the health service’s main challenge was cutting waiting lists, but is now a barrier to increasing integrated care, prevention and early intervention. So it was good to see the need for change being recognised in Monitor and NHS England’s review of payment mechanisms, announced earlier this year.

Strategic aim

Providers of community health services − like my trust − have long been concerned that the block contracts currently used to pay for almost all our services leave us vulnerable both to disproportionately high savings requirements, and to having to deliver far more care than we are paid for.


Monitor and NHS England’s payment systems review can remove barriers to integrated care

Despite the overall strategic aim to shift more resources into community settings, as commissioners face ever tighter budgets, it is hard for them to avoid squeezing their block contracts, where expenditure is far easier for them to control than activity based payments. Both providers and commissioners need the payment system to change in order to support us to work together to reshape care so that it is fit for the future.

With this in mind, members of the NHS Confederation community health services forum (which I chair) recently came together to develop a set of principles to guide the future development of payment mechanisms in community services.

Outcomes patients want

Given the huge range of permutations of both patients’ needs and local service standards, it would not be practical or appropriate to suggest applying a payment by results type approach across the board. Instead, we are looking for a mixed and flexible system, with different approaches applied depending largely on the availability and extent of evidence on costs and patient outcomes.

‘Community health providers are clear that the payment system should remove barriers to new models of care’

The community based offer is becoming more sophisticated, with community health providers increasingly able to care for people at high levels of acuity and continuing to work with other partners to develop new models of care. So this mixed system would also need to be flexible and evolve over time, as data evolves and new ways of providing care become possible.

Measuring and paying for patient outcomes, rather than inputs and process, is another area where there is strong agreement among community providers. This should include outcomes that patients want, including palliative outcomes. It should be possible to find wider support for this kind of approach, based on the perspectives from commissioners and other types of provider shared with our forum.

Community health providers are also clear that the payment system should remove barriers to new models of care that are more integrated and community based. The payment system cannot be expected to drive this change − but it can help by removing disincentives to integrated working, creating incentives for prevention and having some consistency across the whole system in how care is measured and rewarded, so that providers are playing by the same rules.

A new system

Finally, given that reforms to payment mechanisms will take time to develop, in the short and medium term community health providers want to see stability and transparency to enable planned change to services.

For example, longer term contracts and more transparency on costs as data improves would support leaders to plan for and invest in changes to services − including shifting resources into community settings.

Reforming payment mechanisms in community health services will obviously rely on a vast improvement in the quality and quantity of data about patient outcomes, and the real costs of activity. The experiences of mental health providers demonstrate that the development of data and currencies for a new system will take many years and will need widespread sector commitment.

‘We must overcome the challenges involved if the NHS is to build a system to ensure its future sustainability’

Community providers do not underestimate this challenge, but we are committed to improving our understanding of actual costs and outcomes achieved, as the basis for improving quality and efficiency. Community providers have demonstrated this through setting up and funding our own programme to develop quality indicators and outcomes measures.

Though the early signs are encouraging, Monitor and NHS England’s review of payment mechanisms is just the start of a long journey towards a payment system with fewer barriers to achieve more integrated and community based models of care.

We must overcome the challenges involved if the NHS is to build a system geared around maintaining people’s health, wellbeing and independence − and therefore ensure its future sustainability.  

Michael Scott is chair at the NHS Confederation community health services forum and chief executive at Norfolk Community Healthcare