Taking lessons from global healthcare systems that reward value over volume to improve patient care may be a beneficial step for the NHS, writes John Howard

John Howard

John Howard

John Howard

We can’t deny that the NHS is a fantastic healthcare system that provides world-leading care. But even as the NHS makes great advances with new models of care and increased operational efficiency, it is being held back by an outdated payment system that rewards volume, not patient outcomes.

That’s not news to anyone. But there’s now a real urgency to do something about it: we can’t implement new models of care without new models of payment.

Given the urgency, we need to accelerate the NHS’s work on payment reform by learning lessons from healthcare systems around the world that are already improving patient care by rewarding value over volume.

New York is taking a more incremental approach, and it’s one I would encourage the NHS to consider

A great example lies just across the Atlantic in New York State. Since 2011, New York has been using a combination of innovative provider integration and payment reform to transform Medicaid, the US’s publically-funded healthcare system for the poor.

I know what you’re thinking: the NHS is different. American models won’t work here. Although that’s often this case, I think this time it’s different. So did 16 senior NHS leaders who recently visited New York with me on a study tour to learn about the state’s Medicaid reforms.

So, I invite you to suspend your disbelief for a moment and let me explain. 

Structure

At the heart of New York’s Medicaid reforms are 25 new provider networks. They are working together to manage patients’ care across different settings with the aim of keeping people well and out of hospital.

They work together for mutual benefit, get paid for coordinating care, and share in the rewards of better prevention, improved health and reduced complications, which also help reduce costs.

In short, they’re doing exactly what they NHS’s new care models have set out to do.

I don’t deny that NHS is also making progress on payment reform, and it’s great to see an emerging consensus that we should move away from activity-driven payments

What does that mean in practice? Well, New York’s new provider networks are saying: ‘OK, how can we deliver better care for chronic conditions in a way that’s truly integrated and best for the patient? How can we share the rewards of making those improvements?’ They’re looking at patients’ needs across organisational boundaries and working with local communities to tackle social determinants of health.

What’s making New York’s work a success? Well, of course the provider networks are motivated to improve patient care because it’s the right thing to do. But they’re also motivated because the state has structured the value-based payment reforms in a way that ensures payments are fully aligned to the desired patient outcomes.

And it’s not just patients with chronic conditions who are benefitting from the changes. Value-based payments in the state will change care for specific patient cohorts. For example, they’re starting to fund maternity care through a ‘bundle of care’ for perinatal, delivery and postnatal care.

This approach is predicted to reduce the cost per patient by almost a third (around $400, or £276) and reduce the number of avoidable C-sections and complications.

I don’t deny that NHS is also making progress on payment reform, and it’s great to see an emerging consensus that we should move away from activity-driven payments.

The verdict

However, there’s a real risk that the pendulum will swing too far and everyone will rush toward fully capitated budgets that create a different set of problems.New York is taking a more incremental approach, and it’s one I would encourage the NHS to consider.

Of course, New York knows that achieving high-quality integrated care is about more than the money. Alongside its work on payments, the state is also transforming its workforce, getting staff ready to deliver the very different models of care future services will demand.

It’s working with higher education, staff groups and trade unions to develop accredited roles for care managers and to design the training and development needed to support career progression.

We need to accelerate the NHS’s work on payment reform by learning lessons from healthcare systems around the world that are already improving patient care by rewarding value over volume

The state also knows its needs great data and information if it’s going to be able to make the right decisions about how to change care. It is investing heavily at a state-wide level to make sure providers, commissioners and patients have access to the information they need to join all the pieces together.

While there is a lot that the NHS could teach the US about how to improve healthcare, there’s a lot we can learn from New York’s approach. But don’t just take my word for it. At the end of the recent study tour I mentioned, NHS participants said they had found looking at the New York model to be much more valuable than they had expected.

They saw New York’s payment reform approach as a great example of how providers can be incentivised to work together for better outcomes. And they felt New York is leapfrogging the NHS in this area.

There may not be many examples of US health policy innovations that the NHS can learn from, but New York’s work on payment reform is definitely one. We need to move at pace in this area in the NHS, so we’d be wise to look across the pond and learn everything we can.

John Howard is a partner in KPMG’s Public Sector and Health advisory team