The must read stories and talking points in health

The end of PbR?

The national payment tariff used by the NHS has long been criticised for its perverse incentives and tendency to discourage collaboration between local organisations.

But there now seems to be a significant shift away from this system, with trusts and their commissioners increasingly agreeing some form of block or risk share contract.

In some cases this involves a maximum cap on the annual value of the contract, while in others it seems to mean marginal rates being applied above a certain activity level.

Either way, it’s clear that many providers are now willing to contemplate a more joined up approach, rather than maxing out their activity to hit their own growth plan.

Analysis by HSJ suggests one in four acute providers are now mostly contracted through some form of block payment or risk share by their main commissioner, up from one in six trusts last year.

It suggests a 28 per cent increase in the cash value of block contracts in 2017-18 compared to 2016-17, with the shift driven by 10 trusts that have made a major move away from the national tariff in 2017-18.

The private sector is not best pleased about all this – block contracts effectively freeze them out by making commissioners unable to buy services from alternative providers – and they may well be right to warn of growing waiting lists for elective care.

They also point to communications issued by national leaders in March 2016, which said block contracts should not generally be used for electives.

But things have moved on quite a bit since then, with Simon Stevens saying he’s “entirely open” to health economies coming off tariff.

There also seems to be clear encouragement of the new approach from the NHS finance community.

The last two winners of the Healthcare Financial Management Association’s finance director of the year award have been from Bolton CCG and Bolton Foundation Trust, which agreed a significant block contract for 2016-17.