The government is set to empower patients with personal budgets for care, but clear rules must guarantee choices are well informed and cost-effective, say Anna Dixon and Rebecca Ashton
The final report of the next stage review set out the government's intention to launch a pilot programme in early 2009 to evaluate the use of personal budgets in healthcare. It is hard to disagree with the objectives of this policy - to empower patients with enduring and long-term conditions to take more control of their health and healthcare - but the use of personal budgets in a universal system such as the NHS poses some challenging questions.
The review said: "Personal health budgets are likely to work for patients with fairly stable and predictable conditions, well placed to make informed choices about their treatment; for example, some of those in receipt of continuing care or with long-term conditions." The term "predictable" is important here. Many people suffering with long-term conditions do need routine care but they may also experience episodes where their need for medical care is acute, leading to high costs. Mechanisms for deciding which conditions and client groups are covered by the budget will be important.
In social care, where a direct payments scheme has been in place for many years and individual budgets are being trialled, the amount allocated was initially calculated by costing the value of the services that would have been provided by the local authority. To an extent - with the development of a community tariff - that should be also be possible in the NHS for many services that people with a long-term condition might buy, such as an eye examination or routine podiatry. In social care more sophisticated systems for allocating resources on the basis of assessed need, rather than service equivalents, are being developed.
Care and accountability
In healthcare the problem is more difficult. The need for medical care is uncertain even for people with stable illnesses, and the risk of ill health cannot be accurately predicted at individual level. Despite advances in allocating resources according to need based on individual-level data, accuracy is unlikely to be high enough for allocating appropriate resources to individuals.
The review also says "NHS resources will be put to good use, with appropriate accountability". The definition of "good use" will be pivotal. Most international examples of individual budgets and savings accounts have a liberal definition of how the money can be spent. Indeed, this is identified as a potential benefit. Initial experience of individual budgets in social care suggests the process of determining a personalised care plan has resulted in people purchasing some different services from those traditionally on offer, such as a photography course, a holiday or help with gardening.
In healthcare there is generally a stronger evidence base for the effectiveness of treatments and care models than in social care, where services are mainly designed to meet personal needs. If patients are free to spend their personal healthcare budget at their own discretion (within broadly set parameters) it is possible resources will be spent on care that does not improve their health as effectively as if the money had been spent in another way.
Yet the health system is unlikely to tolerate patients spending taxpayers' money on treatments with a weak or no evidence base and it is likely some services which have a strong evidence base would in effect be the only ones on offer. This takes away choice for patients. The pilots will need to be clear about whether spending is a joint decision between clinician and patient or left to the patient.
In social care the assessment process is critical and service users are often supported by peer counsellors. Healthcare is likely to require clinical input into the needs assessment and professional advice about the appropriate range of treatments, what services are offered and how to access them. The commitment in the review that those with complex needs should have an identified care co-ordinator as well as a personalised care plan may provide the answer.
The pilots will have to establish the type of professional who will do the needs assessment, act as co-ordinator and provide advice and establish whether there will be some choice for the patient.
Social care piloting of individual budgets has included a randomised controlled trial in an attempt to find out whether giving people this level of control really does make a difference. A similar approach could be taken in healthcare.
What happens if someone runs out of money in their budget but still needs care? The review says "no one will ever be denied treatment as a result of having a personal budget". This suggests the NHS would be required to fund care to meet the needs of a patient even if they have exhausted their budget - a quite different set-up to social care or many international examples where when the budget is exhausted the individual has to rely on their own means.
Denial of care on the grounds of affordability would be at odds with the fundamental principles of the NHS and challenge professional ethics. In terms of efficiency, however, the NHS will have to pay for the (healthcare) consequences of decisions made by individuals who may have chosen to spend their budget on ineffective care and whose health has deteriorated.
The pilot programme will also have to consider whether patients will be able to carry over unspent budget to the following year. In the US, where many employers have introduced health savings accounts, there appears a strong incentive for employees to carry over the money to cover the possibility of greater expenses in future. Early evaluations suggest enrollees are more likely to forgo care. The financial incentives created for people by the design of the budgets or direct payments need to be carefully thought through to ensure people do not deny themselves care.
And while in social care people can supplement a direct payment with their own resources, a direct payment as part of an individual budget in health would have a cash value; introducing the possibility patients could "top up".
The level of impact depends on the level of take-up. At this stage it is obviously difficult to estimate how many patients might wish to take on this responsibility. Take-up is likely to depend on the size of the payment, perceived benefits, simplicity of administration and the level of support available. The benefits of personal budgets identified in the review are "to give individual patients greater control over the services they receive and the providers from which they receive services".
A number of studies have found people receiving direct payments in social care report feeling happier and more motivated and having an improved quality of life. The extension to healthcare will need to show not only improved subjective well-being but also improved (or at least equivalent) clinical outcomes.
Elsewhere, the effects on planning and commissioning will need to be managed. Commissioners will need to stimulate the local market so patients have a choice of where to spend their budget. Any increase in transaction costs will need to be assessed and monitored during the pilot stage.
And while individual budgets might sound appealing - particularly to patients with long-term conditions frustrated by the lack of responsiveness of healthcare providers - the pilots should be used to test whether they really are the best means to address the problem.
For example, if personalised care planning were fully implemented and properly resourced by commissioners would this meet the needs of most patients without the need for personal budgets?
Given the practical problems with identifying cash equivalents for NHS-funded care and the fundamental challenge this poses within a system that is otherwise free at the point of use, introducing direct payments in healthcare seems a step too far.
Even if the government hands over control of more restricted personal budgets which do not include direct payments - but something more akin to vouchers - there will still be a need to establish clear rules for how they will work. It will challenge those healthcare organisations which opt to be at the vanguard of personal budgets in healthcare.