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The NHS internal payments system should move towards paying by outcomes, the Healthcare Financial Management Association said.
In a joint initiative with the King’s Fund think-tank, it said a new method should be developed, based around full coverage of the range of payments between commissioners and secondary and tertiary healthcare providers, encouraging whole system working.
Payment should be linked to outcomes instead of activity, building on innovations such as best practice tariffs, according to a report in Public Finance.
The system should also provide incentives to deliver services in a way that best meets changing patient needs, the organisations said, and be stable enough to allow for longer term planning with confidence, balancing flexibility with clearly defined indicators of what is allowed.
HFMA president Tony Whitfield said: ‘The current payment system will not support the changes required in the NHS over the coming years.
‘Payment systems need to make change possible – not act as an obstacle to reform because the finances don’t work out.’
He called for ‘a rules-based system covering all activity, not just some of it. But that doesn’t necessarily mean national prices for everything or a single model for payment’.
Whitfield said moving towards payment linked to outcomes ‘also makes sense’, but thought was needed on how good outcomes should be measured and rewarded.
‘The needs of patients must drive service change,’ he said. ‘But we must avoid commissioners or hospitals being penalised for making the right changes because the money doesn’t flow in the right way.’
King’s Fund chief economist John Appleby added: ‘The challenges facing the NHS have changed since payment by results was developed nearly a decade ago.
‘In some cases, it may be obstructing much-needed service change, so tinkering with current payment systems will not be enough.
‘One size does not fit all when it comes to payment systems – radical changes in the blend of payment methods used in the NHS are essential to improve NHS performance and the quality of patient care.’