339. Blended Payment Scheme of NHS England: Issues and Remedies
Invited abstract in session TB-11: Hospitals, stream OR in Healthcare (ORAHS).
Tuesday, 10:30-12:00Room: Clarendon SR 1.03
Authors (first author is the speaker)
| 1. | Sara Mohammadi
|
| School of Management, University College London | |
| 2. | Kenan Arifoglu
|
| School of Management, University College London | |
| 3. | Bilal Gokpinar
|
| School of Management, University College London |
Abstract
The National Health Service (NHS) England has implemented the blended payment scheme, integrating elements from two previously established payment systems: block contracts and Payment by Results (PbR). Block contracts entail a prospective lump-sum payment given to hospitals for accessing a defined range of services for a particular period. On the other hand, PbR is an activity-based payment under which a hospital receives a certain payment for each patient admission. Under the blended approach, hospitals receive an annual fixed payment similar to block contracts to secure an adequate supply of healthcare services. Then, the fixed payment is supplemented by a variable component to reflect differences between planned and actual levels of activity. Blended payment is developed to help hospitals make the most efficient use of available resources and remain in financial balance. Consequently, it can influence hospitals’ decisions about their costs and planned activity levels which reflect their preparedness to deliver the anticipated level of services. Utilizing a principal-agent model, we compare hospitals’ decisions regarding their planned activity levels and costs under the three defined payment schemes with socially optimal actions. Our findings reveal that due to information asymmetry between hospitals and the NHS, none of the existing payment schemes can achieve socially optimal outcomes. Consequently, we propose a new payment model to address this issue effectively.
Keywords
- Health Care
Status: accepted
Back to the list of papers