Daily Insight: Payment by results, the sequel

The health service’s new financial system was meant to capture the best of both worlds by encouraging collaboration and rewarding good performance but, less than a year in, the results are decidedly mixed.

Under rules for this year, elective care is paid for through block contracts – with an extra portion of funding on top that is adjusted up or down depending on performance. In practice, the rules have been confusing – and perhaps more importantly, have not been accompanied by the kind of elective activity levels NHS England and the government would like to see.

One proposal under consideration by NHSE is a return to the so-called payment by results model, which could mean trusts being paid purely for each unit of activity delivered, without a block contract element. A source said there was “strong momentum” towards this.

Any reversion to PbR would be immensely controversial, with opponents branding it a backwards step that cuts across collaborations, and supporters arguing the current system fails to incentivise the best performers.

Whatever the answer, tweaking payment rules – without any change to the overall level of funding – will do little to solve the staffing shortages and delayed discharge holding back elective recovery.

The Health Bill

The week ended with a much clearer idea of what Rishi Sunak and Steve Barclay’s health team will look like.

Bill Morgan, who advised former health secretary Andrew Lansley on his reforms for two years from 2010, returns as Downing Street’s top political health aide.

The move to Number 10 follows a brief stint as Steve Barclay’s special political adviser during his time as health and social care secretary over the summer.

The Number 10 delivery unit – part of the civil service and led by former NHSE director Emily Lawson – will remain in place, and Ninjeri Pandit, previously head of office for Simon Stevens at NHSE, remains health policy and delivery lead.

At the Department of Health Social Care, Mr Barclay has hired a five-strong team of special political advisers. They include chief of staff Iain Carter, who ran Liz Truss’ leadership campaign and then served as director of political strategy at Number 10. Read about all the other health appointments in the full story here.