Paying for the quantity and quality of hospital care: the foundations and evolution of payment policy in England

Abstract

Prospective payment arrangements are now the main form of hospital funding in most developed countries. An essential component of such arrangements is the classification system used to differentiate patients according to their expected resource requirements. In this article we describe the evolution and structure of Healthcare Resource Groups (HRGs) in England and the way in which costs are calculated for patients allocated to each HRG. We then describe how payments are made, how policy has evolved to incentivise improvements in quality, and how prospective payment is being applied outside hospital settings.

Value based healthcare and delivery of vascular surgery services in the United Kingdom

“…44,45 Accurate and transparent measurement of outcomes, 46,47 costs and bundled reimbursement systems have all been subjects of recent healthcare reform in the United Kingdom. 30 These are essential drivers for development structures and processes required for value creation in based hospital services. 38,39 For decades the relationship between primary care and hospital NHS trusts has been based on block contracts [20][21][22][23][24][25] .…”

“…27 In the NHS cost of treatment for each patient are calculated using Health Resources Groups (HRG) according to each patients expected resource requirements. 30 HRGs are designed to be clinically similar and resource homogenous 30 (Table-1).…”

Are cost differences between specialist and general hospitals compensated by the prospective payment system?

“…As such, payment adjustments include top-ups to the tariff if patients received particular specialised care and payment corrections allow for differential costs of labour and capital across the country. These refinements help ensure a fair reimbursement system that rewards hospitals according to the care that they provide, not the advantageous circumstances in which they might operate [5,37]. Given these payment adjustments, hospitals that provide care at a cost below tariff should be more profitable.…”

Multidimensional performance assessment of public sector organisations using dominance criteria

“…We also constructed other risk‐adjustment variables from the PROM survey, namely, the duration of problems, and whether the patient lives alone, considered herself disabled, or required help filling in the questionnaire. In the length of stay model, we controlled for the healthcare resource group (HRG, the English equivalent of Diagnosis‐Related Groups) to which the patient was allocated and which form the basis of the prospective payment system used to reimburse English hospitals (Grašič, Mason, & Street, ).…”