It’s sometimes tricky to move one’s mind from treating the acutely unwell child, or caring for those with palliative needs, or fixing referrals to a series of health and social care colleagues and think about how we encourage people to ‘do the right thing’ in the NHS. As our previous blog explored, management is a really important area of our clinical work – have many of you thought about how the financial levers that we (frequently) hear about are intended to work?

Incentivisation and payment systems have been developed and implemented to produce more efficient and effective health care system. These systems have the following purposes:

• Improvement (internal and comparative)
• Ensuring accountability (public, patients, regulatory agencies)
• Facilitating market mechanisms (patients, purchasers, providers)
• Central government control
• Epidemiological and Public Health Data

The systems can be broadly described by the mechanisms of payment and financial incentivisation:

• Capitation (payment per number of people with a condition / in a population)
• Block (payment to provide services for a period of time)
• Fee-for-service
• Performance related (based on a ‘quality measure’ of process, or rarely outcomes, of care)

These financial levers are only part of the complex (intertwined and ‘chaotic’, in the mathematical sense, as distinct from complicated; being made of many predictable parts) system that delivers health care. For example, payment-by-results systems may shift attention to only the measured outcome, rather than holistic high-quality care, and by providing an extrinsic motivator, the inherent, high, internal motivation of NHS staff may be reduced.

Incentives and payment systems have unintended consequences which should be understood:

• poor measurement (disproportionate focus on the area being measured, poor data collection, minimal routinely collected data on children and young people to be measured against),
• misplaced incentives and sanctions (e.g. hitting the target but missing the point, focus on individual provider performance and not on performance across the wider health and care system)
• breach of trust (e.g. gaming, fraud)
• politicisation of performance systems

Incentives may not keep up to date with the latest innovations. For example, using day case rates as a measure of performance in surgery may inhibit the adoption of the latest techniques for treating patients on an outpatient basis, or perverse incentives in the commissioning and funding arrangements, for example the different budgets in play keeping children with long-term ventilation in hospital rather than with care packages at home.

At the heart of incentivising is the need to ensure that ‘the right thing’ is done. But exactly how do you know what the ‘right thing’ is – and how can you measure it?

… (Not) all will be revealed in Part 2 …

– Bob Phillips