Blog: Elective Orthopaedic Surgery – Looking into the future: Payment By Results and engagement with clinicians

By: Sarkhell Radha and Irrum Afzal, Croydon University Hospital and NOA member organisation, the South West London Elective Orthopaedic Centre

Provision and funding of healthcare in the United Kingdom is undergoing one of the most profound revolutions in the 74-year history of the National Health Service (NHS). Clinicians, healthcare professionals and managers are being presented with a series of organisational reforms that affect how care to their patients is delivered and funded.

With demand in NHS hospitals outstripping capacity even before COVID-19, it is no surprise that the demands of delivering care to deal with the COVID-19 pandemic has now led to significant backlogs and longer waits for patients undergoing elective care. It is anticipated to take several years to clear the ever-growing backlog! In addition, the on-going need for stringent infection prevention control measures and on-going workforce shortages mean it will take even longer to work through as demand continues to rise. Therefore, the process of funding elective orthopaedic care needs to be addressed.

Pre-pandemic in elective orthopaedic surgery funding was through Payment by Results (PbR). PbR is a system of paying NHS healthcare providers a standard national price or tariff for each patient seen or treated. Within elective orthopaedic surgery this system worked well, encouraging both healthcare providers and clinicians to deliver as much as possible per annum, as payment was based on activity. The more you deliver, the more money in your hospital pot! It therefore makes sense to invest money through PbR to allow NHS organisations to deliver care with this financial incentive in mind. PbR can generate a balance between capacity and demands and encourage NHS organisations to operate at maximum capacity without fearing financial collapse.

However, during the pandemic in 2020 all healthcare providers were moved onto full block contracts. Block contracts were introduced to enable the service to focus its whole attention on its response to Covid and then start the recovery process. Block contracts are agreed payments which are regular, usually annual, but what they do not take into consideration is unexpected pressures such as increased patient demand or cost of care and they also do not take into consideration the increased workload high volume elective orthopaedic centres are able to produce. Block contracts allow organisations to often undertake simple outpatient procedures in expensive theatre environments such as injections and outpatients’ endoscopic procedures. These procedures allow organisations to appear as delivering a high volume of procedure but using operating theatre facilities comes at expensive cost.  Block contracts are known to not incentivise improved clinical care or efficiency. So is this really the most cost effective funding mechanism post-pandemic?

There is a need to change back to (PbR) for elective orthopaedic surgery to drive efficacy, incentivise healthcare providers, clinicians and managers to deliver as much as possible. The need to achieve results drives innovation, especially in more challenging environments such as the post-pandemic era. With PbR there is greater transparency, accountability, more rigorous monitoring and evaluation leading to better and more reliable outcomes. NHS England and Government officials need to abandon the traditional top-down approach in consultation and start engagement with clinicians and the consultant body within each care provider unit so that a clear picture of activities is provided rather than just numbers.

It is entirely appreciated that different services require different payment systems. PbR is most appropriate to elective orthopaedic care but it is less suited to other services where less rather than more activity is desirable. Therefore, there is a real need to change back to PbR and for different services to have different funding mechanisms. One size does not fit all!