If you pay providers to do things, they will do them. For example, GP minor surgeries increased 41% after a 1990 contract change, with no reduction in hospital referrals. Payment by results also led to annual acute and elective admissions increases of 1.3-2.5%. However, things don't always work as intended. Case management programs for high-risk patients saw emergency admissions increase 16% in one study and 9% in another. It is easier to improve healthcare quality than reduce costs - only 18% of coordination intervention studies showed cost reductions. Investing in care homes resulted in a 35% reduction in hospital expenditures however, unintended consequences like supply-induced demand are possible when paying for services.
2. If you pay providers to do things, they’ll do them
GP minor surgery following the 1990 GP contract:
- increased by 41%
- no decrease in hospital referrals for minor surgery
Lowy et al BMJ 1993; 307: 413-417.
3. If you pay providers to do things, they’ll do them
Impact of payment by results
- annual increase in acute and elective admissions
of between 1.3% and 2.5%
Farrar et al. BMJ 2009; 339: b3047
4. Things don’t always work out the way you want
Change in
emergency
admissions
p value
Evercare1 +16% 0.14
Integrated care
pilots 2
+9% 0.02
Impact of intensive case management on
emergency admissions for high risk patients
1 Gravelle et al. BMJ 2007; 334: 31
2 Roland et al. Int J Integrated Care 2012; 24 July
5. It’s much easier to improve quality than to reduce cost
% of studies with
a positive
outcome for
health
% of studies with
positive outcome
for patient
experience
% of studies
which showed
reduction in cost
55% 45% 18%
Powell Davies et al Med J Aust 2008; 188 (8): S65-S68
Systematic review of interventions to improve coordination in healthcare
6. Investing £1 in care homes results in
£0.35 reduction in hospital expenditure
Forder J. Health Economics 2009; 18: 1322
7. Things to remember
• If you pay people to do things they’ll do them
• There’s always potential for unintended
consequences, including supply induced demand
• Improving care usually costs more
• The easiest way to reduce cost is to do less
• If you want to reduce cost without reducing quality,
you need to be smart