Quality control, by Noel Plumridge

31 Jul 08
The Darzi report signals a move away from NHS targets to patient-satisfaction outcomes. It means a big shake-up for health funding, explains Noel Plumridge

01 August 2008

The Darzi report signals a move away from NHS targets to patient-satisfaction outcomes. It means a big shake-up for health funding, explains Noel Plumridge

Health minister Lord Darzi's final report in his high-profile review of the NHS in England, High-quality care for all, is a document of many messages. One, however, stands out above all others: quality, not quantity, should become the guiding principle of the English health care system. The target-driven focus on waiting lists and waiting times that has radically improved access to NHS care in recent years will be steadily superseded by a new focus on quality.

Quality, for this purpose, is defined as a composite of three linked concepts. First, patient safety and the requirement to do no harm to patients. Second, effectiveness of treatment and care: did the interventions actually work? And third, patients' satisfaction with their experience.

The report, published on June 30, advances patient perception as the touchstone of quality. This is not just for evaluating NHS 'hotel services' and the compassion, dignity and respect shown by clinicians, but also a means of measuring clinical effectiveness. 'Patient-reported outcome measures' (Proms) take their place alongside 'scientific' criteria, such as survival and complication rates and measures of clinical improvement. In an age of personalised care, the patient is in the best position to decide what constitutes good quality.

NHS funding arrangements will change to match. Quality might be an elusive concept, but real payments to hospital trusts are to be linked to it, and from as early as April 2009.

So what is the significance of the Darzi report for NHS finances, now back in the black after years of deficits? How will quality be measured and rewarded? How will payments based on quality affect the market-based reforms, including payment by results, which the English NHS has successfully implemented during the past five years? And, crucially, what might it cost?

The concept of payment for quality is not new. A well-publicised experiment in the Northwest of England has been running for some time, and in May Prime Minister Gordon Brown, outlining government plans for an NHS Reform Bill, floated the idea of linking hospital funding to quality. Amid media speculation about polyclinics, Brown's hint received a relatively muted reception, although John Appleby, chief economist at the King's Fund, was quick to observe that primary care trusts could potentially find themselves paying more to high-performing hospitals.

Jennifer Dixon, director of the Nuffield Trust, also urged caution, highlighting the complexity of obtaining satisfactory measures of performance, and particularly of clinical outcomes.

At this stage, details of the proposed payment scheme remain scant. Its timetable is clearer than its substance. Darzi stipulates that providers will be rewarded in the first year for submitting data and that 'from no later than 2010, payments will reward outcomes under the scheme'. It adds that where PCTs want to go faster, they will be able to apply the principles as soon as they wish.

Of the payment scheme itself, all we know is that it will 'build upon best practice found in the NHS and internationally' and form a 'simple overlay' to payment by results, making up part of commissioning contracts. It is to be known by the acronym CQuin (Commission for Quality and Innovation). Funding – we don't yet know how much – will be found by 'reducing the payment by results tariff uplift from 2009'.

Such a scheme will, crucially, require a defined set of national quality measures and systems to collect information on them. Darzi's report pledges that the Department of Health will announce the first set of national quality indicators by the end of 2008. These will just cover acute hospital care for 2009, although there is also an undertaking to develop and pilot a quality framework for community services.

And from April 2010, health care providers – including private hospitals working under NHS contracts – will be legally required to publish quality accounts ('just as they publish financial accounts', says the report) that will be independently verified by the Care Quality Commission.

It's an impressive vision. Yet April 2009, when data collection is set to begin, does seem unnervingly close. Darzi acknowledges the importance of creating a measurement culture but in the short term, IT, project management and the disciplines of data reconciliation might present their own challenges.

Andy McKeon of the Audit Commission recently highlighted the need to improve the accuracy and reliability of data. And many NHS finance directors, already coping with reduced growth levels, tight efficiency targets and inflation running well in excess of projections on fuel and energy, will be concerned at the prospect of funds being creamed off the 2009/10 tariff.

What are the implications for the core 'payment by results' system in England, which CQuin is to overlay?

Darzi makes three significant commitments. The first is to publish 'projections for tariff uplift and efficiency gains' on a multi-year basis, aligning with future Spending Review periods and PCT allocation cycles. This will enable NHS organisations to plan beyond the current annual business cycle. It presumably means the operating framework and PCT resource allocations for 2009/10, due in December, will be accompanied by financial projections for 2010/11.

There is also a pledge to extend payment and pricing systems to health services not covered by payment by results, and specifically to develop a national currency for mental health services for 2010/11.

This appears more ambitious. Payment by results is structured around Healthcare Resource Groups, a relatively robust classification of clinical treatments also used for costing. International experience is that developing a set of HRG equivalents for mental health care, and especially for chronic conditions such as schizophrenia and depression, is fraught with difficulties.

Mental health foundation trusts will welcome the announcement, which potentially offers them greater income security in a tightening market. But in practice the 2010/11 timetable might prove challenging.

The DoH response to last year's consultation on the future of payment by results, Options for the future of payment by results, prioritised mental health, on which the NHS spends around 12% of its total budget, for inclusion within the tariff funding system.

The department also accepted the case for calculating certain tariffs, not from the average of NHS hospitals' historic ('reference') costs – a principle on which payment by results has been built – but instead from a best practice clinical pathway for the procedure in question: in the jargon, a 'normative' tariff.

The justification lies in unexplained variations in clinical quality: the objective is greater efficiency. In what might prove to be a far-reaching move, Darzi's third payment-by-results commitment is to a normative tariff in 2010/11 for four high-volume areas of practice: cataracts; fractured neck of femur; cholecystectomy (excision of the gall bladder); and stroke care.

The list of procedures is significant. Since the DoH consultation response in January, cataracts – relatively low cost – have been introduced to the list, while hip and knee replacements – relatively high cost and the bread and butter of many independent sector providers – have been dropped, along with the sensitive issue of caesarean sections.

But the greater significance might be the move, presumably with Treasury consent, away from what has hitherto been a self-balancing trading system within the English NHS in pursuit of material efficiency gains.

Normative tariffs push the NHS towards a different, although not inconsistent, vision of quality. Variations identified by the NHS Institute include two particularly costly ones: in pre-operative bed occupancy (some surgeons routinely admit patients the night before an operation, a traditional and pragmatic way to secure a bed) and in overall length of stay. Together they offer potential savings estimated at around £1.5bn per year, a financial carrot too juicy to ignore.

Few patients view staying in hospital longer than necessary as enhancing the quality of their experience. But there are other causes of variation in length of stay; access to support services and lack of critical mass in some specialities. A normative tariff might prompt some hospitals to withdraw from particular specialities for financial reasons. Stroke care might be a case in point: an optimum pathway calls for integrated acute hospital and community rehabilitation that might be impractical or unaffordable in some rural areas.

So what is the overall projected financial impact? The short answer is that nobody knows. Most of the report's messages hold a latent financial impact.

To cite just four examples: protected income payments to GPs are to be phased out, a process already under way, but what will happen to the £90m or so thereby released? The postcode lottery on access to National Institute for Health and Clinical Excellence-approved drugs and treatments is to be ended, but at what cost? Making more than £4bn of education and training funds 'follow the student' might potentially destabilise teaching hospitals. And where will the cost of 150 GP-led health centres (formerly known as polyclinics) be found?

The DoH's impact assessment, published alongside Darzi's report, does not attempt to assess costs or benefits for the report's proposals, arguing that their number and diversity prohibit the preparation of an overall summary. Besides, their details require 'further consideration of options and discussion with stakeholders'. This statement might bring a wry smile to the face of foundation trust finance directors, wondering how their boards, or Monitor, might respond to such an approach to budgeting.

It's a significant omission. Setting the context for his report, Darzi identifies six challenges that all advanced health systems face in the twenty-first century: rising expectations; demand driven by demographics; the development of the information society; advances in treatments; the changing nature of disease; and changing expectations of the health workplace.

But with oil and energy price inflation driving western economies into recession, one might reasonably add the impact of globalisation on finite resources. Or, put simply, affordability.

Noel Plumridge is a former NHS finance director and the author of CIPFA's Payment by results

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