BAMM

1
BAMM

• 11th - 13th September
• The Skills Factory - Values and Systems
• What going on with
• Payment by Results
• John Flook

2
Payment by Results

• What will success look like?
• What are the key features of your vision for PBR?

3
Payment by Results

• The perfect PBR system would,
• - ?
• - ?
• - ?
• - ?
• - ?
• For,
• Patients, Providers, Commissioners, Clinicians,
  Managers, DH.

4
Session

• PBR in context
• Reflections on first five years of PBR
• Healthcare system by 2015
• A vision for PBR
• PBR - an enabler

5
Future Healthcare Key Drivers

• consumerism public expectation(disposable
  income, empowered)
• demographics (shrinking workforce, the elderly)
• globalisation (technology, workforce)
• lifestyle diseases (heart disease, diabetes,
  obesity, alcohol)
• clinical and scientific breakthrough (stem cell,
  genetics, nanotechnology)
• information and knowledge transfer (I.T.,
  internet)
• complexity and pace of change

6
www
technological
health futures
7
The Breakthrough Cycle Idea, Invent,
Implement, Imitate
technological
health futures
1940
1960
1980
2000
2020
8
Policy Reform and Funding

• Powerful futures drivers - Consumerism,
  Demographics, Technology
• Additional funding essential and allocated
• Step change in productivity and efficiency needed
• Step change in individual responsibility for
  health needed

9
NHS
Funding
Standards
Regulation
Audit Inspection
Devolution
Performance Management
Provider mixed economy
Practice Commissioning
Payment by Results
Workforce Reform
Choose Book
IT Investment
10
NHS as Healthcare Organisation
Funding
Standards
Regulation
Audit Inspection
Devolution
Performance Management
Provider mixed economy
5 to 10 years
Practice Commissioning
Payment by Results
Workforce Reform
Choose Book
IT Investment
NHS as Healthcare System
11

• NHS as healthcare organisation
• reliant on
• structure and hierarchy
• focus on
• Control
• Compliance
• Compartmentalised

• NHS as healthcare system
• reliant on
• people and processes
• focus on
• Ideas
• Information
• Interaction

John Flook Coaching and Consultancy
12
Pre PBR Financial FlowsFlaws

• Block flows determined by history
• Not responsive to change
• Inhibits change
• not linked to product
• not linked to performance
• no effective link to demand management
• Tied to what is rather than what should be

13
Pre PBR Financial FlowsFlaws

• National Allocation System
• but
• Local SLAs linked to Local Prices
• producing
• Distortion of PCT real purchasing power

14
Payment by ResultsOriginal Objectives

• Create a transactional system
• Rules based, fair and transparent
• Sharpens Cost and Budget discipline
• Supports Choice and Plurality
• Focus discussion on Quality (not Price)
• A technical challenge
• DH led

15
Payments by Results plus Practice Based
Commissioning plus Choice
16
Payment by Results Challenges for Department of
Health

• Technical Development
• Regulatory Framework
• Behavioural Dynamics

17
Progress to March 2007a qualified success?

• Moving to funds flow linked to activity
• Covering most elective and non elective in acute
  secondary care
• Transactional value within PBR approaching 25bn
• Basic framework in place to support patient
  choice and service change

18
Progress to March 2007a qualified success?

• some financial turbulence but meltdown avoided
• through transitional introduction policy
• through nelsons eye policy
• through tactical fixes
• evidence of improving financial awareness and
  management
• But,
• expected and unexpected technical and behavioural
  issues emerging

19
PBRReflections on the first 5 years

• slow to recognise the need for ongoing
  development and regulation
• slow to recognise the need for a Code of Conduct
• slow to recognise the need for validation and
  audit
• failure to recognise the need and opportunity to
  transform business processes

20
PBRReflections on the first 5 years

• Inadequacies in classification and casemix
  grouping
• inconsistent and generally unacceptable coding
  and costing
• coding optimisation created illusory activity
  gain and pressure on finances
• no consensus on scope development
• low baseline of information systems
• connection to service change agenda - still a
  barrier to change

21
Commissioning elements of Care PathwaysUnbundlin
g

• original rules impractical restrictive
• service redesign
• 15 LOS reduction
• below national average LOS
• per diem variable cost adjustment
• tariff is not a standard cost - it is average
  cost
• needed PCTs and Trust to agree
• so it did not happen!!

22
PBRReflections on the first 5 years

• inconsistent, generally poor engagement with
  clinicians
• ineffective co-ordination with NPfIT/CfH
• SUS national activity system - not fit for
  purpose and late

23
PBRReflections on the first 5 years

• Development largely
• ad hoc
• incremental
• centrally driven
• Unresolved tensions
• stability or change
• simplicity versus complexity
• transparency

24
PBRReflections on the first 5 years

• Combined effect,
• increasing risk
• impaired PBR performance
• impaired PBR development
• Partly mitigated by
• planned but continually modified transitional
  policy
• reactive decisions
• DH nelsonian eye to local PBR workarounds

25
PBRReflections on the first 5 years

• Its clunky
• not linked to a coherent vision
• not well integrated with other key reform policy

26
PBRReflections on the first 5 years

• Major problems with 2006-07 tariff
• Lawlor review recommendations
• road testing of tariff
• improved PBR programme management
• planned tariff development
• invest in DH PBR unit
• improve clinical engagement at all levels
• look elsewhere to learn from experience

27
PBR - a facilitator

• PBR is not the objective - It is a means to an
  end
• Integrating funds flow with actual events
• Providing access to accessible, accurate
  management information
• To support improving efficiency and clinical
  performance and patient experience

28
Healthcare system
PBR
Efficient transactional systems
transform information and management
29
Healthcare 2008 on

• funding growth will slow dramatically from 2008
• productivity and efficiency gain proving elusive
• no guarantee of Wanless
• solid progress scenario

health futures
30
Healthcare by 2015

• shaped by consumerism, demographics, science and
  technology
• increasing personal spending in lifestyle
  diagnostics and treatments
• 100 Foundation Trusts with increased
  independence
• Independent and voluntary sector holding
  significant market share
• increase in specialist niche providers
• organisation of provision more flexible (JVCos,
  asset use)
• increasingly corporate primary care sector

31
Healthcare 2015

• commissioners core role - change agents and
  performance drivers
• market management rules in line with rest of
  economy
• cost pressures, service demand, even more
  challenging
• clinicians fully involved at all levels of
  management
• managers deeply knowledgeable about clinical
  product lines market environment
• management freed from command and control
  mindsets - look out not up

32
Healthcare 2015

• more permissive, less protective, less forgiving
  environment
• failure means loss of business
• critical success factors
• responsiveness to consumer preferences not just
  needs
• relationship management - internal and external
• constant improvement, costs, quality, innovation
• information and knowledge management

33
commissioning

• Will not validate activity, process transactions
• will access close to real time information on
  activity and payments
• will be expert users of powerful enterprise
  resource management systems
• be effective performance managers of delgated
  commissioners/budget holders
• be expert in market intelligence - costs, public
  and patients, providers, morbidity, performance
• will achieve full clinician and management
  alignment based on common language and hard
  evidence rooted in clinical reality

34
providers

• Will process data close to real time
• will be expert in patient costing
• will routinely operate through service line
  budgets and trading
• will be expert at market analysis and marketing
• will be expert users of powerful enterprise
  resource management systems
• will achieve full clinician and management
  alignment based on common language and hard
  evidence rooted in clinical reality

35
PBR Vision

• classification
• case mix grouping and currencies
• coding
• costing
• scope and structure
• business and transaction processes
• data warehousing
• reporting and information management

36
PBR Vision Clinical classification system

• credible for clinicians and managers
• captures diagnoses and procedures - medical
  surgical
• describes all necessary elements in care pathways
• accommodates severity indicators and
  co-morbidities
• flexible and able to reflect a changing clinical
  environment
• supported by clear definitional guidance
• consistent application of national standards
• supports clinically credible currencies

37
Case mix Grouping and currencies

• HRGs Version 3.5
• insensitive to casemix complexity
• not iso resource
• HRGs V4
• national interventions classification
• independent of Setting
• permit some unbundling
• delayed until 2009/10

38
PBR VisionCase mix grouping and Currencies

• more granularity and flexibility
• support many more priced product lines
• optimal combination of DRGs and HRGs
• support delivery of choice, efficiency and
  innovation
• describes elements of care in credible clinical
  and financial terms
• accepted as a good reflection of clinical and
  financial reality
• appropriate currency for the clinical group
• determined in light of decision on classification
  system

39
PBR VisionCoding

• delivered consistently to national standards
• supported by incentives to improve - premiums and
  penalties
• enjoys clinical buy in and involvement
• completed nearest real time at point of
  intervention
• national web based coding support manual
• delivered by professional coders and clinicians
• supported by data validation and assurance audits

40
PBR VisionCosting

• consistently delivered to national standards
• delivered through accredited software
• subject to rigorous internal and external
  assurance
• less apportionment more direct attribution
• active clinical involvement
• primarily patient based
• output recognised as essential management tool
• informing but not determining tariff

41
PBR VisionTariff setting

• provide incentives to
• improve patient experience
• promote clinical excellence
• promote efficient practice
• encourage and reward innovation
• informed by clinical involvement
• informed by independent economic research and
  assessment
• informed, but not driven by, valid costing data
• use of best practice based normative pricing
• include pay for performance

42
Future Scope

• Specialised Services
• Diagnostic Tests and procedures
• Critical Care
• Urgent and Emergency
• Outpatients
• Very Short stays
• Out of Area treatments (not covered by SLAs)
• Emergency re admissions
• Mental Health
• Ambulance
• Maternity
• Community based services
• Long term conditions

43
PBR VisionScope and structure

• extensions prioritised against agreed criteria
• require clinical support
• developed in service setting not in laboratory
• be subject to road testing and evaluation
• in time,
• cover key elements of care pathways
• Mental Health
• Long Term Conditions
• Community services
• use tariff structure appropriate to the clinical
  group
• extend to all providers (NHS, independent, social
  enterprise)
• encompass national and approved local tariffs

44

• critical success factors
• responsiveness to consumer preferences not just
  needs
• relationship management - internal and external
• information and knowledge management

business processes
expert people
data management
Information knowledge management
45
Near real time automated electronic data and
transaction processing
National local electronic data warehousing
Enterprise resource management systems
Providers possess deep knowledge of costs
income drivers and behaviour
Commissioners possess constantly refreshed
national local market intelligence
Providers are expert in market analysis
marketing
46
Secondary Uses Service

• Data to inform commissioning
• HRG grouping
• Exclusion of activity outside PbyR
• Convert episode to spells
• Calculate excess bed days
• Application of national tariff
• Support flex and freeze dates
• Some online reporting facilities

47
PBR VisionBusiness and Transaction processes,
Data Warehousing and Information management

• A single national transaction system
• automatic, electronic, and a by product of coding
  data output
• eliminating most manual processes and
  interventions
• ensuring compliance with national PBR rules
• a regulated framework for amendments or
  suspension of rules
• ensuring variations are visible
• more ebay and paypal than child support and
  rural farm payments

48
PBR VisionBusiness and Transaction processes,
Data Warehousing and Information management

• A national data warehouse delivering close to
  real time data feed to providers and
  commissioners
• accredited resource management systems to support
  PCTs and PBC
• more amazon and google search than local
  authority landfill

49
(No Transcript)
50

• PBR National Settlement System
• Will support service needs to eliminate the
  physical execution of payments between
  commissioners and providers
• Ensure compliance with PbR rules
• Elimination of unproductive time spent on data
  validation and transaction processing
• Enterprise Resource Management Systems
• Ensure flexible budgeting and reporting tools are
  available
• Enable reporting across all relevant expenditure
• Ensures minimum financial management standards
  are met
• National standards-based solutions with local
  flexibility
• Will allow accountability to be routed to the
  point of referral and driver of cost, i.e. GP
  Practices

51
National Settlement SystemKey Features

• NSS would be a national payment engine
• Capable of receiving instructions from a variety
  of systems regarding the payments due to
  providers
• Providing settlement and electronic statements to
  both commissioners and providers

52
Enterprise Resource Management SystemsKey
Features

• Tool to allow Commissioners to understand
  performance against budget and model the impact
  of commissioning decisions
• Supports
• Planning
• Forecasting
• Budgeting
• Variance Management

53
National Settlement System Potential benefits

• Reduce time spent in Trusts and PCTs validating
  monthly activity data and payments.
• Guarantee enforcement of National PbR rules -
  local variations will be visible, open to audit.
• Provides a consistent 'rules driven ' platform
  for payments to Independent Sector Providers
• Introduce automated net settlement system leading
  to reduction in internal NHS Cash flows.
• Payments for secondary care activity closer to
  'real time', will occur more frequently.
• Timely and accurate in year financial information
  bringing significant improvement in PCT
  financial control
• Prevent significant increase in transaction
  processing bureaucracy
• Consistent national standard for settlements
• Establishes a sound foundation for validation and
  'appeals'.
• Payment rules ensure the prompt completion of
  discharge information for Primary Care

54
Payment by Results Challenges for PCTs and
Providers

• Board Engagement
• Clinician Engagement
• Activity/Finance Modelling Capacity
• Internal Business process change
• Business and Financial skills capacity
• Behavioural change
• External relationships
• Risk Pooling, Joint Budgets
• Managing Uncertainty and Volatility
• Information Systems, Software
• Information management skills
• understanding costs and relationship to income

John Flook Coaching and Consultancy
55
Leadership Challenge

• Comfortable with Complexity and Ambiguity
• Accept and manage risk and uncertainty
• Look outward - not upwards
• Anticipate change
• Identify opportunities
• Develop strategies for change
• Innovate and take measured risks
• Build effective relationships at the
  individual, team and organisational levels.
• secure resources

John Flook Coaching and Consultancy
56
PBR 2015? Vision

• normative pricing - tariff as policy tool
• currency and tariffs atomised
• payment for performance
• uniform automated transaction processing
• more ebay paypal than child support agency
• central validation and assurance
• data warehouse accessible for all
• more amazon search than local authority
  landfill
• currency and reporting that relates to clinical
  reality and consumer preference
• What do we need to do to achieve this?

57
What are your views on responsibility for policy
decisions on tariff scope and structure?

• Should it rest with
• DH subject to ministerial decision
• (Definitely 26 Possibly 33 Definitely not 41)
• A body accountable to SHAs and independent of DH
• (D 5 P 54 DN 41)
• An independent regulatory body?
• (D 31 P 44 DN 25)

58
What are your views on responsibility for
decisions on tariff levels?

• Should it rest with
• The DH subject to Ministerial decision
• (D 13 P 26 DN 61)
• A body accountable to SHAs and independent of DH
• (D 6 P51 DN 43)
• An independent regulatory body
• (D 40 P 49 DN 11)

59
What are your views on supporting research,
analysis and tariff calculations?

• Should this be undertaken by,
• The DH subject to Ministerial decision
• (D 8 P 35 DN 57)
• A body accountable to SHAs and independent of DH
• (D 8 P 59 DN 33)
• An independent regulatory body
• (D 23 P 70 DN 7)
• Commissioned academic organisations
• (D 10 P 75 DN 15)
• Commissioned commercial organisations
• (D 5 P 44 DN 51)

60
What criteria do you think should be used to
support prioritisation of the development of the
tariff scope and structure?

• the level of clinical endorsement
• (Essential 20 Important 72 Not Important 8)
• the level of NHS spending on the specific area
• (E 31 I 59 NI 10)
• incentivising the implementation of national
  policy
• (E 46 I 49 NI 5)
• availability and robustness of data
• (E 67 I 33 NI 0)
• explicit statement of the risks
• (E 41 I 56 NI 3)
• support of commissioners
• (E 36 I 56 NI 8)
• support of providers

61

• What do you consider to be the optimum practical
  date for the announcement of the tariff for the
  following year?
• What do you consider to be the latest practical
  date for the announcement of the tariff for the
  following year?
• Legend
• 1 - preceding June to August 2 - Sept
  3 - Oct 4 - Nov 5 - Dec 6
  - Jan 7 - Feb 8 - March

62
What do you consider to be the minimum notice
that should be given of changes to tariff scope
and structure?

• 1) 3 months (2)
• 2) 6 months (65)
• 3) 12 months (24)
• 4) 18 months (8)
• 5) 24 months (0)

63
Do you think it would be of practical use to have
an indicator of the likely upper or lower range
of tariff uplift for year two and three in the
cycle?

• Within a tolerance of
• 0.5
• (Very helpful 67 Helpful 21
• Neutral 10 Not helpful 2)
• 1.0
• (VH 21 H 74 N 5 NH 0)
• 2.0
• (VH 10 H 36 N 28 NH 26)
• 3.0
• (VH 7.5 H 23 N 7.5 NH 62)

64
Would you be happy to see the PbR tariff set
(within the context of overall resource
availability) prior to any announcement on level
of Review Body Pay Awards?

• Yes 58 No 42

65
Do you think it important to maintain the link to
national reference costs?

• Yes 65 No 35

66
Would you support a move to setting a tariff
based on consideration of a statistically
significant sample of hospital reference costs?

• Yes 72 No 28

67
Would you be supportive of sanctions against
organisations that fail to supply timely
information to support the tariff setting
process?

• Yes 93 No 7

68
Are you supportive of the generalised
introduction of differential tariffs based on
previous years outturn?
33
35
30
23
25
Very supportive 8 Supportive 23
21

20
15
Neutral 33
15
Not Supportive 21
Totally Against 15
8
10
5
0
1
69
Do you consider it appropriate to develop a PbR
tariff structure to reward quality or
performance?
30
26
23
23
25
21
Very Supportive 23
20
Supportive 21
15
Neutral 23
Not Supportive 26
10
7
Totally Against 7
5
0
1
70
Listed below are sixteen possible areas of
refinement and development of PbR - please choose
your top three priority areas

• Diagnostic Services 69 1st
• Critical Care services 33 2nd
• Specialist Services 29 3rd
• Long Term Conditions 29 3rd
• Short stay reductions for emergency medical
  admissions 26 5th
• Community Services 26 5th
• MFF 24 7th
• Acute treatments in Community settings 24
  7th
• Mental Health 19 9th
• Therapy Services 19 9th
• Independent Sector (level playing field) 17
  11th
• Voluntary Sector (level playing field,
  palliative care) 10 12th
• Ambulance Service Urgent 7 13th
• Specific minor injury clinic tariff 5
  15th
• Screening programmes 5 15th
• Patient Transport Services 5 15th

71
Should the proposed national model contract ..

• Set out specific requirements for the production
  of timely, comprehensive and accurate activity
  information
• Y 87 N 13
• set out mandatory arbitration and adjudication
  procedures to be followed for dispute resolution
• Y 83 N 17
• set out the detailed process to be followed in
  the event that forecast activity falls outside
  agreed profiled margins
• Y 57 N 43
• as a final resort, enable PCTs to make reduced
  payments for activity in excess of plan
• Y 61 N 39
• permit local agreements on payments above or
  below tariff in order to incentivise delivery of
  new services
• Y 83 N 17
• set out national arrangements for a scheme to
  reward quality performance
• Y 61 39
• establish the parameters for lead contracting
  by a PCT on behalf of other PCTs

72
Commissioning Framework - page 10 - PCTs will
require close to real time financial activity
information to provide to practices

• Does your PCT have the necessary information and
  reporting systems to support practice based
  commissioning and budgeting?
• Y 27 N 73

73
Should the application of any initial national
tariffs for unbundling (possibly for diagnostics
and rehabilitation) be

• Mandatory or (39)
• subject to local PCT decision or (35)
• subject to local agreement for implementation
  (26)
• and,
• apply only to future changes or, (36)
• apply to current service provision patterns (64)

74
normative pricing

• Are you supportive in principle of a move toward
  normative pricing in PbR
• (Y 91 N 9)
• if yes, would you be supportive of developing PbR
  normative pricing
• to discourage specific ineffective diagnosis and
  treatment practices (e.g. grommets)
• Y 75 N 25
• to encourage adoption of best practice
  diagnosis and treatment (e.g. day care cataract
  surgery)
• Y 100
• to encourage the uptake of new policy/guidelines
  (e.g. from NICE)
• Y 90 N 10

75
validation and settlement

• Do you consider the current level of resources
  committed to regular data cleansing, payment
  negotiation and transaction processing to be
• an efficient use of resources (67)
• an inefficient use of resources (33)

76
validation and settlement

• Would you support the development of an automated
  national net settlement system for PbR
  transactions?
• Y 78 N 22

77
Secondary Uses Service

• Data to inform commissioning
• HRG grouping
• Exclusion of activity outside PbyR
• Convert episode to spells
• Calculate excess bed days
• Application of national tariff
• Support flex and freeze dates
• Some online reporting facilities

78
Wanless solid progress 2003 - 2013
12
135
-14
0 to 12
121
6
4
25 to 40
8
68