Seminar

NHS hospitals on a case by case basis, in light of the experience and economic research from the US and other European countries being presented. The aim was to enable policy makers, NHS managers and academics in the field to consider these issues whilst the specifics of the English NHS 'payment by results' system were still being developed, and so hopefully help to shape and influence improvements to the system and to determine priorities for future research to help the policy achieve its objectives.

The opening address outlining the purpose and objectives of the new system of financial flows was given by Bob Dredge from the Department of Health who is leading the implementation of payment by results in England. He argued the new system should facilitate patient choice, health care plurality and delivery, whilst increasing the efficiency, transparency and fairness of the health care system in England.

Three speakers then gave their view of the issues which arise from introducing DRG payment systems based on observations and experiences of other countries. Professor Thomas G McGuire of Harvard University discussed DRG-based payment in America. He suggests payment based on cost rather than prospective payment based on classification reduces the need for revising the system as technology and patterns of care change. Secondly that insurance principles can be useful modifications to the prospective payment method protecting patients from access problems and hospitals from financial risk and thirdly keeping payments close to average variable cost to avoid distorted incentive effects on discharge levels and fixed cost decisions. Egil Kjerstad gave his observations on the effect of DRG payment in Norway arguing that it seemed to have a significant effect on productivity, as measured by the numbers of patients treated. Miriam Wiley Economic & Social Research Institute, Dublin looked at how similar systems have been introduced in other European countries.

Nigel Edwards, Policy Director, the NHS Confederation discussed the NHS response, highlighting some of the challenges the NHS faces in implementing a DRG based system, Whilst Andrew Street, Centre for Health Economics, University of York looked at the challenges of implementation from an external viewpoint.