U.K. sin­gle-payer re­im­burse­ment pushes most hos­pi­tals into the red

Modern Healthcare - - Comment -

As the U.S. con­sid­ers the mer­its of “Medi­care for all,” ex­pe­ri­ence in the U.K. with a sin­gle-payer sys­tem is worth high­light­ing.

One prob­lem with sin­gle-payer, at least with the U.K. sys­tem, is that if reg­u­la­tors de­cide they are go­ing to drive health­care providers into deficit, there is lit­tle you can do about it. This is in ef­fect what NHS Eng­land (the or­ga­ni­za­tion that sets re­im­burse­ment lev­els) has done. Un­der great pres­sure to main­tain over­all spend­ing within the to­tal fund­ing al­lo­cated by the Trea­sury, NHS Eng­land de­cided that it made best sense to keep a tight lid on re­im­burse­ments to the acute sec­tor.

In­creas­ing hos­pi­tal deficits have been off­set by sur­pluses at the “com­mis­sion­ing” end of the NHS. The mech­a­nism for do­ing so is “pay­ment by re­sults” (PbR), which is sim­i­lar to DRG pay­ments in the U.S. But pay­ments for emer­gency care (in par­tic­u­lar) are kept low. For ex­am­ple, the top rate for a com­plex emer­gency depart­ment visit is the equiv­a­lent of $420 (with no sep­a­rate charg­ing for physi­cian ser­vices). Any in­creased emer­gency ac­tiv­ity is typ­i­cally paid at a 20% mar­ginal rate on al­ready low rates.

As a re­sult, the Na­tional Health Ser­vice in Eng­land has gone from 5% of acute providers be­ing in deficit in 2011-12 to around 70% now. The ac­tual po­si­tion is even worse be­cause many of the 30% that are “of­fi­cially” in bal­ance are only do­ing so with the help of non-PbR sources of in­come such as char­i­ta­ble funds, pri­vate pa­tients and ad­di­tional fund­ing sup­port (which can be shown as in­come rather than as a loan). You can imag­ine the neg­a­tive con­se­quences for qual­ity health­care de­liv­ery and staff morale at hos­pi­tals that are per­ma­nently in deficit.

Robert Royce, Ph.D. Swansea, Wales

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