Assessing the impact of incentives in health care delivery: a natural experiment in the British National Health Service

Abstract

A recurring concern in publicly funded health care systems is how to improve efficiency, without compromising quality. The National Health Service in England instituted a fundamental reform of purchasing termed Payment by Results that began in 2003 and was completed in 2008. This system mirrored the Prospective Payment System adopted by Medicare from 1984. Unlike the Medicare reform however, the phased introduction of the policy, and the existence of a neighbouring jurisdiction Scotland provide a rich set of controls for this natural experiment. Analysing detailed administrative records of nearly 80 million treatments, over 6 years, and across the two jurisdictions we establish that this policy can be credited with reducing resource use, proxied by length of stay, without having impacted negatively on any of the commonly used, albeit crude, measures of quality.

This is joint work with Shelley Farrar, Deokhee Yi and Ada Ma (HERU Aberdeen) and Matt Sutton (Manchester)