Centre for Mental Health

Payment by Results can work for mental health services but will be a leap in the dark

9 December 2004

The Government should extend Payment by Results to mental health services but with caution, according to a policy paper published today by the Sainsbury Centre for Mental Health (SCMH).

The policy paper, Payment by Results: What does it mean for mental health?, shows that a workable system is some way off. A major programme of work is needed to ensure the potential benefits of Payment by Results in mental health services outweigh the risks.

Payment by Results is a new system to pay for NHS services using a national tariff for each procedure carried out. It is designed to increase activity and efficiency and to ensure that services are commissioned for patients on the basis of quality rather than price. Most acute hospital care will be paid for through it from April 2005. Mental health (and some other) services will initially be exempt, but the Government plans to apply the new system to the whole of the NHS by 2008.

The policy paper shows that Payment by Results has been used to pay for other health services in The United States, Australia and other countries for some time, mainly for the good. None have yet extended it to mental health care.

This is because it is harder and riskier to apply Payment by Results to mental health services. Payment by Results is best used for short-term procedures like routine surgery, where the costs do not vary very much from one patient to another. Mental health care is often provided over long periods, using a complex mix of services, and in quite different ways from one person to another.

In the NHS, a further obstacle to Payment by Results in mental health services is the poor quality of information. Without high quality IT support and recording of activity, it would not work.

The policy paper concludes that Payment by Results should be introduced gradually into mental health services while a robust way of classifying mental health care into groups can be found; improvements are made to IT and other managements system; and the effects of the regime are monitored elsewhere in the NHS.

Angela Greatley, SCMH chief executive, said: "Payment by Results was not designed for mental health care. It is untried and untested for these services, anywhere in the world. But that does not mean it should be rejected. Rather that we need to proceed with caution.

"Payment by Results could help to improve the quality of mental health care, to offer greater choice to service users, and to improve efficiency and value for money. To reap its benefits, much work will be needed, on the part of commissioners as well as providers of services. But to simply reject it because it is too difficult would be to make mental health services, and the 600,000 people who use them, yet again a Cinderella within the NHS."