Jon Sussex

Has payment by results affected the way that English hospitals provide care? Difference-in-differences analysis

Objective To examine whether the introduction of payment by results (a fixed tariff case mix based payment system) was associated with changes in key outcome variables measuring volume, cost, and quality of care between 2003/4 and 2005/6. Setting Acute care hospitals in England. Design Difference-in-differences analysis (using a control group created from trusts in England and providers in Scotland not implementing payment by results in the relevant years); retrospective analysis of patient level secondary data with fixed effects models. Data sources English hospital episode statistics and Scottish morbidity records for 2002/3 to 2005/6. Main outcome measures Changes in length of stay and proportion of day case admissions as a proxy for unit cost; growth in number of spells to measure increases in output; and changes in in-hospital mortality, 30 day post-surgical mortality, and emergency readmission after treatment for hip fracture as measures of impact on quality of care. Results Length of stay fell more quickly and the proportion of day cases increased more quickly where payment by results was implemented, suggesting a reduction in the unit costs of care associated with payment by results. Some evidence of an association between the introduction of payment by results and growth in acute hospital activity was found. Little measurable change occurred in the quality of care indicators used in this study that can be attributed to the introduction of payment by results. Conclusion Reductions in unit costs may have been achieved without detrimental impact on the quality of care, at least in as far as these are measured by the proxy variables used in this study.

How long does biomedical research take? Studying the time taken between biomedical and health research and its translation into products, policy and practice

BackgroundThe time taken, or ‘time lags’, between biomedical/health research and its translation into health improvements is receiving growing attention. Reducing time lags should increase rates of return to such research. However, ways to measure time lags are under-developed, with little attention on where time lags arise within overall timelines. The process marker model has been proposed as a better way forward than the current focus on an increasingly complex series of translation ‘gaps’. Starting from that model, we aimed to develop better methods to measure and understand time lags and develop ways to identify policy options and produce recommendations for future studies.MethodsFollowing reviews of the literature on time lags and of relevant policy documents, we developed a new approach to conduct case studies of time lags. We built on the process marker model, including developing a matrix with a series of overlapping tracks to allow us to present and measure elements within any overall time lag. We identified a reduced number of key markers or calibration points and tested our new approach in seven case studies of research leading to interventions in cardiovascular disease and mental health. Finally, we analysed the data to address our study’s key aims.ResultsThe literature review illustrated the lack of agreement on starting points for measuring time lags. We mapped points from policy documents onto our matrix and thus highlighted key areas of concern, for example around delays before new therapies become widely available. Our seven completed case studies demonstrate we have made considerable progress in developing methods to measure and understand time lags. The matrix of overlapping tracks of activity in the research and implementation processes facilitated analysis of time lags along each track, and at the cross-over points where the next track started. We identified some factors that speed up translation through the actions of companies, researchers, funders, policymakers, and regulators. Recommendations for further work are built on progress made, limitations identified and revised terminology.ConclusionsOur advances identify complexities, provide a firm basis for further methodological work along and between tracks, and begin to indicate potential ways of reducing lags.

Operationalizing Value-Based Pricing of Medicines

The UK Government is proposing a novel form of price regulation for branded medicines, which it has dubbed ‘value-based pricing’ (VBP). The specifics of how VBP will work are unclear. We provide an account of the possible means by which VBP of medicines might be operationalized, and a taxonomy to describe and categorize the various approaches. We begin with a brief discussion of the UK Government’s proposal for VBP and proceed to define a taxonomy of approaches to VBP. The taxonomy has five main dimensions: (1) what is identified as being of value, (2) how each element is measured, (3) how it is valued, (4) how the different elements of value are aggregated, and (5) how the result is then used to determine the price of a medicine. We take as our starting point that VBP will include a measure of health gain and that, as proposed by the UK Government, this will be built on the QALY. Our principal interest is in the way criteria other than QALYs are taken into account, including severity of illness, the extent of unmet need, and wider societal considerations such as impacts on carers. We set out to: (1) identify and describe the full range of alternative means by which ‘value’ might be measured and valued, (2) identify and describe the options available for aggregating the different components of value to establish a maximum price, and (3) note the challenges and relative advantages associated with these approaches. We review the means by which aspects of VBP are currently operationalized in a selection of countries and place these, and proposals for the UK, in the context of our taxonomy. Finally, we give an initial assessment of the challenges, pros and cons of each approach. We conclude that identifying where VBP should lie on each of the five dimensions entails value judgements: there are no simple ‘right or wrong’ solutions. If a wider definition of value than incremental QALYs gained is adopted, as is desirable, then a pragmatic way to aggregate the different elements of value, including both QALYs and benefits unrelated to QALYs, is to use a multi-criteria decision analysis (MCDA) approach. All approaches to VBP ultimately require the conversion of value, however assessed, into a monetary price. This requires assessment of the marginal values of all types of benefit, not just of QALYs. All stages of the VBP process are subject to uncertainty and margins of error. Consequently, the assessment of overall value can provide bounds to a price negotiation but cannot be expected to identify a precise value-based price.

Operationalising Value Based Pricing of Medicines: A Taxonomy of Approaches

The purpose of this paper is to provide an account of the full set of possible means by which value based pricing (VBP) might be operationalised; to describe and categorise them by developing a taxonomy of approaches; to give an initial assessment of the challenges, pros and cons that each of the principal types of approach implies. To achieve this, we review the elements of value that could be taken into account, how they might be measured and valued, how the different elements could be combined into an overall assessment of a medicine’s value, and how that then could be linked to the maximum price the health service is willing to reimburse.The UK Department of Health’s consultation document regarding the introduction of VBP (DH, 2010a) outlines one possible approach to these steps – but others are possible. We begin with a brief discussion of value in economics and theoretical frameworks from economics relevant to the normative question of which attributes of medicines should be taken into account in VBP. We proceed to outline a taxonomy of approaches to VBP, taking as our starting point that VBP will include a measure of health gain and that this will be built on the QALY. Our principal interest is in the way criteria other than QALYs are taken into account. We set out to: (i) identify and describe the full range of alternative means by which “value” might be measured and valued, (ii) identify and describe the options available for aggregating the different components of value to establish a maximum price, and (iii) note the challenges and relative advantages associated with these approaches. Finally, we review the means by which VBP is currently operationalised in a selection of countries and place these, and proposals for the UK, in the context of our taxonomy.

Prioritizing Health Technologies in a Primary Care Trust

Background: In the English National Health Service (NHS), Primary Care Trusts (PCTs) are responsible for commissioning health-care services on behalf of their populations. As resources are finite, decisions are required as to which services best fulfil population needs. Evidence on effectiveness varies in quality and availability. Nevertheless, decisions still have to be made. Methods: We report the development and pilot application of a multi-criteria prioritization mechanism in an English PCT, capable of accommodating a wide variety of evidence to rank six service developments. Results: The mechanism proved valuable in assisting prioritization decisions and feedback was positive. Two community-based interventions were expected to save money in the long term and were ranked at the top of the list. Based on weighted benefit score and cost, two preventive programmes were ranked third and fourth. Finally, two National Institute for Health and Clinical Excellence (NICE)-approved interventions were ranked fifth and sixth. Sensitivity analysis revealed overlap in benefit scores for some of the interventions, representing diversity of opinion among the scoring panel. Conclusion: The method appears to be a practical approach to prioritization for commissioners of health care, but the pilot also revealed interesting divergences in relative priority between nationally mandated service developments and local health-care priorities.

Getting UK health care expenditure up to the European union mean-what does that mean?

Tony Blairs statement that the United Kingdom should increase the share of gross domestic product (GDP) that it spends on health care to the average of the European Union (EU)1 raises several questions. Firstly, will the proposed increases in NHS spending of 5% in real terms (after accounting for inflation) each year to 2006 raise the UK figure from the 6.7% of GDP spent in 1998 to the 8% that the prime minister identified as the EU average? Secondly, is 8% the current EU average, and will it still be in 2006, seeing that the average is a moving target dependent on health spending and economic growth in the 15 countries of the EU? Thirdly, is this a sensible target to aim for?2 #### Summary points The prime minister intends NHS spending to rise in real terms (after adjusting for inflation) by 5% a year to achieve 8% of gross domestic product (GDP) being spent on health care by 2006 Achieving this target would require 5.8% real growth in NHS spending every year, assuming that private healthcare spending rises in line with The 8% target understates the average proportion of GDP that is spent on health care in the European Union (EU) outside the United Kingdom, which is 9.1%: hence a real annual increase of 7.7-8.7% in NHS resources is required to match EU levels Nursing home care is not included in the UK figures for health expenditure but is included in the figures of some EU countries Although international comparisons are fraught with difficulty, it is reasonable to set a spending target in terms of share of GDP achieved in the rest of the EU Spending plans for the NHS for the three budget years from 1999-2000 to 2001-2 were announced in the comprehensive spending review.3 A revised estimate …

Opportunity costs and local health service spending decisions: a qualitative study from Wales

BackgroundAll health care systems face the need to find the resources to meet new demands such as a new, cost-increasing health technology. In England and Wales, when a health technology is recommended by the National Institute for Health and Care Excellence (NICE), the National Health Service (NHS) is mandated to provide the funding to accommodate it within three months of publication of the recommendation. Identifying what, in practice, is foregone when new cost-increasing technologies are introduced is important for understanding the effects of health technology assessment (HTA) decisions on the NHS or any other health care system. Our objective was to investigate how in practice local NHS commissioners in Wales accommodated financial “shocks” arising from technology appraisals (TAs) issued by NICE and from other cost pressures.MethodsSemi-structured interviews were conducted with Finance Directors and Medical Directors from all seven Local Health Boards (LHBs) in NHS Wales. These interviews covered prioritisation processes, as well as methods of financing NICE TAs and other financial shocks at each LHB. We then undertook a systematic identification of themes and topics from the information recorded. The study relates to the period October 2010 to March 2013.ResultsThe financial impact of NICE TAs is generally anticipated and planned for in advance and the majority of LHBs have contingency funds available to cope with these and other financial shocks within-period. Efficiency savings (defined as reductions in costs with no assumed reductions in quality) were a source of funds for cost pressures of all kinds. Service displacements were not linkable to particular NICE TAs and there appears to be a general lack of explicit prioritisation activities. The Welsh Government has, on occasion, explicitly or implicitly acted as the funder of last resort.ConclusionsServices may be displaced as part of a response to the cumulative impact of all types of cost pressures, including cost-increasing health technologies recommended by NICE, but such displacements were not direct responses to the publication of individual NICE TAs. The additional cost pressure represented by a new NICE TA is likely to be accommodated at least partly by greater efficiency and increased expenditure rather than displacement of services.

Association between market concentration of hospitals and patient health gain following hip replacement surgery

Objectives To assess the association between market concentration of hospitals (as a proxy for competition) and patient-reported health gains after elective primary hip replacement surgery. Methods Patient Reported Outcome Measures data linked to NHS Hospital Episode Statistics in England in 2011/12 were used to analyse the association between market concentration of hospitals measured by the Herfindahl-Hirschman Index (HHI) and health gains for 337 hospitals. Results The association between market concentration and patient gain in health status measured by the change in Oxford Hip Score (OHS) after primary hip replacement surgery was not statistically significant at the 5% level both for the average patient and for those with more than average severity of hip disease (OHS worse than average). For 12,583 (49.1%) patients with an OHS before hip replacement surgery better than the mean, a one standard deviation increase in the HHI, equivalent to a reduction of about one hospital in the local market, was associated with a 0.104 decrease in patients’ self-reported improvement in OHS after surgery, but this was not statistically significant at the 5% level. Conclusions Hospital market concentration (as a proxy for competition) appears to have no significant influence (at the 5% level) on the outcome of elective primary hip replacement. The generalizability of this finding needs to be investigated.

Opportunity Costs of Implementing Nice Decisions in NHS Wales

Background: When a technology is recommended by the National Institute for Health and Care Excellence (NICE), the National Health Service (NHS) is mandated to provide the funding to accommodate it within three months of publication. Explicit in NICE’s approach to health technology assessment (HTA) is the assumption that the approval of a new, cost-increasing technology will result in the displacement of an existing, less cost-effective health care programme from elsewhere in the NHS. Notwithstanding the research which has been undertaken to establish what NICE’s cost effectiveness threshold should be, to date there has been no attempt to identify the actual opportunity costs of specific NICE decisions. Understanding what, in practice, is foregone when new cost-increasing technologies are introduced is important for an understanding of the effects of HTA.Objectives: The objectives of this paper were to document how in practice local NHS commissioners in Wales accommodated financial shocks arising from technology appraisals (TAs) issued by NICE and from other cost pressures. We also aimed to investigate how prioritisation decisions were made by budget holders in the NHS.Methods: Semi-structured interviews were conducted with Finance Directors and Medical Directors from all seven Local Health Boards (LHBs) in NHS Wales. These interviews covered prioritisation processes, as well as methods of financing NICE TAs and other financial “shocks” at each LHB. We then undertook a systematic identification of themes and topics from the information recorded. The study relates to the period October 2010 to March 2013.Results: The financial impact of NICE TAs is generally anticipated and planned for in advance and the majority of LHBs have contingency funds available to cope with these and other “shocks” within-period. Efficiency savings (defined as reductions in costs with no assumed reductions in quality) were a major source of funds for cost pressures of all kinds. Service displacements were not linkable to particular NICE TAs and there appears to be a general lack of explicit prioritisation activities. The Welsh Government has, on occasion, acted as the funder of last resort.Conclusions: Services may be displaced as part of a response to the cumulative impact of all types of cost pressures, including cost-increasing health technologies newly recommended by NICE, but such displacements were not direct responses to the publication of individual NICE TAs. The additional cost pressure represented by a new NICE TA is likely to be accommodated at least partly by greater efficiency and increased expenditure rather than displacement of services.

Economies of scale and scope in publicly funded biomedical and health research: evidence from the literature

BackgroundPublicly funded biomedical and health research is expected to achieve the best return possible for taxpayers and for society generally. It is therefore important to know whether such research is more productive if concentrated into a small number of ‘research groups’ or dispersed across many.MethodsWe undertook a systematic rapid evidence assessment focused on the research question: do economies of scale and scope exist in biomedical and health research? In other words, is that research more productive per unit of cost if more of it, or a wider variety of it, is done in one location? We reviewed English language literature without date restriction to the end of 2014. To help us to classify and understand that literature, we first undertook a review of econometric literature discussing models for analysing economies of scale and/or scope in research generally (not limited to biomedical and health research).ResultsWe found a large and disparate literature. We reviewed 60 empirical studies of (dis-)economies of scale and/or scope in biomedical and health research, or in categories of research including or overlapping with biomedical and health research. This literature is varied in methods and findings. At the level of universities or research institutes, studies more often point to positive economies of scale than to diseconomies of scale or constant returns to scale in biomedical and health research. However, all three findings exist in the literature, along with inverse U-shaped relationships. At the level of individual research units, laboratories or projects, the numbers of studies are smaller and evidence is mixed. Concerning economies of scope, the literature more often suggests positive economies of scope than diseconomies, but the picture is again mixed. The effect of varying the scope of activities by a research group was less often reported than the effect of scale and the results were more mixed.ConclusionsThe absence of predominant findings for or against the existence of economies of scale or scope implies a continuing need for case by case decisions when distributing research funding, rather than a general policy either to concentrate funding in a few centres or to disperse it across many.