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Background: A Pay-for-Performance (P4P) programme, known as Prescribed Specialised Services Commissioning for Quality and Innovation (PSS CQUIN), was introduced for specialised services in the English NHS in 2013/2014. These services treat patients with rare and complex conditions. We evaluate the implementation of PSS CQUIN contracts between 2016/2017 and 2018/2019., Methods: We used a mixed methods evaluative approach. In the quantitative analysis, we used a difference-in-differences design to evaluate the effectiveness of ten PSS CQUIN schemes across a range of targeted outcomes. Potential selection bias was addressed using propensity score matching. We also estimated impacts on costs by scheme and financial year. In the qualitative analysis, we conducted semi-structured interviews and focus group discussions to gain insights into the complexities of contract design and programme implementation. Qualitative data analysis was based on the constant comparative method, inductively generating themes., Results: The ten PSS CQUIN schemes had limited impact on the targeted outcomes. A statistically significant improvement was found for only one scheme: in the clinical area of trauma, the incentive scheme increased the probability of being discharged from Adult Critical Care within four hours of being clinically ready by 7%. The limited impact may be due to the size of the incentive payments, the complexity of the schemes' design, and issues around ownership, contracting and flexibility., Conclusion: The PSS CQUIN schemes had little or no impact on quality improvements in specialised services. Future P4P programmes in healthcare could benefit from lessons learnt from this study on incentive design and programme implementation., (© 2023. The Author(s).)

We study whether hospitals that exhibit systematically higher bed occupancy rates are associated with lower quality in England over 2010/11-2017/18. We develop an economic conceptual framework to guide our empirical analysis and run regressions to inform possible policy interventions. First, we run a pooled OLS regression to test if high bed occupancy is associated with, and therefore acts as a signal of, lower quality, which could trigger additional regulation. Second, we test whether this association is explained by exogenous demand-supply factors such as potential demand, and unavoidable costs. Third, we include determinants of bed occupancy (beds, length of stay, and volume) that might be associated with quality directly, rather than indirectly through bed occupancy. Last, we use a within-between random-effects specification to decompose these associations into those due to variations in characteristics between hospitals and variations within hospitals. We find that bed occupancy rates are positively associated with overall and surgical mortality, negatively associated with patient-reported health gains, but not associated with other indicators. These results are robust to controlling for demand-supply shifters, beds, and volume. The associations reduce by 12%-25% after controlling for length of stay in most cases and are explained by variations in bed occupancy between hospitals., (© 2022. The Author(s).)

Prospective payment systems fund hospitals based on a fixed-price regime that does not directly distinguish between specialist and general hospitals. We investigate whether current prospective payments in England compensate for differences in costs between specialist orthopaedic hospitals and trauma and orthopaedics departments in general hospitals. We employ reference cost data for a sample of hospitals providing services in the trauma and orthopaedics specialty. Our regression results suggest that specialist orthopaedic hospitals have on average 13% lower profit margins. Under the assumption of break-even for the average trauma and orthopaedics department, two of the three specialist orthopaedic hospitals appear to make a loss on their activity. The same holds true for 33% of departments in our sample. Patient age and severity are the main drivers of such differences.

We model and compare the bargaining process between a purchaser of health services, such as a health authority, and a provider (the hospital) in three plausible scenarios: (a) activity bargaining: the purchaser sets the price and activity (number of patients treated) is bargained between the purchaser and the provider; (b) price bargaining: the price is bargained between the purchaser and the provider, but activity is chosen unilaterally by the provider; (c) efficient bargaining: price and activity are simultaneously bargained between the purchaser and the provider. We show that: (1) if the bargaining power of the purchaser is high (low), efficient bargaining leads to higher (lower) activity and purchaser's utility, and lower (higher) prices and provider's utility compared to price bargaining. (2) In activity bargaining, prices are lowest, the purchaser's utility is highest and the provider's utility is lowest; activity is generally lowest, but higher than in price bargaining for high bargaining power of the purchaser. (3) If the purchaser has higher bargaining power, this reduces prices and activity in price bargaining, it reduces prices but increases activity in activity bargaining, and it reduces prices but has no effect on activity in efficient bargaining.