The impact of reimbursement schemes on healthcare providers' operational performance

University College London (UCL) requires access to NHS England data for the purpose of the following research project: The impact of reimbursement schemes on healthcare providers' operational performance.

In NHS England, where patients do not pay at the point of service, financial incentives are one of the levers that policymakers use to affect healthcare providers’ behaviour. These financial incentives are in the form of payment schemes that determine how and when healthcare providers should be reimbursed for the services they provide. Payment schemes in England have changed over the past 25 years to counteract system inefficiency. However, it is still unclear what reimbursement scheme will effectively incentivize providers to reduce their costs and improve operational efficiency and care quality.

Payment schemes and changes can influence healthcare providers in different aspects such as operational and cost efficiency, and quality. They can also lead to some unintended consequences like patient selection. Furthermore, the impact of financial incentives can vary across healthcare providers depending on factors such as their locations, the health conditions, and patients’ socioeconomic conditions and locations.

Studying financial incentives and realising how and through which mechanisms healthcare providers would be impacted by these financial incentives can provide important insights to policymakers and has a great potential to improve public policy significantly.

The following is a summary of the aims of the research project provided by UCL:

• To examine how different reimbursement schemes proposed by the NHS to reimburse healthcare providers affect providers’ operational efficiency, costs, and quality of care.

• To understand why the same reimbursement scheme leads to different behaviours among healthcare providers depending on their characteristics and patient types.

The following NHS England Data will be accessed:

• Hospital Episode Statistics (HES) Admitted Patient Care (APC) – necessary to extract the operational efficiency and quality-of-care metrics (such as the length of stay, waiting time, number of admissions, number of day cases, number of bed-days, number of readmissions) for different health conditions, sites of treatment, and groups of patients in different time periods.

The level of the Data will be:

• Pseudonymised

The Data will be minimised as follows:

Data is restricted to the financial years 1997/98 onward

Data from 1997/98 onwards has been requested to assess the long-term impact of reimbursement schemes in NHS England which have undergone numerous changes over the past 25 years and continue to evolve. The team aim to assess the long-term impact of these schemes, discern any effects stemming from smaller changes in funding structures across different years, and facilitate comparisons of providers' behaviours under various payment schemes. Moreover, the behaviour of different healthcare providers under a specific payment scheme can vary, and they can also respond differently based on the patient type and patients’ health condition. For example, when examining reimbursement schemes in England, Aragón et al. (2022) investigated the long-term effects of the Payment by Results system as a type of diagnosis-related group payment. Their study used 15 years of HES data, covering 1997/98 to 2013/14, to analyse the impact on hospital lengths of stay.

UCL is the controller who also processes the data as the organisation responsible for ensuring that the Data will only be processed for the purpose described above.

The lawful basis for processing personal data under the UK GDPR is:

Article 6(1)(e) - processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller.

The lawful basis for processing special category data under the UK GDPR is:

Article 9(2)(j) - processing is necessary for archiving purposes in the public interest, scientific or historical research purposes or statistical purposes in accordance with Article 89(1) based on Union or Member State law which shall be proportionate to the aim pursued, respect the essence of the right to data protection and provide for suitable and specific measures to safeguard the fundamental rights and the interests of the data subject.

This processing is in the public interest because it seeks to identify effective financial incentives that can improve overall efficiency, manage health expenditure, and enhance the accessibility and availability of health services.

The funding is provided by the UCL School of Management which is part of the UCL Faculty of Engineering Sciences.

The funder(s) will have no ability to suppress or otherwise limit the publication of findings.

The study team do not interact directly with patients in this research. Instead, NHS England’s pricing team is the key entity responsible for setting policies related to hospital payment models. UCL met with the NHS England pricing team previously. Insights shaped the studies research questions and guided data collection. The study aims to provide evidence-based insights to help the NHS England pricing team better understand the strengths and weaknesses of the implemented payment schemes to decide about their future updates. The study team will continue engagement with the pricing team, sharing findings and seeking their feedback to ensure the research remains relevant to their needs.

No data will flow to NHS England for the purposes of this Data Sharing Agreement (DSA).

NHS England will grant access to the Data via the Secure Data Environment (SDE). The SDE is a secure data and research analysis platform. It allows approved researchers with approved projects access to pseudonymised data and industry-leading analytics tools

NHS England will provide access to the relevant records from the HES APC Data Set to UCL via the NHS England Secure Data Environment (SDE).

The Data will contain no direct identifying data items. The Data will be pseudonymised and individuals cannot be reidentified through linkage with other data in the possession of the recipient.

SDE users can request exportation of aggregated analysis results (suppressed and summarised according to the NHSE SDE Disclosure Control rules) subject to review and approval by the NHS England SDE Output Checking team. The SDE Output Checking team will ensure that no output contains information which could be used either on its own or in conjunction with other data to breach an individual's privacy.

Users must identify themselves via a multi-factor authentication mechanism and are only able to access the datasets detailed within this DSA. The access and use of the system is fully auditable, and all users must comply with the use of the Data as specified in this DSA.

Users are only authorised to access the Data specified in this DSA and can utilise a variety of analytical tools available within the SDE platform. Users are not permitted to export record-level data from the SDE.

The Data will be accessed by authorised personnel via remote access.

The Controller(s) must confirm and provide evidence upon audit by NHS England that access via any remote device complies with the data security obligations within this DSA and the Data Sharing Framework Contract.

For remote access:

• Remote access will only be from secure locations situated within the territory of use (as further restricted elsewhere within the DSA if so done) stated within this DSA;

• Access controls granting users the minimum level of access required are in place;

• Remote access is only via secure connections (e.g., VPNs or secure protocols) to protect data;

• Multifactor authentication (MFA) is required for remote access;

• Device security, including up-to-date software and operating systems, antivirus software, and enabled firewalls are utilised for the remote access;

• All remote access is undertaken within the scope of the organisation’s DSPT (or other security arrangements as per this DSA) and complies with the organisation’s remote access policy.

The above applies in addition to any condition set out elsewhere within the DSA (e.g. who may carry out processing, and for what purpose).

Remote processing will be from secure locations within England/Wales. The Data will not leave England/Wales at any time.

Access is restricted to UCL substantive employees and researchers including UCL faculty and UCL Doctoral students who have authorisation from the research director.

All personnel accessing the Data have been appropriately trained in data protection and confidentiality.

The Data will not be linked with any other data.

There will be no requirement and no attempt to reidentify individuals when using the Data.

Researchers from UCL will process the Data for the purposes described above.

The expected outputs of the processing will be:

• At least 1 submission to a peer reviewed journals (such as Management Science, Manufacturing & Service Operations Management, Production and Operations Management, Journal of Operations Management, British Medical Journal).

• At least 3 presentations at appropriate national and international conferences (such as INFORMS Healthcare Conference, INFORMS Annual Meeting, INFORMS MSOM Conference, POMS Conference, Health Economists’ Study Group Meetings, ISPOR Europe Conference, European Health Economics Association Conference, European Public Health Conference, European Operations Management Association Conference).

The outputs will not contain NHS England Data and will only contain aggregated information with small numbers suppressed as appropriate in line with the relevant disclosure rules for the dataset(s) from which the information was derived.

The outputs will be communicated to relevant recipients through the following dissemination channels:

• Journals

• Conferences

• Workshops and seminars open to UCL staff, academics, researchers outside of UCL, and policymakers

The target date for production and dissemination of the outputs is 2 years following receipt of the Data and is expected to be ongoing until the end of the project.

Long waiting times, high costs, and quality issues such as a high number of readmissions are examples of common problems in English healthcare systems. One of the ways to address these issues is to create effective financial incentives through payment mechanisms that can make healthcare providers’ actions aligned with the healthcare systems’ objectives. In England, policymakers have proposed different payment models over time, but it is still unclear what reimbursement scheme will effectively incentivize hospitals to reduce their costs and improve operational efficiency and care quality.

Analysing payment models in healthcare systems has attracted considerable attention. There are analytical and empirical studies that have explored various reimbursement schemes across different countries, including England (for example: Aragón et al., 2022; Arifoğlu et al., 2021; Arifoglu et al., 2023; Chen & Savva, 2018; Farrar et al., 2009; O’Reilly et al., 2012; Palmer et al., 2014; Savva et al., 2019; She et al., 2024; Shleifer, 1985; Sutherland et al., 2016; Theurl & Winner, 2007). The overarching aim of these studies, including this study, is to deepen the understanding of financial incentive mechanisms in healthcare systems.

This research is also motivated by conversations with hospital administrators. The team have talked to many hospital administrators in an effort to help them to reduce backlog of patients that accumulated during COVID. Several of them expressed concerns that the current payment structures do not incentivize improvements in operational efficiency or efforts to treat more patients. By analysing the HES data, the team aim to determine the validity of these perceptions and help administrators identify effective strategies to enhance their operational efficiency.

The findings of this research study are expected to contribute to evidence-based decision-making for policy-makers regarding the types of financial incentives that should be provided to healthcare providers to improve their overall efficiency and thereby resolve the existing problems in the healthcare system.

The use of the data could:

• help the system to better understand the health and care needs of populations.

• lead to the identification or improvement of treatments or interventions, or health and care system design to improve health and care outcomes or experience.

• inform planning health services and programmes, for example to improve equity of access, experience, and outcomes.

• inform decisions on how to effectively allocate and evaluate funding according to health needs.

• support knowledge creation or exploratory research (and the innovations and developments that might result from that exploratory work).

It is hoped that through publication of findings in appropriate media, the findings of this research will add to the body of evidence that is considered by the bodies, organisations and individual care practitioners charged with making policy decisions for or within the NHS. The implications of the findings could extend beyond England and has the potential to benefit any healthcare system where patients do not pay directly at the point of service, by providing insights into designing effective financial incentives.

It is anticipated that the findings from this research can help better design payment models in the future and thereby improve social welfare in England. Patients are hoped to benefit from the research findings through shorter waiting times and a higher quality of care, while healthcare providers are anticipated to reduce their costs and provide better and more efficient care.

The team have been in contact with the NHS pricing team, and plan to share significant discoveries with them. There is also a plan to collaborate with the UCL Policy Impact Unit to disseminate the results and maximize the impact of the research in shaping better healthcare policies.

Yielded Benefits is not a requirement for new applications.