Establishing a fair playing field for payment by results

A key element of the reform agenda for the health service has been to encourage a plurality of provision for NHS patients and so improve the quality of care. In introducing plurality, the Department of Health is committed to establishing a „fair playing field‟. This means that the objective of competitive neutrality across NHS and Independent Sector (IS) providers of NHS services („a level playing field‟) is tempered by the obligation upon the public sector to act in the public interest. This fair playing field must be supported by the system of reimbursement – called Payment by Results (PbR) – that is being implemented to fund NHS patients. PbR is a prospective payment system in which prices for treating particular types of patients are fixed in advance by the Department of Health rather than being negotiated locally. As prices are fixed, any competition between providers should be on the basis of the quality of services, rather than their cost.