England & Wales Health and social care

Payment by Results: The Perfect Storm of Public Sector Finances

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Councils could use their new preventive health role to pilot programmes which achieve cost savings both to the council and the NHS. In Payment by results: The perfect storm of public sector finances the LGiU and Westminster council suggest councils target their resources on meeting three big public health challenges; diabetes, dementia and heart disease.

Britain spent almost £100 billion on health care in 2010. This will increase as Britain’s population ages and becomes increasingly overweight. One fifth of Britons will reach age 100. Two thirds of Britons are overweight, this is predicted to increase by 10 per cent over the next decade. These twin factors will increase cases of dementia, diabetes and heart disease.

Dementia costs the UK an estimated £23 billion. £10 billion relates to health and social care costs. Every sufferer costs the economy an estimated £27,000 per annum. Dementia risk factors include high blood pressure, high cholesterol, diabetes, smoking and heavy alcohol use.

Diabetes costs are estimated at 10 per cent of NHS expenditure. Around nine in ten diabetes sufferers have type 2 diabetes. Risk factors include being overweight, having a sedentary lifestyle and eating an unbalanced diet. Overweight individuals are twelve times more likely to contract this ailment. The NHS spends around £9 billion per annum treating this condition. If left undetected it can cause blindness, heart disease and strokes.

Heart disease costs the NHS around £3.2 billion per annum. Cardiovascular diseases in general cost the NHS around £15 billion per annum. Hospital care costs account for 73 per cent of costs to the NHS. Risk factors include high cholesterol, high blood pressure.

Each of these conditions can be tested for (dementia tests are at experimental stage). Early detection combined with lifestyle changes can delay or prevent these conditions. So why don’t we invest more in prevention?

We have a national sickness service not a national health service. Government budgets are deployed in acute services. The economic benefits of prevention are dispersed and don’t all accrue to those who fund prevention.  Without sufficient targeting it is difficult to prove positive outcomes are a product of intervention and without defined payback rates these schemes won’t be initiated.

We offer a pragmatic approach based on savings to the council alone and a transformative approach based on central government agreeing to share cost savings. Expenditure should be targeted at screening citizens in age groups most at risk of heart disease, dementia and diabetes. Private providers could be paid to screen citizens. Individuals screened could be paid a small sum for participating. Funding could be obtained through a social impact bond, the general council budget or preventive health budgets.

Under a social impact bond, bondholders would be rewarded according to the number of residents screened. Tesco has screened customers in its pharmacies since 2007 for blood pressure, cholesterol and susceptibility to diabetes, charging £10. PruHealth members are offered annual health checks for cholesterol, blood pressure and body mass. Westminster, Hammersmith and Fulham and Kensington and Chelsea offer residents aged 16-24 a £10 HMV voucher if they return a free chlamydia testing kit. US Medicare gives individuals free annual checks for Alzheimer’s. Residents become eligible for Medicare at age 65.

Councils could provide ‘free’ (council funded) health screening on the condition that users agree to share their susceptibility to these conditions with the council. We could then target prevention schemes at those most susceptible. Providers of preventive programmes could be paid on a payment by results basis. The pay-out ratio would need to allow for the council to pay the initial social impact bondholders (if this funding option were chosen), reward successful providers and for the council to achieve cost savings.

Our measures will deliver savings for councils and the NHS and build a preventive health structure that helps citizens lead longer healthier lives. This may create a bigger pensions headache but this is a nicer problem to have.

This article first appeared in December’s c’llr mag.