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Activity based financing in England: the need for continual refinement of payment by results

Published online by Cambridge University Press:  01 October 2007

Centre for Health Economics, University of York, York, UK
Department of Health Sciences, University of York, York, UK
*Corresponding author: Andrew Street, Centre for Health Economics, University of York, York, YO10 5DD, UK. Email:


The English National Health Service is introducing activity based tariff systems or Payment by Results (PbR) as the basis for hospital funding. The funding arrangements provide incentives for increasing activity, particularly day surgery, and, uniquely, are based on costing data from all hospitals. But prices should not be based on average costs and the potential of PbR to improve the quality of care is yet to be exploited. Without refinement, PbR threatens to undermine expenditure control, to divert resources away from primary care, and to distort needs based funding.

Copyright © Cambridge University Press 2007

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