News story

New plans about paying for a better and more responsive NHS

Radical changes to how healthcare is paid for will enable the NHS to introduce new models of care.


This would enable the NHS to put into practice its long-standing commitment to better integrate hospital, community and mental health care, and provide a payment system to help introduce the examples of care models outlined in the Five Year Forward View launched in October 2014.

The use of so-called ‘capitation’ payments to NHS providers - bringing hospitals, community and mental health into line with the way GPs are funded - would particularly benefit the frail elderly and those with multiple care needs, such as the 17 million people with long-term conditions.

Monitor and NHS England are encouraging commissioners and providers to adopt this new payment model when negotiating the local price-setting arrangements. The organisations propose such arrangements should increasingly become the norm under reforms to the national tariff, which would see it become a framework of rules, rather than just a list of prices.

David Bennett, Chief Executive of Monitor, said:

Improving how healthcare is paid for will provide significant benefits to patients and the NHS. A more flexible and adaptable payment system should also help to ensure the sustainability of services, making sure that NHS funding goes as far as it can for patients.

We’ve started the ball rolling already with our work on the 2015-16 national tariff, but we require people at both local and national level to work together to implement the Five Year Forward View if patients are to see all the benefits possible.

Simon Stevens, Chief Executive of NHS England said:

NHS payment systems are a means, not an end. Much of the current tariff system was designed to help the NHS achieve a set of goals in the 2000s, such as slashing long waiting lists for routine surgery, which have been achieved.

The new challenge is to support the triple integration of care the Forward View highlights: between primary and specialist care, physical and mental health services and health and social care. Today we signal a new, locally flexible direction of travel to advance these goals.

Published 1 December 2014