Activity-based funding for National Health Service hospitals in England: managers' experience and expectations

Activity-based funding of hospital services has been introduced progressively since 2003 in the National Health Service (NHS) in England, under the name 'Payment by Results' (PbR). It represents a major change from previous funding arrangements based on annual "block" payments for large bundles of services. We interviewed senior local NHS managers about their experience and expectations of the impact of PbR. A high degree of 'NHS solidarity' was apparent, and competition between NHS hospitals was muted. PbR has been introduced against a background of numerous other efficiency incentives, and managers did not detect a further PbR-specific boost to efficiency. No impact on care quality, either positive or negative, is yet evident.