Abstract: The English National Health Service is promoting concentration of the treatment of patients with relatively rare and complex conditions into a limited number of specialist centres. If these patients are more costly to treat, the prospective payment system based on Healthcare Resource Groups (HRGs) may need refinement because these centres will be financially disadvantaged. To assess the funding implications of this concentration policy, we estimate the cost differentials associated with caring for patients that receive complex care and examine the extent to which complex care services are concentrated across hospitals and HRGs. We estimate random effects models using patient-level activity and cost data for all patients admitted to English hospitals during the 2011/12 to 2013/14 financial years and construct measures of the concentration of complex services. Payments for complex care services need to be adjusted if they have large cost differentials and if provision is concentrated within a few hospitals. Payments can be adjusted either by refining HRGs or making top-up payments to HRG prices. HRG refinement is preferred to top-payments the greater the concentration of services among HRGs.

Bio: Andrew Street is a Professor of Health Economics in the Department of Health Policy, having joined the London School of Economics in September 2017. Previously he was at the Centre for Health Economics at the University of York, which he joined in 1999, and where he was Director of the Health Policy team and Director of the Economics of Social and Health Care Research Unit (ESHCRU), a joint collaboration with the Personal Social Services Research Unit (PSSRU) at the LSE and the University of Kent.He has a MSc in Health Economics (1990), a MA in Public Administration and Public Policy (2000) and a PhD in Economics (2002), all awarded by the University of York. After completing his MSc, Andrew spent three years in Australia working at the National Centre for Health Program Evaluation, Monash University and the Victorian Department of Health and Community Services. This was followed by a five-year spell with the York Health Economics Consortium and 18 years with the Centre for Health Economics. In 2005 he worked part-time in the English Department of Health. In 2016 he served as special advisor to the House of Commons Health Committee for its inquiry into the Impact of the Spending Review on health and social care. He has been an editor of the Journal of Health Economics since 2006, and currently serves as chair of the Welsh Health Economics Support Service Advisory Group. More information: here.