The adjust a proportion of funds depending on

The commonwealth still pays its percentage of the cost like it would normally however the state the patient is residing in is the state which will have to provide the funds for the remainder of the cost of their admission and not the provider state.     NHS Healthcare Funding   1.     Payment by result Comparatively the NHS uses a healthcare resource group (HRG) as opposed to a diagnosis related group (DRG) as seen in the Australian example of activity based funding. This HRG is otherwise known as a payment by results system. DRG’s are based off of major diagnostic categories while HRG’s are more specific to specialty services.   The NHS England chooses which interventions will be funded by this method and the NHS improvement calculates the appropriate price which is published as the national tariff. (8) This method of funding represents roughly 60% of funding paid to hospitals by the NHS.(9)   This form of funding can encourage providers to treat more patients and therefore reduce waiting lists. Also by using fixed prices for treating each condition it encourages hospitals who are currently paying above average prices for particular investigations to become more efficient.   In 2009/2010 they introduced a commissioning for quality and innovation which aimed to adjust a proportion of funds depending on whether providers where meeting previously agreed goals. (10) This paved the way for best practice tariffs with the aim of improving clinical quality.   Patients may select their own provider based off of personal preference. As a result, this should create more competition between providers to provide a better service which has a knock on effect of improving quality of care. Evidence suggests that once a provider is providing high quality of care for one diseases it is likely that that quality will spill over to the management of other disease.   Criticism of this method is that it does not in fact improve quality of care but instead rewards providers who tick certain boxes. Providers who were already providing a exceptional service have no motivation to improve and providers offering lower standards of care may change their practices to only treat patients who will not negatively affect their numbers the next year leading to a ‘patient dump’ scenario.(11) The waters where also muddied with regards to measuring quality improvement because a number of other initiatives are taking place at the same time including increased use of clinical audits, doctor’s appraisal and introduction of a national standard. Much of this information becomes publically available and hospitals not reaching the standards set by the government receive negative publicity.     2.     Block Funding Block funding is the primary mechanism of paying healthcare facilities in Northern Ireland, Wales and Scotland. (12) (13) They are also used when funding mental health or community based healthcare services.   Conclusion and recommendation   Australia and the UK have a similar means of funding health care however there are some subtle yet crucial differences. When comparing the activity based funding of Australia and payment by results of UK it becomes evident that in the Australian example there is no attempt to improve quality of service using financial incentive. In the United Kingdom there is a genuine attempt to create a more sustainable system though paying for quality and not unit of provision. Using a combination of financial incentives for positive reinforcement and public criticism as negative reinforcement the UK has managed to improve clinical quality.   Australia would struggle if they attempted to implement a HRG style system as the infrastructure is not currently available to allow for a fluid switch. Therefore, the financial implications of making such a change would be too great for Australia. There are other ways Australia may see fit to assess and promote quality of service, currently they assess quality through evidence acquired through multidisciplinary care plans. (14)  They have a safety and quality health service dedicated to improving clinical quality by assessing the service, offer an independent review and making appropriate recommendations.   An alternative for Australia may be risk adjusting cost to ensure no deficits exist in funding or DCG similar to the USA however its not clear at this time if this would be beneficial for Australia.     So, though the Australian health service does not provide for quality improvement within its funding initiative and its lacking risk adjustment it is currently working well in the Australian context.