How much should be paid for Prescribed Specialised Services?

English hospitals are paid according to the number and type of patients they treat, described using Healthcare Resource Groups (HRGs). But it is possible that the costs of providing specialised care are not properly accounted for, in which case hospitals that provide specialised care may be under-funded. This research assesses whether this is the case and, if so, what might be done about it. 

Specialised care is provided in relatively few hospitals, to patients with rare or complex conditions. These conditions are defined on the basis of specific diagnoses that a patient has or procedures that that they undergo during their treatment, set out in system called Prescribed Specialised Services (PSS). The original PSS system has recently been replaced by the Prescribed Specialised Services Shadow Monitoring Tool (PSS-SMT). The PSS identifies 69 different types of specialised care provided in hospital; the PSS-SMT expands this to 98 types. 

We assess whether the costs of patients who receive specialised care are different from the costs of other patients allocated to the same HRG. We examine data for every patient treated in English hospitals for three years: 2011/12, 2012/13 and 2013/14. 

We find that costs are higher for various types of specialised care. We make recommendations as to how the payment system, HRG classification system, or means of defining specialised care should be refined to account of these higher costs.

Full Report: CHE Research Paper 118 (PDF , 2,238kb) Lay Summary 118 (PDF , 275kb) PSS 3 yr All regressions (MS Excel , 130kb)

Other papers in the CHE Research paper series can be found at: In house publications