Counting the cost of mental health

Mental health receives 13 per cent of the NHS’s budget, but related health problems cost the country approximately £105 billion each year - roughly the equivalent of the entire NHS budget. 

In the past, mental health provision has been funded through block contracts, with clinical commissioning groups (CCGs) receiving a set amount of money and allocating it to hospital trusts.

The researchers suggest that there is a need for commitment towards a new system, away from block contracts, towards patients being categorised into one of 21 “clusters” based on need.

The “cluster” system was introduced across the NHS in 2012 but  it has not yet been fully implemented.

The researchers also say the cluster system needs “fine-tuning” after research revealed a “substantial degree of variability” within clusters – with some showing a ten-fold variation between providers in terms of cost. 

Professor Rowena Jacobs, from the University of York’s Centre for Health Economics and one of the authors of the report, said: “One mental health trust had costs that are 55 per cent higher than average while another had costs 25 per cent below average.”

“We show that there is a substantial degree of variability within clusters. It is difficult to build a payment system where you have so much variation,” she added.

“It is very difficult to set an average national fixed price, say for treating depression, if there is a 10-fold difference in cost between providers.”

The researchers called for a firmer commitment to the “cluster” system which is a more transparent and accountable system, otherwise mental health services risk disinvestment.

Professor Jacobs added: “It might not be perfect but it needs to be fine-tuned and driven forward.”

The work was part-funded by the Wellcome Trust through the Centre for Chronic Diseases and Disorders (C2D2) at the University of York.

Full Report: CHE Research Paper 137 (PDF , 3,043kb)

University of York news item