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All you need to know about personal health budgets

The Government has made a U-turn on personal health budgets and agreed to pilot a concept that has been running in social care for more than 10 years. Rebecca Norris explores the implications for the NHS

The Government has made a U-turn on personal health budgets and agreed to pilot a concept that has been running in social care for more than 10 years. Rebecca Norris explores the implications for the NHS

What are personal health budgets?

Personal health budgets were announced in Lord Darzi's Next Stage Review published earlier this month and the new primary and community care strategy that followed a few days later.

They are intended as a means of giving individual patients ‘greater control over the services they receive and the providers from which they receive services'.

The idea is borrowed from social care, where ‘direct payments' and ‘individual budgets' have been operating for a number of years.

How have personal budgets worked in social care?

Direct payments were introduced in 1996, to allow councils to pay funds directly to disabled residents, in lieu of directly provided services.

Payments are means-tested. Recipients can use the payments to part-fund the hiring of their own care assistant to help with daily tasks.

This gives them the flexibility to hire, for example, someone they know at times that suit them, rather than relying on a council sending in staff from a private agency under a block contract, which could result in a different carer being sent each time.

Over the years, direct payments have been extended to older people and carers.

Since 2003, some councils have also been piloting individual budgets in a bid to introduce a more radical change known as ‘self-directed support'.

This involves councils informing adult social care recipients exactly what slice of the total funding pie is available to them individually, and ensuring they have as much control as possible over that spending, regardless of whether they or the council do the purchasing.

This model has allowed innovative spending such as service users clubbing together to purchase more interesting activities such as art or drama classes instead of traditional day centre support.
A controversial example hit the headlines recently, when a football fan with MS bought a season ticket – see case study below.

Why are personal budgets being considered for the NHS now?

As little as two years ago, the Department of Health ruled out extending direct payments and individual budgets to the NHS as ‘this would compromise the founding principle of the NHS that care should be free at the point of need'.

This position was set out in the white paper Our Health, Our Care, Our Say, which added: ‘Social care operates on

a different basis and has always included means-testing and the principles of self- and co-payment for services.'

But momentum has grown in support of personal health budgets, particularly in the light of studies showing that in reality, direct payments have been used to buy what would traditionally be seen as healthcare, such as physiotherapy, dressings, foot care, bowel and bladder management and oxygen equipment.

Research also shows that service users with complex conditions – who need both health and social care – do not distinguish between the two sectors in the strict sense that commissioners do, and simply want a seamless package of support.

The Darzi report talks of ‘enthusiasm we have heard from local clinicians' and commits to ‘exploring the potential' of personal budgets in the NHS.

When will personal health budgets be introduced?

A pilot programme will start in early 2009, the Darzi report confirms, ‘with a view to national rollout'. The pilot will be supported by ‘rigorous evaluation'.

Who will be eligible for personal health budgets?

Piloting will be open to 5,000 patients with long-term conditions.

The Darzi report states the budgets are ‘likely to work for patients with fairly stable and predictable conditions, well placed to make informed choices about their treatment'. Participation will be voluntary – nobody will be forced to have a personal health budget.

What will the budgets pay for?

The Darzi report fails to name any specific services that could be purchased under the pilots.

But previous suggestions from academics and doctors have included things like air conditioning to help COPD patients, reclining chairs to ease leg swellings, non-medical alternatives for pain relief, any type of recovery activity that would help mental health patients reintegrate into society or direct hiring of independent midwives for expectant mothers.

Will patients hold the budgets themselves?

As in social care, the budgets to be piloted in the NHS could either be held and spent by healthcare commissioners on the patient's behalf, or given as direct payments to patients ‘where this makes most sense for particular patients in certain circumstances', the Darzi report states.

Direct payments will require new legislation.

Will any means-testing apply to personal health budgets?

No. The Darzi report states the personal health budget programme will have to fully support the principle of the NHS being a comprehensive service, free at the point of use.

‘The programme will be underpinned by safeguards so that nobody will ever be denied treatment as a result of having a personal budget, and NHS resources will be put to good use, with appropriate accountability.'

What are the potential advantages of personal health budgets?

Introducing personal budgets in the NHS would allow the Government ‘to shed its nanny-state image for good by demonstrating a belief in the capacity of individuals with the right support to develop solutions to improve their health and their lives', argues one report from the Social Market Foundation.

Personal budgets might also lead to wiser use of NHS resources, suggests a joint paper from the University of Birmingham's Health Services Management Centre and the organisation overseeing individual budget pilots in social care, because ‘the individual has more of a vested interest than public services in spending the money as effectively as possible'.

There has been no evidence of substantial misuse of funds in social care – in fact the converse has been seen as service users suggest innovative alternatives to traditional provision.

Personal health budgets would extend the current agenda of using Payment by Results and practice-based commissioning to get money closer to the patient, and also offer a means of supporting joint health and social packages of care.

What are the problems?

One of the main concerns is whether personal health budgets would perpetuate health inequalities because more educated and well-off patients know how to ‘work the system'.

Anna Dixon, director of policy at the King's Fund, says: ‘There is a danger that converting NHS services into cash could allow the better off to enhance their allowance, creating a two-tier service, which undermines the founding principles of the NHS.'

Dr Mike Knapton, director of prevention and care at the British Heart Foundation, adds that patients would need to be made aware of all facilities and services available to them. ‘We are cautious whether this can benefit all patients. Safeguards must ensure the gap between the informed and those most in need doesn't widen health inequalities across the country.'

There are also logistical difficulties. These include ‘getting the initial payment level right and determining who would pay for care should the budget be exhausted', says Ms Dixon.

Personal budgets are also likely to trigger fierce debate about what constitutes a ‘health' service, especially if patients want to spend their budget on non-medical interventions that may not have an evidence base.

There is also an issue of whether commissioners and clinicians have a full understanding themselves about the availability of all potential services – and the individual costs – to pass on to patients to help inform their spending decisions.

Another logistical consideration is how to ensure the safety of patients who directly purchase services. In social care the Government has resisted attempts to make care assistants hired by service users go through the checks required for staff employed by care providers.

What do commissioners think of personal health budgets?

Dr James Kingsland, chair of the National Association of Primary Care, says: ‘Can patients really be discerning enough to decide to spend on, say, a better diet because by reducing their weight they might improve their diabetic control? It's quite sophisticated but not beyond our ken because we have seen that these budgets have worked in social care.

‘But the pilot must include very highly motivated and well-informed patients. They will have an accountability to manage that budget, but if they run into trouble with it, nobody is going to deny them treatment – they'll always be bailed out. So we have to show how these budgets will improve value and efficiency as opposed to just diverting a bit of a responsibility but not really changing how patients act or think.'

Dr Michael Dixon, chair of the NHS Alliance, says giving personal health budgets to all patients with long-term disease would be ‘chaotic and create great inequalities' but he backs pilots for those with complex conditions to test whether they would keep within budget, become more satisfied with their care, and whether the rest of the NHS resource system would be affected by them.

‘In a way you could say it's the most logical end stage of commissioning – as close to the patient as possible. We already know that 80 per cent of patients want to discuss their choices with GPs when it comes to things like referrals to secondary care, so I hope the same process would occur when it came to an individual budget, whether it's talking to your social worker, GP, or district nurse.'

What do patient representatives think?

The Long Term Conditions Alliance (LTCA) says it welcomes any move that encourages and supports choice. However Mark Platt, the LTCA's director of policy and public affairs, adds that it is difficult to judge at this stage exactly how effective such budgets will be.

‘Piloting will hopefully mean personal health budgets will be exposed to rigorous and detailed analysis, and thus provide both traditional empirical data as well as, hopefully, patient outcome reported data measurements; all of which will help us to better determine their suitability and applicability for different people living with different conditions.'

What lessons have been learned from audits and research in social care?

An Audit Commission report has found:

• Council implementation costs for direct payments – training staff, recruiting extra staff or contracting external agencies to advise service users on how to spend direct payments – ranged from £200 to £1,800 per user, with costs higher in London boroughs.

• Overall, there were no net savings. The time saved by care managers was offset by the time spent advising service users.

• Service users gained a wider range of care options, more flexible provision, more culturally sensitive care and higher satisfaction with care.

• There is an extra burden on service users who have to research care options and employ their own assistants, but in most cases they are supported by councils.

• Council pricing of care funded by direct payments varied. Sometimes it was less expensive, sometimes the same and sometimes more expensive than traditionally contracted services.

• Councils did not fully understand their provider market well enough to set prices for direct payment-funded care at a level that both achieved cost-savings and stimulated growth in provision.

Latest survey results from In Control, which oversees individual budget pilots in social care, show:

• 77% of recipients reported improvements in their quality of life

• 63% had improved the extent to which they took part in and contributed to their local communities

• 72% felt the level of choice and control over their lives had improved

• 59% reported improved personal dignity

• 47% reported general health and wellbeing improvements.

Various reports from the Commission for Social Care Inspection show:

• more than 40,000 people had received direct payments at the end of March 2007 compared with 32,000 the year before;

• the payments still only accounted for 6% net spending on community care services;

• potential barriers to uptake include patronising council staff attitudes, lack of information on care options for service users, and unnecessary or bureaucratic paperwork.

Where can I read more about personal budgets?

Choosing well Analysing the costs and benefits of choice in local public services, May 2006, Audit Commission –

Putting Patients in Control June 2007, Social Market Foundation

Our Health Our Care Our Say what could the NHS learn from individual budgets and direct payments? August 2007, University of Birmingham's Health Services Management Centre/In Control

Making it Personal January 2008, Demos

In Control, the organisation overseeing individual budgets in social care

Rebecca Norris is associate editor of Practical Commissioning

All you need to know about personal budgets

Budgets are likely to work for people with stable long-term conditions who are well informed

Personal budgets are the logical end stage of commissioning - as close to the patient as can be

Case study: Personal budget pays for season ticket

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