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Investigating the relationship between costs and outcomes for English mental health providers: A bi-variate multi-level regression analysis

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Publication details

JournalEuropean Journal of Health Economics
DateAccepted/In press - 13 Jun 2017
DateE-pub ahead of print - 24 Jul 2017
DatePublished (current) - 16 May 2018
Issue number5
Number of pages10
Pages (from-to)709-718
Early online date24/07/17
Original languageEnglish


Provider payment systems for mental health care that incentivise cost control and quality improvement have been a policy focus in a number of countries. In England, a new prospective provider payment system is being introduced to mental health that should encourage providers to control costs and improve outcomes. The aim of this research is to investigate the relationship between costs and outcomes to ascertain whether there is a trade-off between controlling costs and improving outcomes. The main data source is the Mental Health Minimum Data Set (MHMDS) for the years 2011/12 and 2012/13. Costs are calculated using NHS Reference Cost data while outcomes are measured using the Health of the Nation Outcome Scales (HoNOS). We estimate a bivariate multi-level model with costs and outcomes simultaneously. We calculate the correlation and plot the pairwise relationship between residual costs and outcomes at the provider level. After controlling for a range of demographic, need, social and treatment variables, residual variation in costs and outcomes remains at the provider level. The correlation between residual costs and outcomes is negative, but very small suggesting that cost-containment efforts by providers should not undermine outcome-improving efforts under the new payment system.

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© Springer-Verlag GmbH Germany 2017. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.

    Research areas

  • Mental health, costs, outcomes, bi-variate model, multi-level model, provider performance.

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