The latest briefing from National Health Service (NHS) England sets out its early thinking for the 2026/27 NHS Payment Scheme. The proposals remain subject to consultation and refinement. Even so, they highlight an important shift in how the NHS plans to use payment mechanisms to support service improvement.
Healthcare leaders have long questioned whether funding models reflect modern clinical practice, patient complexity and today's patterns of care delivery. The latest proposals suggest NHS England is taking steps to address that challenge.
At LOGEX, we see a clear direction of travel. The NHS is placing greater emphasis on better data, more accurate costing information and closer alignment between financial incentives and patient outcomes.
One of the most significant proposals is the move from using 2018/19 cost and activity data to using 2023/24 data when calculating national tariffs, which are the standard prices that NHS commissioners pay providers for delivering care.
Although this may appear to be a technical change, the impact could be substantial.
Healthcare delivery has changed considerably over the past six years. Same Day Emergency Care (SDEC) services have expanded. Providers now use diagnostic services more frequently to avoid unnecessary admissions. Care pathways have evolved, workforce models have changed and patient demand has shifted.
Despite these changes, many payment assumptions still reflect a healthcare system that existed before the COVID-19 pandemic.
The proposed move to 2023/24 data recognises a simple principle. Payment systems should reflect how care is delivered today. When care models change, costing methods and reimbursement approaches should change with them.
At LOGEX, we regularly see the challenges organisations face when historical assumptions inform current financial decisions. Accurate and up-to-date data helps organisations make better decisions about resources, services and patient care.
NHS England is also considering whether specific groups of providers should inform some prices rather than relying solely on national averages.
This proposal reflects a wider discussion across healthcare systems. Payment systems can either reflect historical costs or encourage providers to adopt efficient and effective models of care.
The concept of "should-be costs" is particularly relevant. These costs estimate what services should cost when providers follow recognised good practice and operate efficiently.
If the NHS wants to encourage digital adoption, productivity improvements and proven clinical approaches, organisations need reliable costing information. They need to understand why costs vary and what drives those differences.
High-quality costing data is no longer only a regulatory requirement. It is becoming an important strategic asset that supports planning, performance improvement and investment decisions.
The proposals also show that NHS England increasingly views payment mechanisms as a way to support service transformation.
Several initiatives point in the same direction. These include revised urgent and emergency care payment models, stronger incentives for SDEC services, support for virtual wards and emerging neighbourhood health payment approaches.
Together, these initiatives aim to reduce avoidable hospital activity and support care closer to home.
Financial incentives influence organisational behaviour. Policymakers therefore need to ensure those incentives support clinical priorities and operational realities.
Effective payment reform can support positive change. Poorly designed incentives can lead to unintended consequences or encourage behaviours that do not improve patient care.
The success of any future payment model will depend on high-quality data. Organisations must measure activity, outcomes and costs consistently if they want payment reforms to deliver the intended benefits.
The proposed payment approaches for neighbourhood health services provide another important signal.
Across the UK, healthcare systems are placing greater emphasis on proactive and population-based care. Instead of focusing solely on episodes of treatment, organisations are looking at how they can improve health outcomes across entire communities.
The financial models under discussion suggest a similar shift in reimbursement approaches.
These models may include blended payments, which combine different funding mechanisms, integrated neighbourhood teams and population health programmes. Over time, they may also develop into year-of-care funding arrangements.
For these models to succeed, organisations need a shared understanding of both costs and outcomes.
This requires greater data transparency across healthcare systems.
Healthcare organisations cannot manage resources effectively without reliable measurements. As care becomes more integrated, leaders will need visibility across entire patient pathways rather than within individual organisations alone.
Taken together, the proposals suggest a broader evolution in NHS funding.
The focus is gradually expanding beyond activity alone. Greater attention is being given to value, outcomes, prevention and performance across healthcare systems.
For finance leaders, this presents both opportunities and challenges.
The opportunity is to help build a payment system that reflects modern care pathways and supports long-term strategic priorities.
The challenge is to ensure the underlying data is accurate, reliable and consistent enough to support those ambitions.
Organisations with strong costing capabilities, dependable activity data and a clear understanding of clinical variation will be better placed to respond to future changes in payment policy.
Although consultation and testing are still ahead, the direction outlined by NHS England has been set.
Future NHS payment systems are likely to be:
At LOGEX, we welcome this direction. Better decisions depend on better information. Effective payment systems depend on a clear understanding of how care is delivered and what it costs.
As payment reform develops, organisations that invest in costing maturity, analytics and data quality will be in a stronger position to adapt and succeed.