In the context of international interest in reforming mental health payment systems, national policy in England has sought to move towards an episodic funding approach. Patients are categorised into care clusters, and providers will be paid for episodes of care for patients within each cluster. For the payment system to work, clusters need to be appropriately homogenous in terms of financial resource use. We examine variation in costs and activity within clusters and across health care providers. We find that the large variation between providers with respect to costs within clusters mean that a cluster-based episodic payment system would have substantially different financial impacts across providers.
Keywords: Costs; Episodic payment; Mental health funding; Provider payment; Variation.