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What is a PHB?

The idea behind PHBs is that patients with certain long term conditions are allocated a pot of money to spend on their individual needs. The patient works with their local NHS team to agree a care plan, setting out how the budget will be spent.

The amount of money in a PHB varies according to the patient and there a number of ways the budget can be held. There are limits to what PHBs can be spent on. For example, they cannot be used to pay for alcohol, tobacco, gambling or debt repayment, or anything that is illegal.


PHBs can be managed in three ways:

Notional budget: the money is held by the NHS. No money changes hands. Patients find out how much money is available and discuss different ways to spend it with their NHS teams. The NHS then arranges the agreed care and support.

Third party budget: the money is paid to an organisation that holds the money on the person's behalf. This organisation holds the money for the patient and helps them decide what they need. After this is agreed with the local NHS team, the organisation then buys the care and support the patient has chosen.

Direct payment for healthcare: the money is paid to the person or their representative. They get the cash to buy the care and support they and their local NHS team decide they need. The patient has to show what they have spent it on, but buys and manages services. 


Key points 

  • What is the benefit?
    Doctors are broadly in favour of giving patients greater control over the treatment and care they receive but they remain unconvinced of the benefit of PHBs and therefore broadly unsupportive of their introduction. Much of this is due to a lack of information and knowledge about PHBs.

  • Proper support is needed
    If patients are to be properly supported to choose and use a PHB, any proposed roll-out should be delayed until doctors have a thorough understanding of PHBs.

  • Difficult to control costs
    Doctors are concerned that PHBs will make it more difficult for the NHS to control costs.

  • More convincing evidence
    More evidence is needed of the benefits of PHBs on patient outcomes, particularly clinical outcomes, if doctors are to be convinced to support a roll-out.

  • Improve current frameworks
    More work should be done to explore how existing frameworks could be used to better meet the needs of patients, such as more effective care planning through discussions that focus on a genuine partnership between the patient and health professionals.


Summary of survey findings

To understand our members' thoughts, we conducted a small survey which asked about the principles behind PHBs, the likely impact on patients and the NHS and doctors’ readiness for the introduction of PHBs.

A new discussion paper details the findings of that survey and coincides with the end of the pilot programme and the Government's formal announcement due in November 2012.   

Readiness for PHBs

  • 72% of doctors who responded to the survey feel they are not very well informed or not informed at all about the introduction of PHBs. 

Principles behind PHBs 

  • The majority (58%) of doctors believe it would be beneficial for patients with long-term conditions to have more control over their NHS care.
  • Only around a fifth of doctors believe that giving individuals control of the money the NHS spends on them is an effective way to achieve this.
  • Around 30% of doctors agreed that patients should be able to spend their budget on care not traditionally funded by the NHS. A larger proportion (40%) of doctors felt that this should not be allowed.  

Impact of PHBs

  • 57% of doctors think that PHBs will make it more difficult for the NHS to control costs in the short term.
  • 61% of doctors think that PHBs will make it more difficult for the NHS to control costs in the long term.  

Outcomes of PHBs

  • 10% of doctors think PHBs will improve clinical outcomes for the patients that use them.
  • 46% of doctors think PHBs will improve wellbeing outcomes for the patients that use them.
  • 41% of doctors think PHBs will improve patient experience outcomes for the patients that use them.
  • Between 30% and 35% of doctors did not know if PHBs will improve these various outcomes for the patients that use them.

Download the full survey results



A three year pilot programme to test out personal health budgets (PHB) in the NHS was launched by the Government in 2008 and involves around half the primary care trusts in England.

The BMA has taken a keen interest since the launch. In 2010, we responded to the Department of Health consultation on direct payments in healthcare. 

Whilst we support the use of the pilot programme to uncover potential difficulties ahead of implementation, we nevertheless have held a number of reservations over PHBs and direct payments in particular.