The Regulated Health Care Market: Does It Prevent the NHS from Achieving Contracting Benefits?

This guest article is based on an ongoing research project looking at purchaser-provider cooperation in health service development. The research is conducted by visiting researcher Suvituulia Taponen and Dr. Saba Hinrichs-Krapels at the Policy Institute at King´s College London. Data for the research has been collected by interviewing CCGs´ personnel in different roles responsible for commissioning cancer care.  Taponen has several years of previous experience as a sourcing consultant in the Finnish Government´s central purchasing body. 

Contracting health services from an external provider is intended to achieve improvements in cost efficiency as well as either maintain or improve service quality and accessibility. Competitive markets are typically seen as the vehicle to achieving these benefits. However, the health service market in England is very different to an ‘open market’ which facilitates competition, mainly due to the extent and nature of central government regulation. Could the regulated structure of the health service market in England be preventing NHS local Clinical Commissioning Groups (CCGs) from obtaining all of the benefits that could be achieved when commissioning services?

What makes this question particularly interesting is that the NHS operates under two main principles: (i) encouraging competition between different sector providers and (ii) facilitating close collaboration between NHS purchasers and providers.

The delivery of health services in the NHS has been based on the purchaser-provider model in which the responsibilities of commissioning care and providing care are divided into separate organisations since the early 1990s, but significant changes were introduced in the Health and Social Care Act 2012 and implemented in 2013. The reformation of 2013 aimed to increase competition between different sector providers. However, results have been in the main the opposite, as these changes led to CCGs losing many of the contracting competencies they previously had when operating as Primary Care Trusts (PCTs).

Purchasing professionals were centralised to Commissioning Support Units even though their expertise would be needed within the CCGs locally. Many have since become more reliant on NHS Trusts providing care locally as contracting is seen as complex in relation to CCGs resources. It also seems that currently there is less political drive for increasing competition compared to three years ago.

However, when NHS Trusts, rather than CCGs, directly contract specialised care to private providers, the latter become subcontractors to the local CCG, leaving the terms and conditions of that contract not specific enough – e.g. they do not include specific contract terms or detail on certain services. This is an issue because the contract is one of the most important tools in managing an external service provider, especially around service development. With ‘loose’ general contracts, CCGs may not be able to incentivise service improvement which would lead to better care outcomes and potentially lower costs in care delivery.

At times, cooperation between NHS purchasers and providers suffers from a non-alignment of goals for care delivery. This difference mainly arises because quantitative measures monitor quantity of provided care and access to health care, rather than its impact on a patient´s wellbeing. As providers are measured mainly on quantity, for instance meeting waiting time targets, rather than quality, this has become a focus in their operations. Quantitative measures served an important purpose when introduced by the central government in improving access to care and care quality, but have also created a need for a stricter contracts to facilitate purchaser-provider cooperation.

Local care outcomes vary, and many of these variations arise from differences in, and the management of, the relationship between local CCGs and their providers. Whilst the issues around market regulation discussed here are not relevant to all CCGs, where they are, they need to be addressed in order to achieve much needed improvements in care outcomes and standardised quality of care throughout the UK. Strengthening CCGs´ resources to improve their contracts and contract management would certainly be a move in the right direction.

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