Contracting in the UK NHS: purpose, process and policy
AbstractContracting has played a central role in the NHS reforms as the principal mechanism by which resources are transferred from purchasers to providers. The nature, process and role of contracting are traced by examining the development of government policy on this issue since the inception of the reforms. Much of the emphasis in the early years of the reforms was on getting the detail of contracting ‘right’, with attention becoming focused more recently on wider commissioning issues and the nature of the purchaser-provider relationship. The contracting environment is described and consideration is given to the way in which changes in this environment have influenced the role and nature of contracting, particularly in terms of the tension between the role of the market and the role of management in the NHS. Contracts have been used partly as a management tool and partly as a means to promote competition, often through the threat of competition (‘contestability’) rather than actually switching contracts between providers. The present government’s stated intention to abolish the internal market will lessen the role of contracts as a mechanism to promote competition, but within a “system of contestability to force improvements in standards” (Labour Party 1996). If contestability is to be used more radically in the NHS, a clearer separation may be required between the ownership and operation of assets to address issues of poor provider performance. Longer-term contracts (or agreements) then become the framework within which providers operate to meet purchaser service specifications, with an increasing emphasis on quality and effectiveness of services, and a decreasing emphasis on annual activity and price negotiations. The key challenge will lie in creating an appropriate set of incentives to reward efficient providers, and to ensure sufficient flexibility in longer-term agreements to challenge poor performance.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for Health Economics, University of York in its series Working Papers with number 156chedp.
Length: 28 pages
Date of creation: Nov 1997
Date of revision:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joskow, Paul L, 1987. "Contract Duration and Relationship-Specific Investments: Empirical Evidence from Coal Markets," American Economic Review, American Economic Association, vol. 77(1), pages 168-85, March.
- Goldberg, Victor P & Erickson, John R, 1987. "Quantity and Price Adjustment in Long-term Contracts: A Case Study of Petroleum Coke," Journal of Law and Economics, University of Chicago Press, vol. 30(2), pages 369-98, October.
- Mark Dusheiko & Maria Goddard & Hugh Gravelle & Rowena Jacobs, 2008. "Explaining trends in concentration of healthcare commissioning in the English NHS," Health Economics, John Wiley & Sons, Ltd., vol. 17(8), pages 907-926.
- Propper, Carol & Sutton, Matt & Whitnall, Carolyn & Windmeijer, Frank, 2010.
"Incentives and targets in hospital care: Evidence from a natural experiment,"
Journal of Public Economics,
Elsevier, vol. 94(3-4), pages 318-335, April.
- Carol Propper & Matt Sutton & Carolyn Whitnall & Frank Windmeijer, 2008. "Incentives and Targets in Hospital Care: Evidence from a Natural Experiment," The Centre for Market and Public Organisation 08/205, Department of Economics, University of Bristol, UK.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Frances Sharp).
If references are entirely missing, you can add them using this form.